49-year-old single mom wins landmark universal credit lawsuit

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A single mother who found herself in £ 2,000 in debt trying to pay for childcare has won a landmark universal credit lawsuit to get the fees prepaid.

Nichola Salvato, 49, has filed a lawsuit against Universal Credit’s “proof of payment” policy that only refunds money to parents after it has been spent.

She argued that the money should be paid to parents in advance as long as they have proof that they are responsible for the payments – as is the case with housing costs.

Judicial review by the High Court ruled in favor, Judge Chamberlain concluded that the policy was illegal because it had “disproportionately detrimental” effects on women.

He said the policy was to “have a greater negative effect on women than on men” because women earn “considerably less” than men as a group.

Ms Salvato (pictured) argued that the money should be paid to parents in advance as long as they have proof that they are responsible for the payments - as is the case with housing costs

Nichola Salvato, 49, (pictured) has taken legal action against the Work and Pensions Department’s ‘proof of payment’ policy of only refunding money after it has been spent

Ms Salvato from Brighton, East Sussex, attempted to return to full-time work in her role as a housing association adviser once her daughter turned 10.

As it stands, the Department of Work and Pensions (DWP) will only reimburse parents and guardians for 85% of their childcare costs through their Universal Credit payments once it receives the payment. proof that they were paid – rather than when they were hired.

Ms Salvato was forced to rely on payday lenders to pay for childcare – and ended up owing £ 2,000.

She suffered from anxiety as she struggled to pay childcare expenses and eventually had to reduce her work hours.

Ruling in her favor, Chamberlain J. added: “The proof of payment rule has contributed to materially worsening the plaintiff’s situation – financially, psychologically and ultimately in terms of being able to achieve her ambition to work full time – which ‘it would not have been if (the childcare expense component) had been payable upon proof of obligation to pay the childcare expenses.’

In a statement after the decision, Ms Salvato said: “I am delighted with the decision, I have always thought the rule was unfair and discriminatory.

The High Court review (pictured) found in favor of Ms Salvato, Judge Chamberlain finding the policy had 'disproportionately detrimental' effects on women

The High Court review (pictured) found in favor of Ms Salvato, Judge Chamberlain finding the policy had ‘disproportionately detrimental’ effects on women

“It seemed ludicrous that the most disadvantaged families who get help with childcare costs through universal credit had to find the money for childcare costs in advance, sometimes in the thousands. pounds per month, while wealthy families earning up to £ 200,000 per year have been helped with their childcare costs in advance through the tax exemption system.

Ms Salvato (pictured) from Brighton, East Sussex, tried to return to work full time in her role as a housing association adviser once her daughter turned 10

Ms Salvato (pictured) from Brighton, East Sussex, tried to return to work full time in her role as a housing association adviser once her daughter turned 10

“This is such an obvious barrier to work, when the purpose of welfare and universal credit reform was that it would act as a work incentive allowing and supporting low-income families to work or work. more and achieve their job ambitions and all the benefits that a family brings.

“I am very happy that the judge ruled that the way child care costs are currently managed through universal credit is illegal and I really hope the DWP recognizes that a rapid change in the system is going to have. a huge and very welcome impact on the lives of hundreds of thousands of low-income families across the country, the very group of people the government says it wants to help – change really can’t come soon enough.

The judge said the DWP’s decision to make the eligibility of childcare expenses dependent on proof of payment “negatively affects” those entitled to childcare expenses, of whom more than 80% are women.

He added that women are “much more likely than men to be denied access” to child care costs because they “do not have enough money to pay child care costs. children out of their own funds before being reimbursed “.

Ms Salvato’s case was supported by Save the Children, the Professional Association for Child Care and Early Years (Pacey) and Gingerbread, a charity that supports single-parent families.

In a statement, Save the Children said the move would help “half a million parents” in England and Wales to stay “in work and out of poverty”.

Currently, the Department of Work and Pensions (DWP) will only reimburse parents and guardians for 85% of their childcare costs through their Universal Credit payments once it receives proof that they have been paid. paid - rather than when charges are incurred (file image)

Currently, the Department of Work and Pensions (DWP) will only reimburse parents and guardians for 85% of their childcare costs through their Universal Credit payments once it receives proof that they have been paid. paid – rather than when charges are incurred (file image)

Becca Lyon, responsible for the campaigns against child poverty of the association, declared: “For years, parents have told us that the system is unfair and forces them to go into debt, to face financial difficulties. or even to quit their job altogether because they cannot afford to pay for child care or daycare in advance.

“As we emerge from the pandemic and the economy begins to recover, access to child care is particularly important to jumpstart the economy.

“We look forward to working with Nichola and the DWP to ensure this change is implemented quickly and in the best possible way for families. ”

At a hearing in November last year, the court heard that about 83% of households receiving the universal credit child care component are single parents and 90% of single parents are single parents. women.

Chris Buttler, representing Ms Salvato, said the current situation was a “catch-22” for parents that excludes them from the workforce.

He argued that the way childcare payments are currently made undermines Universal Credit’s goal of “encouraging and supporting parents looking to move into or advance in the workplace.”

The DWP argued that the universal credit system was designed to reduce errors and fraud, which was a big problem for the previous benefit system, and said paying child care expenses was “beneficial. for women”.

The judge said the policy was to

The judge said the policy was to “have a greater negative effect on women” because women earn “considerably less” than men. Pictured: Therese Coffey, Work and Pensions Secretary

But the judge concluded that the fight against fraud did not justify the discriminatory effect of the proof of payment policy.

He said it would be “more accurate” to say that reimbursement of childcare costs went “to some extent to address significant structural inequality” – that women make up the “vast majority” of those whose access to work depends on the ability to pay for childcare.

Attorney Carolin Ott of the Leigh Day law firm, who represented Ms Salvato, said: “Universal credit was designed to help parents enter or advance in work.

“Yet our client, like thousands of others, found herself unable to pay for child care in advance, faced serious difficulties and forced to reduce her working hours.

“The Secretary of State pledged to take a ‘test and learn’ approach to deploying universal credit, but declined to listen to the many activist organizations and individuals who have raised this issue for several years.

“Our client hopes that the Secretary of State will accept the decision and take urgent action to remedy this perverse situation which, as the court noted, is a barrier to work and has disproportionately detrimental effects on women.”

A DWP spokesperson said: “This is currently a court case and the Secretary of State is appealing this decision.”

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