One of the central tenets of Universal Credit is that everything the claimant does must be made as difficult as possible. The treatment of childcare costs is a prime example.
For working claimants UC pays 85% of childcare costs up to a maximum of £646.35 for one child or £1104.08 for more than one child. In the most expensive areas of the country those amounts are wholly inadequate.
Most childcare providers demand payment up front. Those payments are only reimbursed when the care takes place, which often leaves claimants out of pocket for several weeks. An example will demonstrate this.
Start: 6th April
End: 5th May
Payment Date: 12th May
Costs of £725 are paid on 30th April and reported the same day, for care that takes place between the 1st and 31st May.
Someone new to the game might expect £616.25 back from UC on 12th May (725 x 85%). The payment would only be £99.40. This is because there are only five days of care (1st-5th May) which are in the current assessment period. The other £516.85 is reimbursed to the claimant on 12th June, over six weeks after they paid out.
Is There Any Help For Upfront Costs?
Yes, but it’s patchy. The two possibilities are budget advances and payments from the Flexible Support Fund (FSF)
This is normally available for one off household purchases or to obtain or retain work. The following conditions must be met.
1. Claimant must have received benefits for six months continuously.
2. Employment earnings received in the last six months must be less than £2600 (£3600 for joint claims.)
3. There must be enough benefit left to repay the advance. This will exclude those claimants who already have a lot of deductions.
Only one budgeting advance can be outstanding at any one time. If you’ve already got one, then tough.
Flexible Support Fund
If a claimant has started work, but not received their first wage, they may be eligible for a payment from the Flexible Support Fund. This is entirely at the discretion of the service leader in the job centre. You might get it, you might not.
A More Civilised Way?
It has been suggested that childcare costs be paid directly to the provider. This would remove much of the burden from the claimant, although they would still have to make up the difference between the amount charged and that paid from Universal Credit.
Other Problems with Childcare Costs
Childcare must be paid for and reported in the same assessment period. In the example above if payment was made on 30th April but not reported until 6th May, the costs would be referred to a decision maker for late reporting, instead of being automatically paid back. In practice, costs are almost always allowed. This is just another way of increasing delay and typical of the spite that pervades Universal Credit.
If reimbursement is allowed, the amount is calculated manually and not by the service. Fingers crossed you have a numerate case manager. Don’t be afraid to ask how your childcare costs have been worked out.
The automated payments can’t be relied on either. Up until recently, if there was one child with care costs, but two or more children in total on the claim, the service calculated the child care costs with an upper limit of £1104.08 instead of the correct £646.35. The claimants affected were expected to make good the over payments when the mistake was discovered months later.
Work is the Best Route Out of Poverty
But is it really? Childcare and transport costs, bigger council tax bills, increased deductions from benefits and sixty three pence clawed back for every pound earned over the work allowance, means that claimants can be no better off. Far from being the best route out of poverty, work is often a path back to where you started from.