MPs’ Recommendations First Step Towards Childcare Passport

The Work and Pensions Committee have today (23 December) published the report on their inquiry into the childcare element of Universal Credit.

The Committee says that the way childcare costs are paid in Universal Credit “directly conflicts” with the Government’s key aim for the policy: getting more people into work.Work and Pensions Committee logo

Currently, Universal Credit requires parents returning to work to pay upfront childcare costs and claim these back in arrears, leaving those who cannot afford to meet the costs a choice between getting into debt or turning down offers of work. The inquiry also heard that payments can be delayed causing parents to get into arrears with childcare providers and causing cash-flow problems for nurseries already struggling to cover their costs.

Jonathan Broadbery, Head of Policy & External Relations at NDNA said, “This report shows yet another example of the Government’s childcare policies working against its other aims. The design of the system places burdens on parents and nurseries, making it a barrier to accessing good quality childcare and returning to work.

“If Universal Credit isn’t reformed before it is rolled out to more families the upfront payments requirement will land more parents in debt and create serious cash flow problems for providers. The Government has an opportunity to reform this policy to remove these barriers and prevent further harm being caused.

“The recommendation that payments be made directly to the childcare providers parents choose would take a lot of administration costs out of the system. NDNA’s Childcare Passport proposal would do just that, bringing all forms of childcare support into one, easy to use account. 

“The Committee rightly said that the DWP should not be paying for shortcomings in DfE policy but what the Government should be focusing on are the children, families and childcare providers in the system, not passing the buck.”

NDNA discussed the benefits of the Childcare Passport proposal with the Committee, which would see parents have control over all childcare support and payments made directly to their providers of choice, reducing admin costs and complexity. The organisation also provided evidence of the impact of underfunding on nurseries and the complexity of the current system and the necessity of deposits to ensure staff and other resources were in place when children joined a nursery. 

MP’s recommended that direct payments of Universal Credit childcare support to childcare providers would alleviate the problem of upfront costs, give childcare providers much-needed certainty of income, and substantially reduce the risk of fraud and error.

Rt Hon Frank Field MP, Chair of the Committee, said: “If the Government had set out to design a system to make it harder for parents to get into work, it could hardly have done better than this one. It’s not just driving parents into despair and debt and creating problems for childcare providers—it’s also actively working to prevent the Government achieving its own aim of getting more people into work. And it is simply irresponsible of Government to suggest that the way around this policy’s inherent problems is for struggling, striving parents to take on more debt - still more so to claim, untruthfully, that it is not a debt at all. It clearly is.

“This is about more than employment figures. Good quality childcare enhances a child’s life chances—and that enhances our society and our economy. If the Government doesn’t sort this out, Universal Credit childcare support will work against all that good, as well as against the objectives of Universal Credit itself.”

Read the full report here