Court of Appeal to hear Universal Credit childcare appeal

The Court of Appeal is to hear an appeal brought by the Government against single mum Nichola Salvato, who won her claim against the requirement for working parents to provide proof of payment before they can receive Universal Credit childcare payments.

The hearing will begin on 27 July and has been listed for 2.5 days at the Royal Courts of Justice in London.

The Department of Work and Pensions is appealing against a judgment handed down in January 2021, that its mechanism for assessing and paying the childcare costs element of UC, which requires proof of payment from working parents before they receive funding, is unlawful.

The ruling was made after Brighton working mother Nichola, aged 49, brought a judicial review against the “proof of payment rule”, arguing that it put her in debt and forced her to reduce her working hours. The judge held the rule was irrational and subjected Nichola and other mums in her situation, to indirect sex discrimination, contrary to Article 14, read with Article 8, and Article 1 of the First Protocol of the European Convention on Human Rights (ECHR).

He said the proof of payment rule has a disproportionate prejudicial effect on women in two ways. Firstly, the decision to impose the proof of payment rule on the childcare element, which is disproportionately claimed by women, and not on any other element of Universal Credit (such as the housing element) causes women disproportionate disadvantage in accessing the financial support they would otherwise be entitled to. Secondly, the proof of payment rule has a greater adverse effect on women than on men “because women as a group earn substantially less than men as a group”.

Nichola, represented by law firm Leigh Day, says the appeal by the DWP which argues that the High Court was wrong to find that the proof of payment rule was indirectly discriminatory and irrational fails to demonstrate any error of law in the High Court judgment.

Nichola took her case to the High Court after 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, Nichola could not afford the £377.40 of upfront childcare costs that arose in September-October 2018, so she had to borrow the money. The requirement to pay childcare costs before she could claim them back through Universal Credit led to a “cycle of debt where I was constantly owing childcare as well as loan providers and struggling to find the money to cover payments”.

By January 2019, Nichola was “becoming overwhelmed with the juggle of work, childcare, parenting and ongoing poverty”. She had to cut her work to 32 hours, then to 25.5 hours, which reduced her monthly income and increased her dependence on benefits.

Her legal challenge was supported by Save the Children, Gingerbread, the Professional Association for Childcare and Early Years (PACEY) and the National Day Nurseries Association (NDNA) who continue to support her case as she defends her High Court win.

Their evidence supports Nichola’s arguments that payment for childcare fees upfront is vital for working parents and childcare providers alike and that the current system puts families in significant hardship and debt. Their evidence also shows that the payment system is a barrier to working and progressing in work for single parents and single mums in particular.

Nichola is represented by Carolin Ott and Tessa Gregory of Leigh Day and Chris Buttler and Jessica Jones of Matrix Chambers.

Nichola Salvato said:

“Since I brought this case hundreds of women and families have come forward with stories of having to give up jobs, turn down jobs or reduce working hours because of the childcare costs ‘proof of payment’ rule. The court has ruled it unlawful and a barrier to work for single mums, the exact group of people the government claim they want to help into work. The Northern Ireland executive already recognises that the rule is a barrier and discriminatory. I only wish that our government would listen to the voices of hard working single mums across the country, give childcare support to low income families and stop wasting public money, defending ill-considered discriminatory secondary legislation that doesn’t come close to achieving the original aims intended by Parliament when welfare reform was designed. I will be extremely surprised if the Court of Appeal doesn’t uphold the thorough and well explained judgment of the High Court.”

Gingerbread chief executive Victoria Benson said:

“Nichola is not alone – too many single mums are stuck in a cycle of debt, have been forced to reduce their working hours, or have even turned down jobs because they simply can’t afford upfront childcare costs. Single mums don’t have hundreds of pounds put aside for these costs and it’s not unusual for repayment through Universal Credit to take a month. We know single parents want to work and it's clear that this government must remove the barriers that stop them from doing so and provide proper support for mums like Nichola.”

Dan Paskins, director of UK impact at Save the Children said:

“The UK government says that work is the best route out of poverty – but to make that a reality, they need to change the system so that it works for parents, by giving them the money they are entitled to for childcare under Universal Credit, before they need to pay their nursery or childminder. This simple change in the way childcare payments are made could make a huge difference to families on low incomes, giving them the opportunity they need to go back to work, boost their pay and contribute to the economy.”

Leigh Day solicitor, Carolin Ott, who represents Nichola, said:

“Our client is a hard working single mum and she is precisely the kind of person Universal Credit was supposedly designed to support. She wanted to work, provide for her family, and set an example for her child. The High Court found that the proof of payment rule was both discriminatory and irrational. It beggars belief that despite those findings and substantial evidence to show the hardship caused by the proof of payment rule, the DWP is spending taxpayers’ money continuing to fight the case rather than focusing its efforts on fixing the problem.

“We hope that the Court of Appeal will uphold the ruling made by the High Court in our client’s favour to ensure that the many hard working single mums who are hit hardest by this rule receive the support they deserve.”