Employers For Childcare’s response to Government Consultation on Universal Credit

Employers For Childcare has submitted written evidence to the Work and Pensions Committee at Westminster on ‘Universal Credit: the wait for a first payment’. In our response, we highlighted our work with families who receive Universal Credit and the issues they face. One of the key challenges families report once they apply for, or move onto Universal Credit, is the long wait of five weeks, or in some cases longer, for a first payment. This unacceptable wait can leave families in a negative financial situation and has the potential to push people into financial crisis rather than supporting them or lifting them out of poverty. As a result, some families are left without enough money to cover the basics essentials and may be pushed into debt.

Upfront childcare costs

We also highlighted the issues around payment of upfront childcare costs. The long wait for a first payment is exacerbated for families who receive Universal Credit payments to support them with the cost of childcare. This is because Universal Credit requires claimants to pay for registered childcare upfront and claim reimbursement after the childcare has been provided. This requirement, alongside the minimum five week wait, often means new claimants who have childcare costs will have had to pay two months of childcare fees before receiving their first Universal Credit payment.

We have raised the significance of this problem for parents and childcare providers with political representatives and in other policy consultations. However, we are disappointed that little progress has been made to date to change this policy within the system.

Advance payments

In our response, we also raised the issue of Advance payments which must be taken as a loan and then repaid out of a claimant’s Universal Credit payment. We are concerned that this has the potential to push people further into debt and poverty before they have received their first Universal Credit claim. We would strongly advocate for the Government to change the Advance payment to a one-off, non-repayable grant to support new Universal Credit claimants through the period before they receive their first payment. Ultimately, this would reduce financial pressure on households in the short and longer term and result in fewer people getting into debt.

Family Benefits Advice Service

For further information on Universal Credit, see our factsheet on our website, available here. For personalised advice, call our Family Benefits Advice Service on Freephone 028 9267 8200 or email hello@employersforchildcare.org. We advise anyone considering a move to Universal Credit to seek independent advice before doing so, as it may not be the best form of support available to them.