Iain Duncan Smith’s flagship Universal Credit scheme will do little to help single parents increase their working hours, a new report shows.

The report ‘Paying the price: Single parents in the age of austerity‘, from the charity Gingerbread – who provide advice and support to single parents – found that extra help for childcare costs to be rolled-out within Universal Credit don’t go far enough.

Under Universal Credit, support for childcare costs will increase from 70% to 85%. But a decade-long cap on childcare costs parents can claim back, mean it won’t make financial sense for single parents to move from part-time work into full-time employment.

The cap on childcare costs only allows up to £175 a week for a nursery place for one child, or £300 a week for two or more children.

Under Universal Credit the amount parents can claim back within the cap will rise from £122.50 a week to £149 a week, for one child. However, the average cost of childcare in the UK currently stands at around £212 a week – rising to as much as £283 a week for full-time care in London.

Even with the higher level of financial support, single parents will still struggle to pay for the care of their children, making the prospect of working more hours a distant pipe dream.

According to the report, nearly half of all single parents (47%) are already having to borrow money from friends, family or banks to pay for rising childcare costs.

Single parent Karen, from Surrey, has two children, aged four and five:  “I’m living in my overdraft. Although tax credits do help with childcare costs, the expense is still crippling.

“Childcare costs are my biggest monthly outgoing. I’m lucky to work in a school so it means I don’t need childcare for my daughter during the holidays, but money is still really tight.”

Gingerbread is calling on the government to raise the cap on childcare costs to more accurately reflect today’s prices. The charity is also calling for a review into childcare support systems, to ensure they are still ‘fit for purpose’.

Gingerbread Chief Executive Fiona Weir said: “Childcare costs are putting single parent families under severe financial strain.

“Childcare just isn’t affordable for many and it is very worrying that single parents are having to turn to friends and family banks and credit cards to try and cover costs.

“We welcome government plans to increase the amount of support available – but the cap on costs means too many single parents will see little benefit.

“The government must honour its commitment to make work pay and swiftly bring in extra financial support – parents can’t afford to wait any longer.”

She added: “Although low-income parents will be able to claim up to 85% of costs under universal credit, this will still be capped at a limit which has remained unchanged since 2005: £175 for one child and £300 a week for two or more children. Since then the average cost for a part-time nursery place has increased by around 70%.”