DWP: Universal Credit childcare rules declared unlawful as single mum’s win High Court battle

Victory could open the doors for thousands after a top judge declared that UC childcare rules discriminate against women in a legal challenge brought by 49-year-old mum Nichola Salvato

Universal Credit policy previously insisted that claimants would have to pay the costs of childcare in the first instance, and then claim the costs back later.

The case was brought by Nichola Salvato, a 49-year-old benefits advisor from Brighton who struggled after moving jobs in September 2019.

She was forced to cut her hours and borrowed £2,000 from payday lenders and family to cope with childcare costs for her 12-year-old daughter.

Parents on Universal Credit can claim 85% of the cost of childcare, up to a cap of £646 per month, for each child under 16.

However, parents must pay up front before claiming the costs back later – often leaving parents with no choice but to defer paying bills, rents and mortgages creating a spiral of debt that even when in work is hard to climb out from.

Nichola had to cut her hours to look after her daughter, 12, and was forced to borrow £2000 from payday lenders and family members to cover childcare costs.

Mr Justice Chamberlain backed Nichola’s claim that the rules were “irrational” and were contrary to Article 14 (covering discrimination) of the European Convention on Human Rights.

The judge said the rules were a material contributor in making Nichola financially worse off, which resulted in “a cycle of debt” and “psychological effects.”

He added that because the vast majority of those claiming childcare costs on Universal Credit are female, “the decision has a disproportionate effect on women”.

However, this is not the end of the battle – as the Department for Work and Pensions has since said they are now looking to overturn this ruling in the Court of Appeal.

A DWP spokesperson said: “This is currently a matter for the Court and the Secretary of State is appealing this decision”.

Figures from August last year show that 52,000 households claimed childcare costs under Universal Credit, with 42,000 of those made up from single-parent families.

But those figures are out of date, and Save the Children said the ruling could help “half a million parents up and down the country to stay in work and stay out of poverty” due to knock-on effects elsewhere in the system.

The charity’s Becca Lyon, who backed Nichola’s case, said she was “delighted” adding: “For years we have been hearing from parents that the system is unfair is forcing them to run up debts, face financial hardship, or even drop out of work altogether because they can’t afford to pay childcare or nursery fees in advance.

Nichola, said today she was “over the moon” that the “unfair and discriminatory” rule had been defeated in the courts.

She said: “It seemed ridiculous that the most hard up families getting help for childcare costs through Universal Credit had to find the money for childcare costs upfront, sometimes thousands of pounds per month.

“While better off families earning up to £200,000 per year got help for their childcare costs in advance through the tax free system.

“It is such a clear barrier into work”.

The charity’s Becca Lyon, who backed Nichola’s case, said she was “delighted” adding: “For years we have been hearing from parents that the system is unfair is forcing them to run up debts, face financial hardship, or even drop out of work altogether because they can’t afford to pay childcare or nursery fees in advance.

“Today’s judgement will help half a million parents up and down the country to stay in work and stay out of poverty.

“As we come out of the pandemic and the economy begins to recover, access to childcare is especially important to get the economy moving again.

“We look forward to working with Nichola and the DWP to make sure this change is implemented quickly and in the best way possible for families.

Nichola’s lawyer Carolin Ott, of Leigh Day, said: “Universal Credit was designed to support parents moving into or advancing in work.

“Yet our client, like thousands of others, found herself unable to pay for childcare upfront, facing severe hardship and forced to reduce her working hours.

“The Secretary of State committed to a ‘test and learn’ approach in rolling out Universal Credit yet refused to listen to the many campaigning organisations and individuals who have raised this issue for a number of years.

“Our client hopes that the Secretary of State will accept the ruling and take urgent steps to fix this perverse situation which, as noted by the Court, is a barrier to work and has disproportionately prejudicial effects on women.”

Victoria Benson, Chief Executive of single parents’ charity Gingerbread, said: “Nichola’s win is great news for single parents who are unfairly hit with the burden of upfront childcare costs.

“Single parents need childcare in order to work but it’s often impossible for them to find hundreds of pounds to pay for childcare upfront. This leads to a spiral of debt and pushes too many into poverty.”

A DWP spokesperson said: “This is currently a matter for the Court and the Secretary of State is appealing this decision”.