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Childcare costs pushing ‘acceptable living standards’ out of reach amid unprecedented cost of living crisis, think tank finds

09 Mar 2022

IPPR Scotland calls for introduction of new childcare grant to support parents struggling to meet upfront costs – as next step towards a ‘Universal Basic Services’ model

 

Amid a cost-of-living crisis, and as one in three families report paying more for childcare than for their rent or mortgage, a leading progressive think tank has today called for urgent action by the Scottish Government to help low-income families with the upfront costs of childcare – one of a range of measures to start redesigning collective services to ease financial insecurity.

 

Currently, parents and carers in receipt of Universal Credit can apply to recoup up to 85 per cent of their childcare expenses – but this leaves many families facing significant upfront costs. Today's research by IPPR Scotland shows that for working parents with pre-school-age children, this forces them into spiraling debt, or having much of their pay packet go towards the previous month’s childcare costs.

 

Researchers at the think tank have called on the Scottish Government to introduce a new grant for parents in receipt of Universal Credit, to negate the up-front costs of childcare and ease the cost-of-living crisis they face - in their newly released report, ‘Universal Basic Services: Building Financial Security in Scotland’.

 

IPPR Scotland’s proposal would see Scotland follow Northern Ireland’s lead – where a non-repayable grant of up to £1,500 is already being made available to parents and carers who receive Universal Credit. A similar policy in Scotland would utilise the powers available to the Scottish Government to mitigate one of the flaws in Universal Credit policy design, enable parents to bridge the gap that exists under current Universal Credit rules, and provide essential support in helping them to meet a minimum income standard. At an average award of £500, it would cost an estimated £5 million per annum, and it is estimated that it could help over 10,000 people in Scotland transitioning into work every year. 


The report is the third and final in IPPR Scotland’s ‘Living Income’ programme which has examined the role of social security and fair work in strengthening financial security. This report focuses on the development of 'Universal Basic Services’ (UBS). The Scottish Government has previously committed to such an approach as part of its work on a Minimum Income Guarantee. This report explores the extent and ways in which the idea of UBS can help reimagine the design and delivery of services in Scotland – both in the immediate term, to tackle the impending cost of living crisis, and long-term, to secure a stronger safety net by 2030 – across childcare, education, social care, and transport.  


Rachel Statham, IPPR Scotland Senior Research Fellow, said:
“Even before they are faced with the impending cost-of-living crisis, meeting significant, essential costs like childcare and transport is locking people out of an acceptable standard of living. This cannot be right in Scotland in 2022.

“As the Scottish government looks to weather the storm ahead, and to ensure that everyone has access to a minimum standard of living in the future, big, bold, ambitious action is needed to redesign our broken welfare system.

” The Scottish government has committed to exploring the idea of Universal Basic Services – like the NHS and our education system. Taking a Universal Basic Services approach to rebuilding families’ resilience – including by reducing upfront childcare costs - across Scotland is a real opportunity to make a difference to people now, and for decades to come. This work can start now”.

 

Mubin Haq, chief executive of abrdn Financial Fairness Trust, said:

“Provision of Universal Basic Services such as childcare, public transport and social care are essential to reducing living costs, especially at a time when costs are rapidly rising.
“Following on from the Scottish Government’s welcome doubling of the Scottish child payment - set to come into effect from next month – today's proposals and work towards Universal Basic Services set out a path towards bringing down costs for families with children, support more parents into work, and build financial security for households across Scotland.” 

Read the report