Parents on Universal Credit will have to find up to £800 extra to pay for childcare over the summer, with some resorting to payday loans to cover the cost, according to a report by Save the Children

The report says that thousands of hard-pressed families will have to take out loans or borrow from family and friends to cover the shortfall – or even give up work altogether. Parents can claim up to 85 per cent of their childcare costs under Universal Credit but they have to cover the upfront costs first and then claim the money back, which can take up to a month.

Childcare costs increase during the school holidays when many parents rely on holiday clubs or childminders while they are at work. However, even parents of pre-school-aged children are affected, as they lose their free childcare entitlement during the holidays.

A parent with a three or four-year-old who usually receives 30 free hours of childcare could face an increase of between £530 to £832 during the summer holidays, depending on where they live.

There are 30,000 parents in England currently getting support with childcare through Universal Credit. This is set to rise to half a million families when Universal Credit is eventually rolled out.

Martha Mackenzie, Save the Children’s Director of UK poverty policy, said “It’s simply not right that families are being driven into poverty and debt by soaring childcare costs. Parents tell us it feels as if the system is stacked against them. They rely on childcare to go to work but when the school holidays come around they find themselves faced with sky-high childcare bills they can’t afford. They are having to resort to desperate measures – cutting back on essentials, falling behind on bills or getting into debt – just to go to work.”

“Instead of setting families up to struggle, the government must change the system so that parents can get help with their childcare costs before they need to pay fees. This would make a massive difference to parents and children living in poverty – and it wouldn’t cost more money.”