Question to the Department for Work and Pensions:

To ask Her Majesty's Government what assessment they have made of the number of recipients of universal credit discouraged from taking employment by the low level of net financial benefit from being employed due to associated costs, such as transport and childcare, known as the "benefit trap".

No such assessment has been undertaken.

UC recipients in work now benefit from a reduction in the UC taper rate from 63% to 55%, and for those eligible customers an increase in the work allowance by £500 per year meaning that working households will be able to keep more of what they earn and strengthening incentives to move into and progress in work.

The National Living Wage has risen from £8.91 to £9.50 an hour from 1 April. That means a pay rise for millions of the country’s lowest paid workers – worth an increase of over £1,000 to the annual earnings of a full-time worker on the National Living Wage.

The Department is aware that for some UC claimants’ childcare costs presents challenges to entering employment. To support parents to become financially resilient by moving into work and progressing in work, eligible UC claimants can claim back up to 85% of their registered childcare costs each month regardless of the number of hours they work, compared to 70% in Tax Credits. This is up to the maximum amount of £646.35 per month for one child and £1,108.04 per month for two or more children. For families with two children, this could be worth over £13,000 a year.

This support is available to all lone parents and couples, regardless of the number of hours they work. For couples, both parents need to be in paid work to be eligible unless one of the allowable exceptions is met.

The UC childcare policy aligns with the wider government childcare offer in England and there are similar funded early learning offers in devolved nations. The Free Childcare offer provides 15 hours a week of free childcare in England for all 3- and 4-year old’s and disadvantaged 2 year old’s, doubling for working parents of 3 and 4 year old’s to 30 hours a week.

The UC childcare element can be used to top up a claimant’s eligible free childcare hours if more hours are worked and childcare required. This offer means that for some claimants’ childcare costs should not present any barriers to entering work.

UC claimants who need help with upfront childcare costs to enter employment or significantly increase their working hours can apply for help from the Flexible Support Fund (FSF). This is a non-repayable payment that will pay their initial childcare costs directly to the provider up to the first salary received.

In order to achieve our long-term goals of driving up productivity and levelling up, we are supporting people in work to ensure they have the right skills and opportunities to progress out of low pay. Through providing right infrastructure we will support an ambitious and productive workforce suited to meet the UK’s future demand.

Through a staged rollout from April 2022 onwards, 2.1m low paid Universal Credit claimants will be eligible for support to progress into higher paid work. This will be provided by work coaches and focus on career progression advice, such as considering skills gaps, identifying training opportunities, or looking for opportunities for the claimant to progress in their current role or in a new role. Jobcentres will be supported in this new role by a network of 37 Progression Champions across Great Britain who will spearhead the scheme. They will work with partners to address local barriers that limit progression, such as transport and childcare.