The High Court has confirmed that the case brought by the single parent was arguable. Following the decision, the case will now be presented at a hearing in the High Court, on a date yet to be announced.
Nichola, who is represented by Tessa Gregory and Carolin Ott of law firm Leigh Day, has argued that the provision which requires upfront payment of childcare under Universal Credit indirectly discriminates against women because it disproportionately affects single parents who are predominantly women.
She also also argued that the provision which provides that childcare payments can only be recovered if the affected benefits recipients are paid upfront is irrational because it undermines Universal Credit’s stated aim of encouraging and supporting parents seeking to move into or advance within the workplace.
Nicola, 48, worked part-time when her daughter was very young, but after her daughter turned 10 years old, she decided to try to go back to work full-time.
She began a full-time role as an advisor at a housing association, meaning her daughter needed before and after-school childcare, as well as childcare during school holidays.
However, under the Universal Credit system, Nichola, from Brighton, needed to meet the cost of the childcare herself, and then claim them back from the DWP.
Without the funding upfront, Nichola has said she had to resort to using a “payday lender” in order to meet the costs – leaving her with high-interest debt and in constant arrears.
In an effort to try to reduce the costs of childcare, Nichola had to take time off work, ultimately reducing her working hours.
Nichola said: “I am so relieved that the court has allowed me to take my case further so that the DWP will have to face up to its illogical system which forces working parents, especially single mothers, into financially precarious situations, and even forces them out of work altogether.
“All I wanted to do was to work and provide for my child. I was initially very glad that Universal Credit promised to help me become as independent as it was possible to be in my situation as a single mother.
“But the requirement to pay childcare costs upfront, then claim them back from the DWP, made a nonsense of the whole notion that Universal Credit would make work pay.
“Universal Credit is meant to help people to work and provide for their family, not push them into debt.”
Carolin Ott, from the human rights team at law firm Leigh Day representing Nichola, said: “We are very pleased that the court has granted our client permission for a judicial review of the DWP systems which forced her out of full-time work and into debt, the very opposite of what the government said Universal Credit was intended to achieve for people, especially women, who want to go out to work and provide for their families.”
Becca Lyon, Head of UK Poverty Campaigns at Save the Children, who are supporting Nichola’s legal challenge said: “This case offers a glimmer of hope to families who have been pushed into debt and hardship by upfront childcare costs. It just isn’t right that working parents are being forced to take out loans or turn down better paid jobs because they can’t find the money for childcare.
“As a country we should be doing all we can to make sure parents can go back to work, not setting them up to struggle by leaving them thousands of pounds in debt before they’ve even started a new job.
“The government needs to change the system so that it works for parents. That means giving them the money they are entitled to for childcare under Universal Credit before they need to pay their nursery or childminder, instead of leaving them in arrears.
“This simple change in the way childcare payments are made could make a huge difference to struggling families, giving them the opportunity they need to go back to work and boost their pay.”
Liz Bayram, Chief Executive at the Professional Association for Childcare and Early Years (PACEY) commented: “This decision from the court is a positive step forward for both parents and practitioners.
“We know that Universal Credit’s current requirement that claimants are reimbursed for the cost of their childcare place clearly isn’t working and means many vulnerable families are put in an impossible position.
“No registered childcare provider wants to turn a family in need of childcare away but this creates a snowball effect where registered providers are struggling to cover the cost of delivering a childcare place, especially with such low levels of government funding for early education entitlements.
“Providers must remain sustainable and support their own staff and other families, meaning parents like Nichola have to take out loans of up to £1,000 to secure a place or are forced to use less childcare, reduce their working hours or stop working altogether – the opposite of what Universal Credit aims to achieve.
“Universal Credit has to change to recognise the reality for parents and providers alike and we hope that this decision is an encouraging move in the right direction.
“We hope our continued support and evidence will support the DWP to change how it supports parents like Nichola, by paying their childcare costs upfront and then facilitating manageable repayment processes that do not place vulnerable families in greater financial difficulty.”
Victoria Benson, Chief Executive Officer at Gingerbread said: “Gingerbread contributed written evidence for the case and welcomes the decision by the judge to proceed with the legal challenge brought about by single parent, Nichola Salvato against the government.
“Sadly, Nichola’s experiences with Universal Credit and the upfront costs of childcare are not uncommon. Many hard working single parents are forced into desperate financial circumstances due to the unfairness of the current welfare system.
“This decision highlights the urgent need for government to address the failures of the current system and we echo Nichola’s call for changes which would allow single parents to work without being plunged into debt just to pay expensive upfront childcare costs.”
The claim is also supported by the National Day Nurseries Association.
The DWP did not comment at this time due to the case being live.