English court finds up-front costs of Universal Childcare Scheme indirectly discriminate against women
The Administrative Court of England and Wales has found that the method of reimbursing childcare costs under the universal credit system constitutes indirect discrimination against women under Article 14 (read with Article 8 and/or Article 1 Protocol 1) European Convention on Human Rights.
The childcare costs element (‘CCE’) of universal credit (‘UC’) currently requires applicants to pay for childcare costs up-front before being reimbursed once payment is made. As was highlighted in this case, this differs from the housing costs element (‘HCE’) of universal credit, which compensates for amounts which claimants are liable to pay.
The case, R (Salvato) v Secretary of State for Work and Pensions [2021] EWHC 102 (Admin) involved a single mother, Ms Salvato, who has an 11-year-old daughter, who worked full-time for 37 hours per week earning approximately £1,900 per month in net take-home pay. Ms Salvato was in receipt of the CCE payment regarding her childcare costs, initially £377.40 per month. However the requirement to pay up front (the ‘Proof of Payment rule’) caused her major difficulties, leading to (in her words) a “cycle of debt where (she) was constantly owing childcare as well as loan providers and struggling to find the money to cover payments".
Unable to meet these demands, she was forced to reduce her working hours to 25.5 hours per week. This she described as “very frustrating”, stating that as well as having the opportunity to “further her career” she would be “less reliant on the welfare state” if only she “could get support for childcare costs in advance”. She pointed out that she was now claiming more UC than she would have been if she had been able to continue working her previous hours.
In arguing that the Proof of Payment rule was discriminatory, Ms Salvato pointed out that women are disproportionately dependent on state-funded childcare in order to access the labour market. As the Proof of Payment rule prevented them from availing of childcare, it therefore affected their ability to access the labour market. Some 80% of those claiming the CCE are women.
Ms Salvato presented evidence from a number of sources, including other women in receipt of the CCE payment as well as policy experts / representatives from Save the Children UK, Gingerbread (a charity working with single parent families), the National Day Nurseries Association and the Professional Association for Childcare and Early Years. These accounts elucidated the knock-on effects of the Proof of Payment rule on childcare providers and nurseries as well as drawing further attention to the “vulnerable” and “stressful” position it placed CCE recipients in.
In defence, the Secretary of State argued that the CCE was “advantageous to women; largely taken up by women and designed to assist them into work”. Further, it was argued that the current system was designed to reduce the scope for fraud and error, as well as the need for overpayments to be recouped where incorrect estimates or projections were made.
Chamberlain J rejected the argument that the CCE was “advantageous to women”, stating that this was “true only in a narrow and irrelevant respect: it makes the members of the (disproportionately female) eligible group better off than they would be without it...the members of that group start off at a disadvantage vis-à-vis those who are not eligible for the CCE, because they are responsible for the care of children.”
In making his judgment, Chamberlain J acknowledged that “the Claimant's evidence in this case comes from a broader range of informed sources than is seen in some other challenges of this kind.”
He concluded that the Proof of Payment rule had “disproportionately prejudicial effects” on women in two ways: as it affected all those entitled to the CCE, more than 80% of whom were women; and because as a group women “earn substantially less than men”, with the result that they could not afford to pay childcare costs out of their own pockets before being reimbursed.
Further, it was stated that as the HCE illustrated, it would be possible to have a system where there is payment on the basis of liability without additional costs to the State.
You can access the judgment in full here.