To ask the Secretary of State for Work and Pensions, what steps her Department is taking to support universal credit claimants at risk of being unable to work due to being unable to pay for childcare costs upfront.
24 September 2020
Childcare costs should not be a barrier to getting into work – this Government is committed to helping parents into work. Universal Credit pays up to 85% of childcare costs, compared to 70% in legacy benefits and can be claimed up to a month before starting a job. For families with two children this could be worth up to £13,000 a year.
Help with upfront childcare costs for starting work is available through a non-repayable Flexible Support Fund (FSF) award for eligible Universal Credit claimants up to the limits set. This does not apply for claimants already in work. We have issued guidance to Work Coaches in Jobcentres to ensure that eligible claimants, who require help with upfront childcare costs in order to start work, are directed to the Government’s FSF. The FSF received an additional £150m this financial year to help support Universal Credit claimants to move closer to, or into work. Budgeting Advances are also available to eligible claimants who require help with upfront costs.
Support with eligible childcare costs is based on reporting actual childcare costs that a household incurs as soon as those costs have been paid. Childcare costs can be reported in the same assessment period they were paid or in the following assessment period. Claimants are then reimbursed for their eligible costs within their Universal Credit award. Monthly reporting helps to support accuracy of payment, whilst also avoiding the levels of error in the Tax Credit system and the possibility of overpayments.
The Universal Credit childcare policy aligns with the wider Government childcare offer, which includes free childcare hours for children between 2 and 4 years and tax free childcare. Eligibility for children aged 2 requires household income to be less than £15,400 a year after tax, not including benefit payments. Universal Credit claimants can utilise both the free childcare entitlement and Universal Credit childcare costs in conjunction with each other for the relevant hours.