UPDATED: Upfront childcare support through Advisor Discretion Fund

Parents in Northern Ireland who are claiming Universal Credit or are in receipt of other income-based benefits, can struggle to move into employment, return to work from parental leave, or increase their hours of work, due to the considerable barrier posed by having to pay initial upfront childcare costs.

The current Universal Credit system requires a parent to pay their registered childcare costs upfront, and then receive a portion of these costs reimbursed through Universal Credit. This can take up to six weeks, by which time the parent may have had to find more money to make another payment to the childcare provider for subsequent childcare costs, which are often paid monthly, in advance, at the start of the month.

This can mean that, for some parents, moving into employment is simply not possible without going into debt or using up any savings they may have built up. This barrier to employment has been recognised by the Government and eligible parents can now claim help with upfront childcare costs in the form of a non-repayable grant through the expanded Adviser Discretion Fund (ADF).

Announcing this new development in May, Communities Minister Deirdre Hargey referred to the particular impact upfront childcare costs can have on the ability of mothers and lone parents to get into work:

“Many people do not have the resources to pay upfront childcare costs which most childcare providers require. For women, lone parents and low income families especially, this can act as a major barrier to employment.”

This is an important and welcome development for eligible parents in Northern Ireland. Not only can eligible parents now receive support through the ADF for upfront childcare costs, new regulations also mean that the upfront costs can still be used to calculate the parent’s Universal Credit entitlement, as though the parent had paid them themselves. This will help to ensure that they have sufficient resources to pay for subsequent months of childcare in advance before claiming those costs in arrears from Universal Credit.

Adviser Discretion Fund for upfront childcare costs

From 25 October 2021, eligible parents who are in receipt of, or moving onto, Universal Credit, or who are on another income based benefit, can apply for support through the ADF to cover initial upfront childcare costs that are a barrier to:

  • moving into employment
  • significantly increasing their hours of work
  • returning to work from a period of parental leave eg maternity leave.

Key points:

  • This is a non-repayable grant for upfront childcare costs of up to £1,500
  • The money will be paid directly to a registered childcare provider only
  • A receipt for the upfront childcare costs paid through the ADF can also be submitted for the purposes of calculating the parent’s Universal Credit entitlement (if applicable).

How to apply

Upfront childcare costs are only payable through the ADF for the first month, when a parent is starting work, recommencing employment, or significantly increasing their hours.

However, a parent can make more than one application within a 12 month period, for example if they start a job which later ends, and then start a new job within the same 12 month period.

Parents will need to complete two forms which will be available from their work coach:

  • ADF application form (AD1 form) and
  • Assistance with Upfront Childcare Costs (AD5 form).

The childcare provider will also have to complete some sections of the AD5 form. Once fully completed the forms must be returned directly to the parent’s Jobs and Benefits Office. Staff in the Jobs and Benefits office will be able to advise the parent of the process and the local arrangements to deal with the application forms.

The Work Coach will discuss the application with the parent before providing the AD1 and AD5 forms, but it is important to note that receiving or completing these forms is not a guarantee that an application will be successful. This will be confirmed by the Work Coach, or on receipt of a Confirmation of Payment form (AD7 form).

The maximum overall limit for the ADF is £1,500 in any 12 month period.

If the parent’s childcare provider charges on a weekly basis, rather than monthly, the parent should still only complete one AD5 form. If they wish to claim for a full month, then the figure relating to the full one month period should be completed on the form, rather than the weekly amount. The childcare provider will receive a single payment covering the whole month.

How a payment is made and how it affects Universal Credit

ADF payments are made directly to a childcare provider’s bank account by the Jobs and Benefits Office on behalf of the parent. Once payment is made, the Jobs and Benefits Office will provide the parent with a receipt (AD7 form) as proof of the payment having been made. This receipt is instead of proof of payment being issued directly to the parent by the childcare provider.

If the parent is claiming Universal Credit, they can add these costs to their Universal Credit claim. To do so, the parent should upload the AD7 form to their journal as proof of payment. This will ensure that the upfront costs are treated as though the parent had made the payment themselves. The parent’s next Universal Credit award will be increased to include the reimbursement of 85% of registered childcare paid during the parent’s assessment period, including any costs that were paid by the ADF.

Summary: step by step guide for parents

  1. Request ADF support for childcare: Inform your work coach that upfront childcare costs are a barrier to moving into work or increasing your hours of work – provide evidence of the childcare that you require and the costs you have been quoted.
  2. Complete application forms: Complete forms AD1 and AD5 (provided by your work coach) and ask your childcare provider to complete the relevant information on the AD5 form. Return the AD5 form directly to the Jobs and Benefits Office.
  3. Childcare provider is paid enabling child to attend: Childcare provider will receive payment directly from the Jobs and Benefits Office enabling your child(ren) to take up their place.
  4. Upload your receipt to your UC journal (if applicable): You will receive a receipt (AD7) from the Jobs and Benefits Office. Upload this receipt to your UC journal as proof of your childcare costs, if you are a Universal Credit claimant.

We are here to help

This is both complex and new information for Universal Credit claimants. It is important to note that, aside from payments made through the ADF, there has been no change overall to how parents receive support with their registered childcare costs through Universal Credit. In general, parents will still be expected to pay their fees to the provider, and submit their receipts to Universal Credit in order to receive support.

We will continue to keep this article up to date as further information becomes available. It reflects the most recent information that has been provided to us by the Department for Communities but please note, therefore, that it is subject to change. We have published a factsheet on our website with further detail – available to download here

If you are considering returning to employment and would like further advice on how this change may affect your entitlement to any benefits or help with childcare costs, or wish to find out more about what financial support you may be entitled to, contact our Family Benefits Advice Service for free, impartial and confidential advice. Call us on 028 9267 8200 or email hello@employersforchildcare.org – we are here to help.