{"id":2597,"date":"2025-02-18T10:28:23","date_gmt":"2025-02-18T10:28:23","guid":{"rendered":"https:\/\/blogs.bath.ac.uk\/iprblog\/?p=2597"},"modified":"2025-02-18T14:43:28","modified_gmt":"2025-02-18T14:43:28","slug":"a-big-vast-grey-area-childcare-for-parents-on-universal-credit","status":"publish","type":"post","link":"https:\/\/blogs.bath.ac.uk\/iprblog\/2025\/02\/18\/a-big-vast-grey-area-childcare-for-parents-on-universal-credit\/","title":{"rendered":"\u2018A big, vast, grey area\u2019:\u00a0Childcare for parents on Universal Credit"},"content":{"rendered":"

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Dr Marsha Wood is a Research Associate at the University of Bath Institute for Policy Research (IPR). Dr Rita Griffiths is a Research Fellow at the IPR and Professor Nick Pearce is the Director of the IPR. This blog post is part of their work on the report \u2018A big, vast, grey area\u2019: Exploring the lived experiences of childcare for parents on Universal Credit\u2019\u00a0<\/a> which examines\u00a0how low-income households on Universal Credit manage childcare costs, as well as their broader experiences of childcare and work conditionality requirements.\u00a0The research was funded by\u00a0abrdn\u00a0Financial Fairness Trust<\/a>.<\/em><\/p>\n

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Support for childcare in the UK is complex, partial and provision is geographically patchy. There are several streams of support available \u2013 some financial, some in-kind, some universal, some means tested \u2013 as well as differences across the devolved administrations. There have been recent increases to the free hours of childcare<\/a> for working parents that have been generally well received. However, there remain issues for parents and providers. For example, the increased free childcare hours often do not address working parents\u2019 needs or cover the full cost of childcare. Low-income parents can therefore find themselves having to reclaim additional childcare costs through Universal Credit<\/a>, which can be complicated and insufficient.<\/p>\n

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For low-income families, reclaiming additional childcare costs through UC involves paying the costs upfront and then reclaiming them each month through the online system, after the childcare has been provided. Childcare fees are reimbursed up to 85 per cent of costs, up to a maximum of \u00a31,015 per month for one child and \u00a31,739 per month for two or more children. However, the amount that parents are reimbursed for their childcare is included in their overall Universal Credit award, not separately identified or ring-fenced. It is also means tested. This means that the total Universal Credit payment, including the amount for childcare, can go up or down, depending on household earnings, as the overall award is reduced by the 55 per cent taper rate for earnings above the work allowance (amount\u00a0some\u00a0claimants can earn before the taper is applied). There is, therefore,\u00a0often a big shortfall between the contribution they get, and\u00a0the full amount of childcare costs they have paid for.<\/p>\n

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New research into\u00a0childcare for\u00a0low-income\u00a0families on Universal Credit<\/h3>\n

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Drawing on\u00a0the findings from qualitative\u00a0interviews with\u00a022 low-income parents in receipt of Universal Credit (UC), our research\u00a0explored\u00a0how\u00a0they\u00a0manage childcare costs, as well as their broader experiences of childcare and work conditionality requirements. This work is\u00a0of interest to\u00a0politicians and policymakers\u00a0as they\u00a0develop\u00a0their\u00a0strategy for reducing child poverty, in part through increasing economic activity rates and earnings in families and improving early years learning. The Labour Party has also promised to \u201cmake work pay\u201d through its New Deal for Working People and increases in the National Minimum Wage.\u00a0In November 2024 they published the \u201cGet\u00a0Britain Working\u201d White paper<\/a>.\u00a0Ensuring these goals are met for low-income families will depend on the availability of affordable, quality childcare that can meet the diverse needs of all children.<\/p>\n

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What did the research find?<\/h3>\n

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The parents who took part in our study welcomed the free childcare hours. Yet currently, many low-income families continue to face high childcare costs because\u00a0they can\u00a0require more childcare hours than\u00a0are\u00a0offered\u00a0for free;\u00a0there are variations in support for childcare costs in the devolved\u00a0nations;\u00a0providers may charge parents more than the subsidised rates they receive from government, for example, for food; there are earnings thresholds for eligibility for free childcare for working parents; there are no free hours of support for after-school clubs\u00a0and funded childcare during school holidays is limited.<\/p>\n

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Although\u00a0parents\u00a0on UC can reclaim some of their costs through the UC childcare element if they (and their partner if\u00a0they are in a couple) are working, most in our sample\u00a0found the childcare support in UC to be onerous, complicated and\u00a0inadequate.The\u00a0most challenging issues were linked to the system of monthly assessment\u00a0which meant that parents\u2019 reimbursements were not enough to cover\u00a0the\u00a0full cost of childcare:<\/p>\n

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\u201cThere wasn\u2019t that much \u2026 when it came back from UC.\u201d<\/strong><\/p>\n

Fiona, couple with one child<\/p><\/blockquote>\n

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Monthly assessment also meant that the\u00a0childcare contribution could vary if childcare costs\/earnings and\/or household circumstances changed month to month, also making it hard to decipher the accuracy of payment, and to budget.<\/p>\n

The requirement to pay childcare costs upfront, in advance, and then wait to be reimbursed for the hours\u00a0of childcare\u00a0used within their UC monthly assessment period meant delays in receiving reimbursements and ongoing challenges meeting childcare costs:<\/p>\n

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\u201cThey were just too slow making the payments \u2026 I did get it back in the end, but to begin with I was just like basically paying it out of like my budget, and obviously my budget\u2019s not massive to begin with!\u201d<\/strong><\/p>\n

Rachel, lone parent with two children<\/p><\/blockquote>\n

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Delays are especially problematic for parents whose childcare invoices span two UC monthly assessment periods or those who have to pay more than one month\u2019s childcare in advance. Both scenarios meant claimants could wait two months to receive what they are owed:<\/p>\n

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\u201cSo\u00a0I actually paid that in June, but because it was for like June and July \u2026 They didn\u2019t pay it until August or September, so it was a long time.\u201d<\/strong><\/p>\n

Rachel, lone parent with two\u00a0children<\/p><\/blockquote>\n

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The administrative burden of submitting monthly evidence of fees was additional work for working parents and providers and increased the risk of errors, which could lead to additional delays in payments.<\/p>\n

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\u201cThere were problems with [childcare payments] \u2026 there was always some kind of problem. It\u2019s like always. \u2026 it\u2019s like a month never went by. And I mean I\u2019m sure you can understand the frustration when I\u2019m working full-time.\u201d<\/strong><\/p>\n

Gina, lone parent with one child<\/p>\n

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There were also other issues with the UC childcare element included\u00a0around a general lack of information, limitations of support for upfront costs and poor communication etc which we also explore in the report.<\/p>\n

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As well, outside of Universal Credit support there were additional childcare challenges such as\u00a0barriers to accessing two-year old childcare; poor availability of childcare in some areas;\u00a0providers being unable to meet the needs of children with more complex needs;\u00a0issues with suitability of after school clubs \u2013 especially for older children.<\/p>\n

Some\u00a0parents\u00a0had to reduce their hours of work; use more expensive providers; or were obliged to use poor quality childcare they were not happy with.<\/p>\n

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The childcare challenge however was complicated for working parents facing additional conditionality requirements from the Department for Work and Pensions (DWP) to increase their working hours felt that this threatened to undo work-care arrangements which they had struggled hard to achieve.\u00a0Many jobs available to parents in our sample were not family-friendly in that they did not offer flexible work arrangements or the option to work from home. This made the extra conditionality demands seem especially unfair and hard to achieve for low-income parents.<\/p>\n

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Parents were facing these childcare challenges alongside other benefit-related barriers to work or increasing their hours, including the loss of entitlement to other means-tested support if their earnings rose above certain thresholds\u00a0as reported in our\u00a0recent report<\/a>\u00a0and, for couples, the lack of a second-earner work allowance in UC<\/a>.<\/p>\n

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What can be done?<\/h3>\n

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Our main recommendation is\u00a0to make pre-school childcare for working parents on Universal Credit fully free and pay childcare costs directly to providers across the UK with a one year one year run on of access to free childcare for working parents on UC with pre-school children so that the support would only end if claimants had a nil UC payment for 12 consecutive months.<\/p>\n

In the interim (as it may take time to establish paying providers directly) reform of the childcare element of Universal Credit to:<\/p>\n

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