High childcare costs are making it impossible for some of the poorest families to work their way out of poverty, says the Barnardo's charity in a new report. Many parents in work gain little or nothing from doing extra hours, and may even be worse off – effectively paying for the privilege of working.

Key points

• Under universal credit, once childcare costs are factored in, lone parents with more than one pre-school child will face 'significant disincentives' to work enough hours to lift themselves out of poverty. For example, a lone parent with two children in London will pay £1.61 an hour more than they earn if they work 28 hours or more.
• Lone parents with only one pre-school child could face losing a significant proportion of any extra money they earn – acting as a 'substantial barrier' for families looking to work their way out of poverty. For each extra hour worked between 16 and 24, a lone parent on the minimum wage will potentially gain only £1.10.
• The report calls on the government to increase the proportion of childcare costs covered under the new universal credit system, to 80 per cent instead of 70.
• It also says the government should look at extending the free weekly 'early years' entitlement to education/childcare from 15 hours to 20 (or more) for disadvantaged children.

Source: Paying to Work: Childcare and Child Poverty, Barnardo's
Links: Report | Barnardos press release | BBC report