The Parent Trap: Childcare cuts under Universal Credit

Our report, The Parent Trap: Childcare cuts under Universal Credit, addresses the plight of approximately 100,000 families that will be hit hardest when new childcare measures come into effect under the new benefit system, Universal Credit.

Universal Credit will form a crucial part of the government’s plans to meet its statutory commitment to eradicate child poverty by 2020, by helping to make work pay for families. In order to succeed, sufficient support must be provided for families facing high childcare costs in work.

Accordingly, we welcome the government’s decision to extend help with childcare costs through the benefits system to those working under 16 hours per week, who are not currently entitled to receive this support.

However, the government’s proposals for support with childcare costs under Universal Credit include a change that will substantially reduce the amount of support which some of Britain’s lowest income working families receive. The loss of support with childcare costs through housing benefit and potentially council tax benefit, which is addressed in this briefing, is set to cost 100,000 of the lowest income working families up to £4,000 per year in support with childcare.

This is not a simple cut in support, nor can the support simply be replaced. It is the result of restructuring of support, and specifically, the incorporation of Housing Benefit into Universal Credit. However, the impact of this change does need to be recognised, particularly as it disproportionately affects the lowest income working families, and the government needs to consider ways to offset the impact.

Report

Read our report, The Parent Trap: Childcare cuts under Universal Credit