Single mum wins landmark Universal Credit court case

Nichola Salvato, 49, from Brighton, was plunged into a ‘cycle of debt’ after having to pay hundreds of pounds upfront for Universal Credit, before being able to claim it back.

The current system has been widely criticised by early years organisations like National Day Nurseries Association (NDNA) and Professional Association for Childcare and Early Years (PACEY), who claim that it not only causes distress and debt for many parents, but it also creates cash flow pressure on struggling providers.

A high court judge ruled on 22 January that the Department of Work and Pensions’ mechanism for assessing and paying the childcare costs element of Universal Credit, which requires ‘proof of payment’ from working parents before they receive funding, is unlawful.

The judgment said that this rule subjected Ms Salvato and other mums in her situation, who account for about 80 percent of all universal credit childcare payment claimants, to indirect sex discrimination and described the rule as ‘irrational’.

Ms Salvato, a welfare rights adviser, said she was ‘over the moon’ about the ruling, saying it was ‘ridiculous’ that hard-up families had to find the money for childcare costs upfront, while better-off families earning up to £200,000 a year could get help for their childcare costs in advance through the tax system.
In September 2018, she began working full time as a welfare rights adviser for a housing association and needed up to 3.5 hours childcare per day for her then 10-year-old daughter.

Although she was working full time, she could not afford the £377.40 of upfront childcare costs that arose in September to October, so she had to borrow the money. This led to what she described as a ‘cycle of debt’ where she was constantly owing childcare as well as loan providers and struggling to find the money to cover payments.

By January 2019, Ms Salvato was becoming overwhelmed with the juggle of work, childcare, parenting and ongoing poverty. She took as much time off as she could to minimise childcare costs and was constantly stressed and worried. Eventually she had to cut her work to 32 hours, then 25.5 hours, which reduced her monthly income and increased her dependence on benefits.