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Universal Credit childcare policy "hurts the poorest"

By Rachel Lawler
baby universal credit childcare
Childcare support for parents claiming Universal Credit “directly conflicts” with the government’s aim of making it easier for parents to work, according to a new report from the Work and Pensions Committee.
The report says: “Universal Credit claimants must pay for childcare upfront and claim reimbursement from the Department after the childcare has been provided.”
This, the report argues, leaves many families with a choice: “turn down a job offer, or get themselves into debt in order to pay for childcare”.
30-hours and Tax-Free Childcare
The committee says that this is particularly unfair at a time when families on higher incomes, earning up to £200,000 a year, are supported with the Tax-Free Childcare and 30-hours schemes.
“The government should divert funding from those schemes towards improving universal credit childcare support,” the report says.
Additional fees
The report also noted that many childcare providers are charging parents for additional services or consumables, as a result of underfunding for the 30-hours offer. Some providers charge these to make up for the shortfall between their usual fees and their funding rate.
According to the report, these additional fees cannot be reimbursed under Universal Credit. It questioned whether the Department for Work and Pensions should “pick up costs resulting from the Department for Education’s policy”.
While early years providers can charge for meals and other consumables, or additional activities, the Department for Education’s operational guidance makes it clear that parents must be given an alternative option of supplying their own consumables. It says that “all parents should have the same rights to access a free entitlement place, regardless of whether they choose to pay for additional hours of provision, additional activities or meals”.
The committee said that it would look to take further evidence on this issue.
The report called for Universal Credit claimants to be directed to the Flexible Support Fund to help with paying for upfront childcare costs. This fund has been underspent each year since 2012-13 and very little of this has been spent on childcare in the past.
It also also suggested that payments for upfront childcare costs are paid directly to childcare providers and called for better advice on childcare for claimants.
Find out more
Alliance calls for Universal Credit stories

The Alliance wants to better understand providers’ experiences of working with families in receipt of Universal Credit, particularly if there have been issues with parents who were unaware they couldn’t claim back addtional charges.

If your setting has children whose parents receive Universal Credit, please fill in our online form.