Support for childcare costs in universal credit

28 November 2013

Support for childcare costs in universal credit briefing [ 190 kb]

Citizens Advice advised 2.1 million people on 6.6 million problems in the year 2012/13. In the last four quarters for which statistics are available, bureaux gave advice on almost 3 million enquires on benefits and tax credits

Citizens Advice supports the aims of universal credit and has remained actively involved in working with the Government to help realise the objectives of universal credit. We believe it is important that the system is as simple as possible to use, and that financial traps and cliff edges within the system do not undermine the ability of claimants to make work pay.

We welcome the extra £200 million support for childcare costs in universal credit announced in the budget of 2013.The Government has proposed using this extra funding to give 85 per cent childcare costs to families if all parents are earning above the income tax threshold. The lowest income working parents will receive help with 70 per cent of childcare costs. We believe that this proposal if implemented will undermine the aims of universal credit.

We are concerned that this proposal creates a system that is more complex, less flexible and is not targeted at those who are most in need. As a result some parents, particularly those earning at or near the minimum wage and often being expected to work variable hours, will have very limited options to make work pay.

As well as explaining our concerns with the current proposal our briefing identifies four worrying situations that, as a result of this proposal, parents may encounter as their child grows up.