Single mum Nichola Salvato will ask for Supreme Court ruling on childcare payments

Nichola, of Brighton, won her claim at the High Court who found that the Department of Work and Pensions (DWP) policy that parents who receive Universal Credit should meet their childcare costs in advance was discriminatory and irrational.

However the DWP appealed to the Court of Appeal, which ruled in its favour. It found that while the "proof of payment" rule does indirectly discriminate, the difference in treatment is justifiable and the rule is not irrational.

Now Nichola, a 49-year-old mother of one, has decided to seek permission to appeal to the Supreme Court because she believes her case raises issues of public importance that warrant its consideration.

• She believes the DWP should have to justify why a less intrusive measure like requiring an invoice rather than a receipt could not be used.
• Her claim raises a serious and wide-ranging social problem in that the proof of payment rule is liable to prevent parents, particularly women, from getting into work. Latest figures suggest 500,000 working parents are affected by the Appeal Court ruling.

Nichola’s legal team will argue that Appeal Court judges were wrong to reject the High Court ruling that the proof of payment rule is disproportionate and wrong to say that Mr Justice Chamberlain took a mistaken approach when he said the DWP should have explained why it had rejected proof of liability as an alternative to the rule.

Nichola 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 said 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).

Nichola took her case to the High Court, in September 2018, after she began working full time as a welfare rights adviser for a housing association, and needed childcare 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, 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”.

Nichola Salvato said:

“Although I’m very disappointed that the Court of Appeal did not uphold the High Court ruling, I am hopeful that that the Supreme Court will address the issue. So many of us single parents want to work but find the upfront childcare costs through Universal Credit an impossible barrier, meanwhile the government continues to support better off families with their childcare costs in advance via the tax-free childcare system. The system is clearly discriminatory, and the Court of Appeal agrees that it is discriminatory, but has said the government is entitled to discriminate unless I can show that there is an easy and better way. I don’t think that is correct and I will continue my fight to get our voices heard. Affordable, accessible childcare support is fundamental to our infrastructure if the government want to achieve higher levels of employment among single mums and reduce child poverty.”

Nichola’s 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 asks for permission to appeal to the Supreme Court.

Dan Paskins, Director of UK Impact at Save the Children, said:

“We were deeply disappointed by last week’s judgement from the Court of Appeal. We have campaigned with parents on this issue for years, and they have told us this unfair system 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. We look forward to supporting the appeal process in the hope that this fundamental flaw in the system can be fixed.
“There is clear evidence that the design of the system is causing working parents to struggle. 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 urge the UK government to continue to look at this issue and make sure that parents are not blocked from work because of the design of the Universal Credit system.”

Victoria Benson, CEO of Gingerbread said:

“We’re deeply disappointed at the Court of Appeal’s decision to overturn the ruling of the High Court on Nichola’s claim and we support her bid to take her claim to the Supreme Court. This is a devastating step backwards and a blow for single parents up and down the country who are being pushed into desperate financial circumstances due to the unfairness of the current welfare system. Gingerbread’s research with single parents has shown that high costs of childcare is one of the leading causes of problem debt among single parent households, limiting their ability to work full-time and make work pay. Single parents like Nichola should not be penalised for working and plunged into crippling debt just to pay expensive upfront childcare costs.”

Helen Donohoe, Policy Advisor at PACEY said:

“We know that many families, particularly single parents, are put in an extremely difficult position because of Universal Credit’s current requirement for upfront childcare charges. And whilst no registered childcare provider wants to turn away a family in need, most are not in a position themselves to cover the cost of delivering that place particularly without greater certainty of receiving these payments.
“We hope that Nichola’s case, including evidence submitted by PACEY and our members will be recognised at Supreme Court so that the Government finally facilitates a fairer repayment process that prevents vulnerable families from entering a ‘cycle of debt’ in order to access employment or training.”

Purnima Tanuku OBE, Chief Executive of National Day Nurseries Association (NDNA) said:

“Nichola’s case is extremely important both for parents and childcare providers. The Universal Credit upfront requirement of proof of payment have left many parents and families distressed and sometimes getting into debt. It has also left providers with serious cash flow issues and uncertainty on top of existing financial burdens.
“As a result our member nurseries have some parents who cannot take up places or are really struggling financially due to the upfront payment ruling. This is depriving children of access to high quality education and care which is vital for all children, especially those from families on low incomes, so they can fulfil their potential.
“We need a system which can support both children into early education and also their parents into work or training. The Universal Credit rules continue to be a barrier to both.”

Nichola’s solicitor, Carolin Ott of Leigh Day said:

“Our client believes that the current system of childcare payments to parents who claim Universal Credit is causing great hardship to many others besides her and for that reason her application for permission to appeal to the Supreme Court is of great public importance. She believes that it should be for the Secretary of State to show why an alternative measure requiring an invoice rather than a receipt cannot be used in circumstances where requiring proof of payment is discriminatory. It is hoped that Nichola’s case, and that of thousands of other parents, can be made at the Supreme Court.”

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