Welfare reforms will penalise working families, warns Barnardo’s

High childcare costs mean the poorest parents could effectively be paying to go to work once the government’s welfare reforms are introduced, a report by the charity Barnardo’s has found.

The new Universal Credit system, to be launched this year, will only provide parents with financial support for up to 70 per cent of their childcare costs.

According to analysis by the charity, a single parent with two pre-school aged children earning the minimum wage in London will be forced to pay £1.61 more than they earn for each hour of childcare, if they work 28 hours or more a week. The same parent in Yorkshire and Humber would have to pay out 50p an hour.

The report also found that lone parents with only one young child look set to loose a substantial amount of their pay, potentially only gaining an average of £1.10 an hour for each additional hour they work between 16 and 24 hours a week.

Barnardo’s is calling on government to urgently increase the proportion of childcare costs covered through Universal Credit from 70 to 80 per cent.

It also wants ministers to consider extending the free childcare entitlement from 15 to 20 hours, or more for the most disadvantaged children.

Barnardo’s chief executive, Anne Marie Carrie, said the government’s claim that work will pay for the most disadvantaged families under Universal Credit is “simply wrong”.

“Leaving the poorest without sufficient means to pay for childcare ironically risks pricing precisely those families who are in greatest need of the extra income out of work,” she said.

“If we want the poorest parents to be genuinely able to work their way out of poverty, then they must be able to afford the costs of childcare. This is why we’re calling on the government to provide more help to the most disadvantaged families.”

The Department for Work and Pensions has been contacted for a response.