Universal Credit System ‘Forcing Single Mothers into Debt’

March 10, 2020

The rules around childcare payments for claimants of Universal Credit are believed to be forcing single mothers across England into significant amounts of debt.

According to the charity Save the Children, the situation is piling financial pressures onto single mothers in ways that aren’t fair and ought to be addressed by policymakers in government.

The issue is that the current system obliges parents to pay for their child’s fees for childcare upfront and then claim most of that money back if they’re entitled to do so via Universal Credit.

For an estimated 35,000 single mothers, and around 1,000 single fathers, that means having to find around £1,000 upfront, which will very often involve going into debt.

Mothers in these situations have told Save the Children that they’ve needed to take out loans to help cover their childcare costs, while others have been faced with tough choices about how best to balance their finances and their professional lives.

The charity is supporting a legal challenge being made to the government in the High Court, which will make the case that the Universal Credit system as it currently works for single mothers is unlawful and discriminatory.

It’s hoped that the government might rethink its approach to the way Universal Credit works for single parents so that they don’t have to go into arrears to cover childcare costs but rather that they can claim and receive money they’re entitled to upfront.

“As a society, we believe women should have the same opportunities to work as men,” said Becca Lyon, head of child poverty at Save the Children.

“But not only are women already shouldering most of the burden of childcare, they’re now being unfairly penalised by a system, which makes it even more difficult for them to go back to work.”

The transition undertaken in recent years by the government to consolidate benefit payments into its flagship Universal Credit system has been a cause of financial hardship for significant numbers of people across the country.

A particular problem has been the five-week wait that new claimants generally have to deal with before they receive their first payment, which for a lot of people means resorting to high-interest debt and adding pressure to their already stretched financial situation.

Paul Barber

Head Adviser at our Manchester Office

Tel: 0800 001 4247
Email: enquiries@ukdebt.org.uk

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