PARLIAMENTARY WRITTEN QUESTION
Universal Credit (24 October 2014)

To ask the Secretary of State for Work and Pensions, if he will make an assessment of the potential merits of universal credit access to childcare accounts equivalent to those proposed in the Childcare Payments Bill for claimants of tax-free childcare.

Asked by:
Sir Stephen Timms (Labour)

Universal credit prepares claimants for the world of work in which around 75% of employees are paid monthly and in arrears. Monthly payment of benefit, which includes support for childcare costs that have been paid out, makes for more straightforward reporting and helps households to budget on a monthly income, which eases the transition into paid work.

Moving to a system of ‘childcare accounts’ which ring-fences childcare costs would complicate the system for these claimants. It would add complexity to the Universal Credit system, which is being rolled out in a safe and controlled manner and could potentially increase the administration costs of running two systems in parallel.

We have worked with Her Majesty’s Revenue and Customs (HMRC) to support claimants that may wish to switch between Universal Credit and Tax Free Childcare. It will be easy for parents to register and open a childcare account online for Tax Free Childcare, and those who wish to move back to Universal Credit may do so without having to report the change to HMRC. Both systems are designed to be simple, responsive and flexible.

We recognise the importance of providing information and support to help parents make an informed choice about which scheme to access. Alongside wider guidance and information, we will provide support and online tools for parents choosing between Universal Credit and Tax-Free Childcare.

Answered by:
Steve Webb (Liberal Democrat)
29 October 2014