Charity warns parents could face upfront childcare costs under Universal Credit scheme
Parents could face having to find hundreds of pounds upfront for childcare under the controversial Universal Credit scheme, according to a charity.
Save the Children has warned there is a risk that the new benefits system will put mothers and father off taking up a new job, or push families into debt.
The new system has the potential to provide more support for childcare costs, the charity argues, but the way it is set up is “flawed”.
Parents eligible for Universal Credit will have to pay for childcare costs upfront, and then claim the money back, a new report by Save the Children says.
It notes that many parents in England have to pay upfront costs to put their youngsters into childcare, such as a month’s fees in advance plus a deposit.
“Upfront costs are prohibitively high for many low-income parents, who tend to lack savings,” the report says.
The charity calculates, using available data, that, taking into account one month’s fees plus a deposit of £150, the average upfront costs for families in England for a one-year-old taking up a full-time place (40 hours) are £1,000.
The initial costs of a part-time place (25 hours) for a one-year-old would be £680, it says.
And for a three or four-year-old, who is receiving the Government’s 30 free hours of childcare a week, the upfront cost would be £360.
This is likely to be higher during the holidays, as the 30-hour offer applies to term-time only.
“Universal Credit has the potential to provide more support for childcare costs for low-income parents,” the report says.
“But the way parents will have to access that support is flawed.
“Few low-income parents will have the luxury of being able to wait to be reimbursed through Universal Credit.”
It adds: “The risk is that upfront childcare costs put off parents from looking for a better job or push them into unsustainable debt, seriously undermining the goals of Universal Credit.”
The report does note that parents claiming Universal Credit can get advances, to help pay for one-off expenses, which are loans that must be paid back.
But the charity argues that, while these are useful, there are still challenges – for example, families can only have one advance at a time, and they may not cover all upfront childcare costs.
A Government spokesperson said: “Under Universal Credit, working parents can claim back up to 85% of eligible childcare costs, compared to 70% of costs covered under the previous legacy system.
“This is the highest level of support ever. And if someone has accepted an offer of paid work, they are eligible to be paid these costs for the month prior to starting work.
“This generous provision has been widely welcomed by stakeholders and is available in addition to an entitlement of up to 30 hours of free childcare.”
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