Upfront payment for childcare under the current Universal Credit system “directly conflicts” with the Government’s aim of getting more people into work, according to a new report by the House of Commons Work and Pensions Committee.

The committee, formed of a cross-party group of MPs, has published a report outlining the findings of its inquiry into Universal Credit and childcare support. Currently, Universal Credit claimants must pay for childcare upfront and claim reimbursement from the Department for Work and Pensions (DWP) after the childcare has been provided. This can leave households waiting weeks or even months to be paid back. The committee found that this is leading many claimants to face a stark choice: turn down a job offer, or get themselves into debt in order to pay for childcare.

MPs are calling on the Government to:

  • Provide direct payments of Universal Credit childcare support to childcare providers. This would alleviate the problem of upfront costs, give childcare providers much-needed certainty of income, and substantially reduce the risk of fraud and error.

  • Review the maximum amount and percentage of childcare costs that can be reimbursed under Universal Credit, modelling the effect of increasing them on parents’ participation in work and introducing London weighting to account for the very high childcare costs in the capital.

  • Divert funding from the schemes aimed at wealthier parents (Tax-Free Childcare and the 30-hour funded childcare scheme) towards Universal Credit childcare.

  • Monitor the use and impact of the Flexible Support Fund (FSF). This is a budget given to every Jobcentre Plus to provide non-repayable, discretionary grants to help people overcome barriers to work.

The full report is available here.

Last reviewed 7 January 2019