The House of Commons Work and Pensions Committee, a cross-party group of MPs, has published a report outlining the findings of its inquiry into Universal Credit (UC) and childcare support, arguing that the current system “directly conflicts” with the Government’s aim of getting more people into work.
Currently, UC claimants must pay for childcare up-front 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 UC 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. DWP should carry out this work and implement the best of the two options before it starts so-called "managed migration" – transferring claimants of existing benefits to UC.
- Divert funding from the schemes aimed at wealthier parents (Tax Free Childcare and the 30 hours free childcare) 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. This is little known and under-used; DWP’s limited data shows the FSF has been underspent in every year since 2012-13, and the proportion spent on childcare is “minute”.