Save the Children says thousands of single parents, mainly mums, are being penalised by having to pay childcare fees upfront before they can claim back the money from Universal Credit.
Design flaws in the way Universal Credit supports families with childcare are forcing single mums to pay up to £1,400 a month in nursery bills upfront, before waiting up to a month to be reimbursed, according to new analysis by Save the Children.
New figures, based on data from a Freedom of Information request made to the Department for Work and Pensions, reveal that 81% of parents receiving childcare support through Universal Credit are single mums.
Save the Children says more than 35,000 single mums currently receive help with childcare through Universal Credit in England, compared with only 1,000 dads. But parents have to pay the costs out of their own pockets first and wait until the end of the month to get the payment.
With bills as high as £1,000 a month on average for a full-time place for a one-year-old in England, mums up and down the country are being left out of pocket for weeks, to the tune of £40 million a month, says Save the Children.
Mums interviewed by Save the Children said paying upfront had left them constantly in arrears, forcing them to borrow on credit cards, cut back on food and other essentials or even resort to high-interest loans to stay afloat. Some have had to turn down better jobs because they couldn’t find cash for childcare in advance.
Last week, single mum Nichola Salvato was given permission by the High Court to proceed with a legal challenge against the Department for Work and Pensions over the upfront payment rule. Her claim, backed by Save the Children, alleges that the system is unlawful and discriminatory.
Becca Lyon, Head of UK Child Poverty at Save the Children said: “As a society, we believe women should have the same opportunities to work as men. But not only are women already shouldering most of the burden of childcare, they’re now being unfairly penalised by a system which makes it even more difficult for them to go back work.
“Mums tell us they have taken out loans to pay for childcare or that they’ve had to turn down better paid jobs or more hours because under Universal Credit parents have to wait a month to get the support they’re entitled to. Not only does this new system unfairly disadvantage women, it could also undermine the whole point of Universal Credit – to help more parents into work and boost their pay.
“We would like to see the government giving parents the money they are entitled to for childcare under Universal Credit before they need to pay their nursery or childminder, instead of leaving them in arrears. The Budget this week is a chance to improve the system before more parents, especially mothers, are pushed into debt and hardship. Now is the time to act.”
The government says parents can get help with upfront costs though the Flexible Support Fund (FSF) – a discretionary back-to-work grant which can be used to cover the first month’s childcare costs. But Save the Children says this only pushes the problem back by a month, leaving parents facing a huge upfront bill in the second month. The grant is also only available to people starting a new job: parents returning from maternity leave or starting to pay for childcare for the first time don’t qualify.