(10 years, 1 month ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
18:41 - The House divided: - Ayes: 206 / Noes: 274 - Question accordingly negatived.
19:43 - The House divided: - Ayes: 208 / Noes: 272 - Question accordingly negatived.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker
With this it will be convenient to discuss the following:
Amendment 2 in clause 1, page 2, line 4, at end insert—
‘( ) The amount of the top-up payment is 66.66 per cent. of the amount of the qualifying payment where the qualifying child is a disabled child.”
Amendment 1 in clause 14, page 8, line 42, at end add—
‘(3) A child is a qualifying child for the purposes of the Act until the last day of the week in which falls on the 1 September following the child’s eleventh birthday (or eighteenth birthday in the case of a disabled child).”
Catherine McKinnell
New clause 1 stands in my name and that of my hon. Friend the Member for Wirral South (Alison McGovern), whom I wish to congratulate on her new role. It calls on the Government to consider the necessary help that hundreds of thousands of parents of three to four-year-olds need now to cover the ever-rising costs of child care.
Before I elaborate on the new clause further, I wish to reiterate a point that the Opposition have stressed throughout proceedings on the Bill. We welcome any new investment in child care and, in particular, any extra support for hard-pressed parents and families up and down the country who are struggling to juggle work and family life. That is worth remembering because, after all, we are the party which, in government, pioneered investment in early years. The principle that every child matters was at the centre of the Labour Government’s work across all Departments. We are the party that, in government, made no apology for focusing our efforts on, and redirecting any available support to, the children and families who needed our help the most. We are the party that, in government, made it its business to tackle disadvantage and to improve the life chances of every single child from the earliest possible age to give them the best possible start in life.
Andy Sawford (Corby) (Lab/Co-op)
I agree with the case my hon. Friend is making. Does she share my concern about the closure across the country of Sure Start centres, which were a key part of that commitment to supporting children and families, including the Raunds Sure Start centre in my constituency, which the Tory county council is now going to close?
Catherine McKinnell
My hon. Friend makes a very valuable point and I was just about to come to that. We are the party of Sure Start and the thousands of Sure Start centres that existed in 2010. It is not specifically relevant to this debate, but we could not allow it to pass without mentioning the very deep concern up and down the country about the future of our Sure Start centres.
There are concerns, which were made abundantly clear by a number of witnesses in Committee last month, that the Bill does not go anywhere near far enough to provide the support that thousands of parents and families desperately need right now. They need that support now, not in 12 months’ time, which is why we tabled new clause 1. Based on the Family and Childcare Trust’s annual survey, we know that child care costs have risen five times faster than wages since 2010, at a time when wages have lagged behind prices, leaving people £1,600 a year worse off on average. This support is even more vital when we see how much parents have lost out as a result of the Government’s choices: the decisions to cut tax credits, child benefit and maternity pay, and to close thousands of Sure Start centres.
As we saw and read in the news yesterday, research from the London School of Economics and the Institute for Social and Economic Research at the university of Essex shows clearly how the burden of austerity under this Government has fallen most heavily on those with lower incomes. The research found that the Government’s tax and benefit changes have seen the poorest lose about 3% of their incomes, while the richest half of the country have actually seen their incomes increase by 1% to 2%. That blows away the Government’s claims from the start that we are somehow all in this together. The research highlighted the fact that families with children have fared worst of all, which confirms our worst fears. Single parent families, in particular, have lost far more through cuts to tax credits and other support than they may have gained through any tax changes, proving that the Government have given with one hand but taken away far more with the other—so much for being the most family-friendly country. Families have lost out on up to £1,500 a year due to changes to tax credits alone. Tax credits are a vital part of income for many working parents, especially those on the most modest incomes.
When we look at all the tax and benefit changes since 2010, including the Government’s much-lauded and touted personal allowance increases, we see that families have clearly been hit hardest of all, and that will remain the case right up to the general election. A family with both parents in work will be about £2,073 a year worse off and a family with a single parent in work will be about £1,300 a year worse off. Despite the Conservatives’ claim of creating the most family-friendly country and the Liberal Democrats’ supposed belief that families should get the support they need to thrive, the Government have not been family-friendly and they have not stepped in to provide families with the help they so desperately need to get to grips with the soaring costs of child care. Far from stepping in, they have pulled the rug from under the feet of many families. Any extra help for parents struggling with the cost of child care is clearly to be welcomed. However, not only is the Bill too little too late for hundreds of thousands of families, we are disappointed that the Government have so far refused to consider that additional support could be offered to families right now. That is why we have tabled new clause 1.
Mr Jim Cunningham (Coventry South) (Lab)
Does my hon. Friend agree that we can see the Government’s attitude to child care with their closure of more than 400 Sure Start centres?
Catherine McKinnell
Up and down the country, there is deep concern about the disappearing Sure Start services. We know that the worst is yet to come when we look at the dire straits in which many local authorities find themselves and the difficult decisions that many are having to make about their Sure Start services. My hon. Friend makes a very good point: that does sum up the Government’s attitude to support for children and families. They simply wash their hands of the issue whenever it is raised in this House.
We tabled new clause 1 because we want to compel the Government to explore the effectiveness of extending the free entitlement for three and four-year-olds when both parents are in work. The first part of new clause 1 seeks to understand what support the current proposals will provide to the parents who need it most. The free entitlement introduced under the Labour Government, which happily has been continued under this Government, makes a real difference to hard-pressed families. The simple truth is that, months after the Bill was first published and introduced, we are still none the wiser about exactly how many parents will be better off as a result of the top-up payments, or, crucially, by how much.
That stands in marked contrast to our plans to extend the free entitlement for three and four-year-olds, which will be worth £40 a week, or £1,500 a year, to about half a million children. We know from the Government’s impact assessment that of those families who will be newly eligible for support under the Bill—those who are self-employed, or those whose employers do not currently offer employer supported child care vouchers—the average benefit will be about £600 a year. Clearly, that is far lower than the £2,000 per child that the Government have been touting ever since they announced the policy for top-up payments in March.
It is worth remembering that some 520,000 families currently benefit from ESC vouchers. The Government’s impact assessment sets out a number of case studies where families might be better off or, indeed, worse off under the new top-up payments. The impact assessment suggests that families can retain their ESC vouchers if they wish, but goes on to list a whole range of caveats relating to whether parents will be able to continue to qualify, whether they would be better off remaining under the current voucher scheme, or whether the new top-up scheme might be better for them.
Clauses 62 and 63 seek to wind down the ESC scheme over the next few years, closing it to new entrants. Presumably, ESC vouchers will eventually vanish completely. If a parent changes jobs or if their employer stops offering vouchers—this could well happen, as voucher providers are set to see the majority of their business disappear—they will have no choice but to switch to top-up payments, leaving many worse off.
We heard evidence from a wide range of witnesses in Committee last month who cited the Resolution Foundation’s work. It is worrying that the Resolution Foundation had to undertake that work because the Government have not done sufficient work to look at the true impact on parents. The Resolution Foundation suggests that 80% of the families who will benefit from top-up payments are in the top 40% of income distribution. The remaining 20% will go to those in the middle of the distribution scale. If the key aims of the Bill are to support parents with the cost of child care and to help more parents back into work by making work an economically viable option, those figures raise questions about whether its aims are achievable through this Government scheme alone. In contrast, many child care experts agree that Labour’s child care plans, as outlined in new clause 1, meet these twin aims.
Alex Cunningham (Stockton North) (Lab)
I rise to support new clause 1 and specifically to speak to amendments 1 and 2, which are aimed at getting a fairer deal for parents with disabled children by respectively rethinking how we identify qualifying children to expand the definition beyond that planned by the Government, aligning it with the prescriptions of the Childcare Act 2006, and increasing the amount of top-up payment available to support parents of disabled children.
The provisions in clause 14 relate to “qualifying children” and lay out the criteria that such children must meet to be eligible for the scheme. Clause 14 is therefore fundamental to the entire Bill, so it is of the utmost importance that we get its provisions right. Failure to do so risks undermining the entire scheme.
After this amendment was brought forward in Committee, I understand that the Government’s intention was to frame regulations such that a “qualifying child” is defined as one aged under 12 or, in the case of a disabled child, under 17. I do not need to recap fully on the reasoning I set out in Committee; suffice it to say, as I mentioned at the time, that the stated definition of a disabled child does not fit easily with section 6 of the Childcare Act 2006, which places a duty on local authorities to provide sufficient child care for working parents with disabled children aged up to 18 “as far as practicable”.
The Exchequer Secretary objected to raising the age of eligibility for disabled children to 18 on the grounds that the age limit was set in line with the child care element of universal credit. However, it is important to recognise that the regulations on the child care element of universal credit reflect a maximum age that was set more than a decade ago when the child care element of working tax credit was established. Put simply, markedly less evidence was available on how families use child care, and our understanding has improved greatly since.
The Childcare Act 2006, however, was designed to take into account the evidence of child care needs in families with disabled children, which in many cases remain significant up to 18 and beyond. It therefore makes sense to adopt the maximum age set by the Childcare Act, which set a higher age because it was based on a comprehensive review of the available evidence, rather than revert back to an historical maximum age that no longer reflects our best understanding of families’ child care needs.
Through the tax-free child care scheme, the Government are committing significant new resources to support parents with child care costs. This will come at a cost of more than £800 million each year, and my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) made it very clear that we welcome that. There must be some scope to ensure that a balance exists between supporting all parents and those who face significant additional costs.
The additional costs of raising a disabled child are well documented, and the Minister herself noted in Committee that she was “conscious” of these additional child care costs that families with disabled children might have to meet. I need not go into any great detail, but these can include such things as extra nappies or continence supplies, specially designed shoes, IT adaptations and communication aids, as well as specially adapted toys or equipment. That is on top of the day-to-day premium that is paid already in the shape of higher travel and activity costs, and the like.
Maria Miller (Basingstoke) (Con)
I understand what the hon. Gentleman is saying, because it accords with my experience in my constituency, but does he not think that local authorities have an obligation to ensure that there is sufficient care for disabled children? KIDS nursery in my constituency is a specialist nursery for disabled children. Should not local authorities be thinking about providing such services as well?
Alex Cunningham
I have been fighting the ending of specialist nursing provision at my local hospital, because it meets the specific needs of parents of disabled children. There has been a considerable reduction in the amount of money that enables local authorities to meet the demand for essential services—if they were given more means, they might well be able to expand provision—but I agree with the right hon. Lady that someone should take responsibility, and I think that my amendment goes some way towards ensuring that that happens.
In Committee, the Minister said:
“It is right that we make the new scheme consistent with the current framework.”––[Official Report, Child care Payments Public Bill Committee, 23 October 2014; c. 192.]
I urge her to reconsider her decision not to increase support for parents of disabled children. She can help today by increasing the maximum age at which disabled children become eligible for the tax-free child care scheme—and, in future, for the child care element of universal credit —to 18, to align the scheme with the prescriptions of the Childcare Act sufficiency duty, and to give the families of disabled children the support that they need and deserve.
At the same time, the Government should aim to establish a framework that would include all children with disabilities in child care in order to fulfil the basic principles of equality and inclusion. Equitable access to affordable, flexible, high-quality child care would be hugely valuable to children’s social and educational development, not to mention parents’ well-being and long-term economic prospects. In its present form, however, the tax-free child care scheme will not effectively remove the additional affordability barriers from parents with disabled children. To address that inequality, the Government should provide the additional top-up payments for disabled children through the tax-free child care scheme that amendment 2 would provide. I hope that the Minister will consider that proposal.
The Exchequer Secretary to the Treasury (Priti Patel)
It gives me great pleasure to speak in the debate. Let me begin by thanking everyone who contributed to the Committee stage, engaging in constructive dialogue, submitting the Bill to line-by-line scrutiny, sharing their views and giving evidence. I think that all Members found the evidence sessions extremely helpful. Opposition Members tabled a number of well-considered probing amendments that were designed to seek clarification throughout—
Madam Deputy Speaker (Dame Dawn Primarolo)
Order. This is not an opportunity to review all the work that was done in Committee. The debate is very narrow. The Minister should be responding to the debate on new clause 1 and the amendments. I do not want her to come to that gradually; it is the only thing that she should be doing. I have given her a little bit of latitude, but perhaps she will now return to new clause 1.
Priti Patel
I will do so very promptly, Madam Deputy Speaker.
New clause 1 would require the Government to publish, within three months of Royal Assent, an assessment of the benefits of this scheme to parents of three and four-year-old children, together with an assessment of the benefits in addition to the likely benefits of funding 25 hours of free child care per week for such parents.
The Government fully understand the importance of high-quality early education for that age group, which is why they fund 15 hours a week of early education for every three or four-year-old. We have extended that entitlement to the least advantaged 40% of two-year-olds, thus saving their families about £2,440 a year. By the end of this financial year, funding for early education places alone will have risen by over £1 billion during the current Parliament. We have committed ourselves to that substantial investment in early education because there is overwhelming evidence, here and elsewhere in the world, that high-quality early education has long-lasting benefits for children. We have seen big year-on-year improvements in the development of five-year-old children who have benefited from early learning, although we recognise that many factors influence school readiness and later attainment. We have commissioned academically robust and detailed research in order to understand more about the way in which high-quality early education affects children’s attainment and social and behavioural development.
However, it is important to recognise—as the Bill does—that the cost of child care is an issue not just for under-fives, but for school-age children. For many working families, the high costs of child care make it one of the largest parts of the household budget. The Government believe that there is a powerful case for improving access to child care throughout childhood, and to ensure that parents are helped to work if they choose to do so. The new scheme for children up to the age of 12 will build on the £5 billion per year that the Government already spend on early education and child care. It will help many more parents to meet their costs, including self-employed parents who cannot gain access to support under the existing employer-supported child-care scheme.
We recognise that every family is different, and will have different child-care needs and cost. We recognise that no one size fits all. The scheme is therefore designed to provide flexible support for working families, and to cater for different family circumstances. For example, it will allow parents to build up money in their child-care accounts to cover increased costs at holiday times.
As I have already said many times during our debates on the Bill, the Government have made a clear commitment to reviewing the impact of the scheme two years after its full implementation. That was made clear in the impact assessment that was published alongside the Bill. The review will consider the impact on all age groups within the scope of the scheme—which will, of course, include three and four-year olds—but it will not consider the effects of free early education, which is already the subject of extensive evaluation.
The Government take the evaluation of early education very seriously. We have commissioned a significant longitudinal study of early education and development, which will evaluate the effectiveness of the current early-education model in England and, more specifically, the impact of funded early-years education on two-year-olds from lower-income families. It will also update evidence from the effective pre-school and primary education project. It will continue until 2020.
The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) made a number of points. For instance, she mentioned children’s centres. Let me reiterate that the Government want to see a strong network of children’s centres throughout the country, offering families access to a wide range of local and flexible services, tackling disadvantage, and preparing children for later life. Again, we covered in Committee many of the points about what goes on in centres and support in children’s centres.
The hon. Lady also specifically mentioned supply-side provision of child care, which we touched on in Committee, too. There are 100,000 more child care places than there were in 2009 and a lot of work is being done on the supply-side provision of child care, which is the point of this Bill.
Maria Miller
The Minister will have provided a great deal of clarity today for parents who might have been concerned about some of the reports they had read in the papers. I thank her on behalf of my constituents for what she has said.
The Minister mentioned the communication she is having with stakeholder groups. Is she also communicating with employers to make sure they are aware of the way the new system will work, especially those who may want to make their own contributions to their staff’s child care costs?
Priti Patel
I thank my right hon. Friend for her intervention and comments. She is absolutely right; as she will know from discussions in Committee, this scheme has been designed to be parent-focused—parent-friendly is, I think, the term to use—and to work with employers, because this is about engaging both parties to communicate, educate and inform. Employers have an important role to play—we must not forget that—so working with employers on the scheme design is key.
The introduction of this new scheme sits alongside strong early-education entitlement for pre-schoolers to support families and hard-pressed families with their child care costs and support parents to work more if they want to do so.
As I said in Committee and we have touched on again today, we have already committed to reviewing the impact of this new scheme after two years, and it is hard to see what purpose would be served by a review only three months after Royal Assent, given the Government’s clear commitment to reviewing the scheme.
I shall now move on to the points made about amendments 2 and 1 and the comments of the hon. Member for Stockton North (Alex Cunningham). I welcome his comments and I followed his remarks with interest, and we discussed these matters in Committee. We fully accept that child care costs are higher for parents with disabled children; there is no disagreement here at all. The families and parents of disabled children struggle with the challenges of raising and looking after their children. We had a very fluid debate about this in Committee.
The effect of amendment 2 is straightforward. It would increase the level at which the Government top-up payments are paid to parents of disabled children from 20% to 40%. This would mean in practice that for every £10 spent on child care, the Government would contribute £4 and the parent the remaining £6. This contrasts with the position set out in the Bill, which is that the Government would contribute £2 of every £10 spent on child care.
I am very well aware of the keen interest the hon. Gentleman takes in families with disabled children. He spoke with great eloquence in Committee and I thank him for his contribution on this point. As he rightly pointed out, families with disabled children face significant costs, and that fact ought to be reflected in the scheme. A number of witnesses who gave evidence to the Committee made similar points. I have already put on the record that I fully understand the arguments the hon. Gentleman and others have made and it is absolutely right that parents of disabled children are properly supported, which brings me to why I will ask him not to press his amendments.
Alex Cunningham
I thank the Minister for her kind comments, but the multiplication that I want to achieve for disabled children does not even reflect the multiplication factor in their child care costs. Child care can cost £20 an hour, but all I am asking is that the Government double the amount of support they give. I am not asking them to increase it by four or five times.
Priti Patel
I thank the hon. Gentleman for his comment. I outlined measures relating to disabled children in Committee. We recognise the high costs faced by parents of disabled children, and the specialist care that their children need, but increasing the amount of top-up is obviously not appropriate, for the reasons that I have already outlined. I have made a commitment on disabled children, and I am exploring the possibility of increasing the maximum amount that a parent of a disabled child can pay into their child care account. For those reasons, I ask the Opposition to withdraw their new clause.
Catherine McKinnell
I thank the Minister for her thorough reply to the concerns that I expressed earlier. She has gone some way towards alleviating them, but some concerns remain. We shall have to give the Government the benefit of the doubt on the delivery of her reassurances, but that does not take away from the fact that dealing with the supply-side issues and extending the free entitlement for three and four-year-olds would constitute a much better offer to parents. The Government could do that now to provide support for parents who are struggling with child care costs and with the cost of living more generally. We will therefore press new clause 1 to a vote.
Question put, That the clause be read a Second time.
Alison McGovern (Wirral South) (Lab)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Amendment 12, in clause 11, page 7, line 8, after “may —”, insert—
“(a) repeal this section, or”.
Amendment 13, in clause 15, page 9, line 10, after “may —”, insert—
“(a) amend this Act to allow childcare accounts to be held by persons other than those specified in subsection (1),”.
Amendment 3, in clause 30, page 17, line 3, leave out
“an award of tax credit is or has been made”
and insert
“an award of tax credit which includes the childcare element is or has been made”.
Amendment 4, page 17, line 18, after “credit”, insert
“which includes the childcare element”.
Amendment 5, page 17, line 22, after “credit”, insert
“which includes the childcare element”.
Amendment 6, page 17, line 31, after “credit”, insert
“which includes the childcare element”.
Amendment 7, in clause 32, page 19, line 16, after “credit”, insert
“which includes the childcare element”.
Amendment 8, in clause 35, page 21, line 21, after “credit”, insert
“which includes the childcare element”.
Amendment 9, page 21, line 32, after “credit”, insert
“which includes the childcare element”.
Amendment 10, in clause 36, page 22, line 12, after “credit”, insert
“which includes the childcare element”.
Amendment 11, page 22, line 24, after “credit”, insert
“which includes the childcare element”.
Alison McGovern
It is a pleasure to speak in support of new clause 2, which stands in my name and that of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell). Before I continue, may I pause briefly to pay tribute to the outstanding work that my hon. Friend the Member for Manchester Central (Lucy Powell) did as my predecessor in this shadow position, and in particular to her scrutiny of the Bill in Committee?
In and of itself, this is not a bad Bill. We agree with its aims; it sets out to address serious issues relating to child care costs and affordability, which we recognise form a major part of the crisis hitting so many families in Britain today. Our concerns with the Bill are that, for all its good intentions in proposing this scheme for payments towards child care costs, Treasury Ministers have not thought through all the potential consequences.
Some of the Bill’s weaknesses may arise from the fact that, as far as the Government are concerned, this is purely a Treasury Bill; it has perhaps lacked some valuable input from those with a stronger experience of how the child care market actually operates—or, in far too many cases, fails to operate—in this country.
In oral evidence to the Committee, numerous organisations and experts raised concerns about the long-term effects of the Bill, and we have seen little movement from the Government to address those worries. The new clause seeks to go some way to rectifying that, by requiring the Chancellor to keep under review the impact the scheme has on issues of child care cost inflation and, thus, affordability.
Let me say a few words about the situation in which we find ourselves. There is, undeniably, a crisis in child care costs. There is no need to take my word for that or to rely on the testimony we hear on the doorsteps in our constituencies. The Office for National Statistics tells us that between 2010 and 2014 the cost of placing a two-year-old or older in nursery rose by 31%—wages rose by just under 4% in that period—and for under-twos the figure rose by 27%. [Interruption.] If the hon. Member for Taunton Deane (Mr Browne), who is sitting on the Liberal Democrat Front Bench, wants to intervene, he is welcome to. [Interruption.] I shall take that to mean he does not.
The figures also reveal that, as we have seen so often during the past four years, the areas seeing the least benefit from this weak and uneven recovery have been hit the hardest by child care cost increases. In my region of the north-west, costs are up by 46% in just four years. Over the Pennines, in the north-east, the figure is 47%. A family in my constituency is having to find, on average, £31 a week more to fund 25 hours of nursery for their two-year-old, three-year-old or four-year-old. That is a hefty sum in almost anyone’s money. When that is tied in with frozen wages, reduced tax credits, increased VAT and soaring housing costs, it all becomes a pretty desperate recipe—I hear testimony on that from my constituents week in, week out.
We know that not only are there regional biases to costs, but families with disabled children are being hit disproportionately hard as well. I pay tribute to my hon. Friend the Member for Stockton North (Alex Cunningham), who was a doughty champion for the parents of disabled children in Committee and who has tabled amendments 1 to 13 today. The cross-party parliamentary inquiry on child care for disabled children, of which my hon. Friend was a member and which was chaired by my hon. Friend the Member for North West Durham (Pat Glass) and the hon. and learned Member for South Swindon (Mr Buckland), produced some valuable findings on that point.
Hywel Williams (Arfon) (PC)
Does the hon. Lady accept that there are particular stresses on parents in rural areas, as the cost of travel has to be added to the cost of child care itself? The money could be better deployed in such areas in increasing the provision rather than the amount that child care providers get.
Alison McGovern
It is important for all of us to recognise the extra pressures on families in rural areas. People’s circumstances are different. We want to increase employment in rural areas as well as in suburban and urban areas. The hon. Gentleman makes an important point.
Alex Cunningham
My hon. Friend helps me to talk about the needs of parents with disabled children. When inflation and prices go up, the increase is felt particularly acutely by those families. Does she agree that the Government really need to think again about that particular element?
Alison McGovern
Again, I support the views of my hon. Friend. Too often, parents of children with disabilities are forgotten in our debates. They have the most important responsibility. Children with disabilities deserve all our care and attention. I hope that, by raising this matter, we can remind ourselves that their parents might not have the time to make these points, so it is important that we all remember the extra costs and the circumstances that those parents face. We all have an interest in this matter. It is why Labour is sceptical about the wisdom of a demand-side-only approach.
In general, better value for money and better outcomes could be achieved through a radical expansion of the free child care entitlement to three and four-year-olds, from 15 hours a week to 25, paid for by an extension of the bank levy. There is no better week than this to be making the argument about extending the bank levy, as once again we are seeing banks being taken to task for their poor behaviour. I make no apology for reminding Members about the importance of that bank levy, especially as it could pay for something as vital as child care.
As we saw from the debate on new clause 1, the Government are not about to accept the policy—more fool them—but we want to ensure that Ministers are required to keep track of the inflationary impacts. New clause 2 requires that within three months of the Bill’s becoming an Act and every three years subsequently, the Chancellor will have to review the impact of the subsidy on making child care more affordable, on what the average cost of child care for parents in work is and on whether supply-led measures could be more effective. That is not a massively onerous burden on the immense capabilities of the Treasury, but a very valuable canary in the coal mine regarding child care inflation.
In Committee, the Minister was consistently against any suggestion of hourly rate capping or other means of placing a brake on any inflationary pressures arising from the policy. A regular review might demonstrate whether the post hoc implementation of such provisions might in fact be necessary if the subsidy is to be anything more than a damp squib.
The Bill is a blunt instrument that fails to target Government funding and gives the most financial support to the best-off families. It will possibly provide some short-term relief for parents, but does little to deal with the underlying problems of inflation, supply and quality in the child care system. There are 40,000 fewer child care places in England than there were when the Government came to power and almost 4,000 fewer suppliers. Childminder numbers are down by 13%. For tens and likely hundreds of thousands of families across the country, the proposals in the Bill will mean little or nothing because they simply cannot find a child care place or access one that will offer the flexibility in hours to fit around work. We need radical reform of the broken child care market. This Bill does not provide it, but by supporting new clause 2 today Members can at least take a step that will help guard against its being a worse than a useless creator of child care cost inflation.
Alex Cunningham
My hon. Friend the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) has already talked about the complexity of the Government’s scheme. Amendments 12, 13 and 3 to 11 are all aimed at simplifying the relationship and interaction between the tax-free child care scheme and other sources of support, particularly tax credits and universal credit.
Members might be aware that I tabled amendments 3 to 11 in Committee with the intention of broadening the provisions of the Bill and allowing those households in receipt of tax credits that do not receive any support for their child care costs in their tax credit award to receive support from the tax-free child care scheme. My hon. Friend the Member for Wirral South (Alison McGovern) has already outlined that the working poor have been hit most by the policies of this Government and I would like that not to apply to child care.
Giving those people help will entail several minor changes being made to the clauses dealing with the special rules affecting tax credits and universal credit claimants: specifically clauses 30, 32, 35 and 36. In Committee, the Minister was very clear about the need to deliver a welfare system that is
“designed to encourage progression into work”.––[Official Report, Childcare Payments Public Bill Committee, 23 October 2014; c. 223.]
However, that is not what will result from the Bill in its current form.
Let us take as an example a parent who is offered 15 hours of work a week on a low rate of pay. Most, if not all, of any gains from this employment could be totally lost in child care costs. They would not get any support from the Government to meet those costs and might therefore not be able to afford to take the work in the first place, and I for one would not be surprised if they chose to spend the time with their children instead. These amendments, however, would create a much greater financial incentive for people to start working part time.
It is important to be clear from the outset that the purpose of the tax-free child care scheme is to provide support for child care costs for those who are not eligible for help from elsewhere. As I mentioned when I raised the matter in Committee, there is an anomaly in the Bill if we are serious about encouraging people to go back into work or to stay in work—particularly those who are on the lowest earned incomes in our society.
The Bill as it stands says that the Minister recognises that there are some who do not get any help through tax credits but that the Government will do nothing to help. I am sure that that is not what she intends. Indeed, in Committee, she specified that the new scheme should not interfere with financial incentives for people to work more hours, let alone create perverse incentives, but that is precisely what the Bill will do.
Many parents who claim tax credits are both working and incurring child care costs, but they are not entitled to claim the child care element because, for instance, they do not meet the minimum number of working hours per week to qualify. Clause 30, however, makes it clear that any tax credit award will be terminated when a valid claim for the tax-free child care scheme is made, regardless of whether the child care element of working tax credit is received. Put into context, that means that households in which one parent is working full-time while the other works 12 hours a week will not be entitled to receive the child care element of tax credits to support them in the payment of child care costs. Similarly, single parents working 15 hours or fewer per week on average will also not be entitled to the child care element of working tax credit. Both would have to pay for their child care out of their own, potentially low, earnings.
Hywel Williams
I very much agree with the thrust of the hon. Gentleman’s argument. His point applies particularly to people in seasonal industries such as agriculture or, as in my constituency, tourism. I am sure that he agrees that there is a particular problem for those sorts of workers.
Alex Cunningham
Yes. I am grateful to the hon. Gentleman for that intervention. I most certainly do agree with him. Pieceworkers and others can have hours and wages that fluctuate over a long period; they will most certainly be affected. I feel that the
“easy-to-use online tool”––[Official Report, Childcare Payments Public Bill Committee, 23 October 2014; c. 222.]
promised by the Minister in Committee will prove elusive.
On top of the sizeable potential for confusion, the different mechanisms by which child care costs are to be paid under the tax-free child care scheme and universal credit are also worrying. As we are aware, under the tax-free scheme, payments will be made through child care accounts. That will provide families who are in receipt of tax-free child care with an important budgeting tool to help them manage their finances; that is particularly important as payments will be made through child care account top-ups before costs are paid by the parent. However, child care support received through tax credits and universal credit cannot be provided through child care accounts. That means that child care payments are not aligned, which gives rise to the potential for further confusion and complexity for parents, and it means that an important budgeting tool for households in receipt of tax-free child care is not available to those receiving child care support through universal credit.
It is worth highlighting that the Children’s Society report “The Debt Trap” found households in poverty containing dependent children to be twice as likely to be in some form of arrears as families on higher incomes. It is precisely these families who are most likely to need help with budgeting, but who will be given the least support. Moreover, universal credit payments of child care costs will be made in arrears. As Members will be aware, parents are usually required to pay child care providers one month in advance, but families on low incomes claiming universal credit are likely to have the lowest savings, if any at all; this will inevitably result in many being forced to borrow money to pay for their child care up front. We should be under no illusion: that could be a hefty sum, and if child care costs are higher during school holidays, further loans may be required to meet those costs. This runs the obvious risk of forging a cycle of dependence. Reporting requirements for universal credit are significantly greater than those for either tax credits or tax-free child care, and any failure to report in time will lead to the loss of all payments for that assessment period.
Mark Durkan (Foyle) (SDLP)
Does the hon. Gentleman not think it strange that in this time of austerity and everything else that we hear about, the Government have come forward, under this Bill, with a child care payment scheme that gives more, including more flexibility, to those who have more? I am thinking of the bankable allowances and so on. Compare that with what the Government are providing, in terms of child care, under the universal credit rules. It really is one scheme for the better-off, and another, much worse scheme for the less well-off.
Alex Cunningham
I most certainly do agree with my hon. Friend. It is a peculiar world—I would use the word “bonkers”—when someone earning £100,000 can benefit more from a new Government scheme than somebody on perhaps £20,000. It is important that the Government think again on some of these points.
Let us not forget that families on higher incomes will get their child care accounts topped up by the Government before they have to pay their provider, so the rich get paid up front, while the poor do not get any payment at all. One possible solution that could be explored further is the provision of child care accounts and tax-free child care to families in receipt of child care support through tax credits or universal credit. Allowing these claimants to use child care accounts to receive their payments of child care costs would allow receipt in advance of payment, but without the risk of any overpayments being lost within wider family budgets. However, as things stand, the Bill would not permit that without additional primary legislation. These minor amendments to clauses 11 and 15 would allow the tax-free child care scheme to go forward as designed, while allowing us the time to consult and to assess these issues fully. We would have the flexibility to make changes by regulation, rather than through additional primary legislation.
Universal credit is still in its infancy and is being gradually rolled out. It seems to make little sense to limit how it may evolve by putting barriers, in the form of primary legislation, in the way of what may be sensible reforms. I would like to hear from the Minister what further considerations she has given to extending the tax-free child care scheme in this way, and expanding child care accounts beyond the scheme. I hope that she will support these minor amendments, which would allow for the potential benefits that those changes could deliver, particularly for some of the poorest people in our society.
Priti Patel
I welcome the hon. Member for Wirral South (Alison McGovern) to her position and post. It is good to hear from her. Obviously, she did not have the full benefit of participating in the Committee, so it is good to hear her views today.
New clause 2 is about the Bill’s impact on child care costs, an issue that we discussed at some length in Committee. The new clause would require the Government to publish a review of the Bill’s impact on the cost of child care three months after it passed into law, and every three years thereafter. The review would have a particular focus on the effectiveness of the Act in making child care more affordable, the average cost of child care for working parents, and the impact of supply-led measures on costs.
As I have said many times in debates on this Bill, the Government have made a clear commitment to review the impact of the scheme two years after full implementation. That was set out in the impact assessment published alongside the Bill. The Government feel that a two-year assessment period is reasonable and will allow sufficient time for the scheme to become bedded in, so that the full impacts can be assessed and properly evaluated in the context of wider Government policy. We do not think that there is anything to be gained from adding a further review after only three months.
I think that all hon. and right hon. Members are rightly concerned about the impact that high child care costs have on working parents. We understand the cost of child care, and the Government are committed to supporting parents to meet that cost; that is the purpose of the Bill.
Bob Stewart (Beckenham) (Con)
I assume that the Minister and her team will watch this very closely from the start. She may not need a review: if she saw something going wrong, she would take immediate action to correct it, before the two-year point.
Priti Patel
I thank my hon. Friend for his comment. Naturally, we want to get this right, so there is oversight at every level. Later in my remarks, I shall touch on areas where his remarks are valid and pertinent.
We know that child care is an expensive outgoing for many families across the country. This Government understand the need for both demand and supply-led measures to ensure that the costs of child care do not spiral out of control. We have been taking steps to ensure that both sides of the problem are properly considered. The Government believe that increasing supply is an effective way of limiting further price rises, and are therefore making significant reforms to support the child care sector in increasing the supply of places.
The Government are taking actions beyond the scope of the Bill to improve the quality and supply of child care provision. These reforms are designed to ensure that any increase in demand for child care arising from the new scheme will be matched by increased supply and not by increased costs. The latest figures show that there are about 100,000 more child care places than in 2009, and the Government are taking action to grow the supply of child care still further, which will improve choice and affordability for parents. For example, we are making start-up grants of up to £2 million available to help people set up new child care businesses. We are also enabling good and outstanding childminders to access funding for early education places. Only 4,000 do so currently, but as a result of our reforms, up to 32,000 will be automatically eligible. We are making it simpler and easier for schools and child care providers to work together to increase the amount of child care available on school sites, and only this year we have introduced childminder agencies, which are designed to improve the support available for both childminders and parents, and to simplify existing regulatory frameworks to allow nurseries to expand more easily.
We recognise that child care costs place a significant financial burden on many families, but research shows that after 12 years of consistently rising prices, the costs of child care in England have stabilised for the first time. There is encouraging evidence that costs of some of the most popular types of child care are falling in England. For example, the Family and Childcare Trust reported in March that the cost of nurseries in 2014 was 2% lower than in the previous year in real terms. Similarly, the cost of after-school clubs reduced by 5% in real terms during the same period. Once inflation is taken into account, costs for the majority of parents have fallen. This means that more parents are able to access affordable child care and support their families, and shows that the Government’s reforms are making a difference. We should compare that with the situation under Labour, when costs rose nearly 50% between 2002 and 2010, and the average cost of child care rose faster than inflation.
Alongside these measures to increase the provision of good quality, affordable child care, the Government have taken significant steps to support families in meeting their child care costs.
Alex Cunningham
I welcome the fact that more families may well be able to access child care because of falling costs, but the costs are still high and they are paid by the poor as well as the rich. Will the Minister please outline what she will do for the working poor who do not qualify for anything under any of her schemes?
Priti Patel
I will come on to the hon. Gentleman’s amendments and refer specifically to the points he makes.
For low earners, the Government will continue to pay up to 70% of child care costs through working tax credit, and under universal credit this support will be extended to up to 85% of costs when both parents are working, as all hon. Members heard in Committee. In addition, as we have touched on, the Government fund an early years entitlement of £15 a week.
The Government are making good progress in tackling the root causes of child poverty, to which the hon. Member for Wirral South referred. All Governments are committed to ending child poverty once and for all, but I reiterate that work remains the best route out of poverty. We discussed this at length in Committee, including the interactions between universal credit, making work pay, and interdepartmental measures on child poverty.
Alison McGovern
The Minister mentions universal credit and making work pay—for too many families I only wish it did. Will she comment on the role of universal credit in discouraging dual earners? In the context of this child care debate, does she think the Government should look again at its operation?
Priti Patel
We had much debate in Committee on universal credit and the way in which the scheme interacts with it. The hon. Member for Manchester Central (Lucy Powell) made some strong and valid contributions in this regard.
Amendment 12, tabled by the hon. Member for Stockton North (Alex Cunningham), would allow regulations in future to permit parents to receive support under the new scheme and universal credit at the same time. As I have said, we must not forget that families in receipt of universal credit already rightly receive generous support with their child care costs. Child care support is offered to parents on universal credit as part of a welfare system designed to make sure that work pays and that those who need the support get it. Up to 300,000 more people are likely to be in work as a result of universal credit, and we expect a significant proportion of those to be households with children. But it is not right for a parent to receive support under the new scheme in addition to universal credit, when parents will receive 85% of their child care costs from April 2016. It will be easy for parents to access support that best suits their circumstances, so I reassure the hon. Gentleman that parents who are eligible for universal credit will be able to opt out and claim support under the new scheme should they wish to do so. We shall be supporting parents in making those decisions.
As we said in Committee—hon. Members have touched on it again today—we shall be launching the online support tools, the calculator and clear guidance. Draft guidance has been published well ahead of the launch of the scheme and shows our commitment to work in close collaboration with parents, child care providers and employers, and their feedback will ensure that guidance is tailored to meet their needs.
This is about ensuring that support remains focused on those on lower incomes, and the introduction of the scheme gives parents confidence that as they increase their income and move off universal credit, they will continue to receive Government support with their child care costs, which is vital.
Alex Cunningham
I do not want to go over the top on this, but will the Minister please outline what help she proposes for families who do not qualify for anything at the moment but who are still the working poor?
Priti Patel
There is support that remains focused on those on lower incomes. As I said at length in Committee, the Government’s overall child care system is very much focused on those on lower incomes, and it is wrong to suggest that that is not the case. Families in receipt of tax credits receive more generous support with child care costs. We have already discussed universal credit, which is being extended to cover up to 85% of the costs of child care. All the analysis shows that the benefits of the scheme are focused on households on lower incomes. The new scheme ensures that for the first time parents can be certain that support will be available for them; yes, obviously, at the lower end, but importantly, as they move into work and increase their incomes too. The scheme is much more fairly targeted than the existing scheme of employer-supported child care. It supports working families, getting households and families back into work. It was debated at length in Committee, and I reassure the hon. Gentleman that that is the case.
Today’s debate has shown that the Government are taking a broad range of actions to support families with the costs of child care, not just through this scheme, but through improvements in the welfare scheme—
Mark Durkan
In considering how the Government can best take this forward, will the Minister take account of the fact that whenever the Northern Ireland Assembly debated the legislative consent motion, there was much confusion, even on the part of the junior Minister, about its impact on child care in Northern Ireland? Child care provision in Northern Ireland has a different profile from here, and it seems that the Government’s scheme will lead to degrees of confusion and uncertainty, particularly for existing schemes that are well favoured.
Priti Patel
I take this opportunity to re-emphasise that the scheme in no way creates confusion. In Committee we touched briefly on the situation in Northern Ireland and provided information and guidance in that regard. This is about working with all the players—parents, employers, and other stakeholders. It is about making the system abundantly clear and simple, not about complexity. Guidance has been drafted. We are working with third parties. We are designing a calculator tool, as we have discussed before. This is all about giving guidance and providing clarity.
I shall briefly cover amendments 3 to 11 on families in receipt of tax credits. The child care element of tax credits is just one component of the package of support designed to help lower-income households. I emphasise that there is support for those on low incomes, in particular. We should reflect on the fact that under the new scheme more working families than ever before will be eligible for support with child care costs. The scheme will be an important component of the overall offer to working families. It will sit alongside existing schemes to ensure that support is available to those increasing their incomes as they move off benefits.
Alex Cunningham
Does the Minister not see any advantage in leaving the door open by amending the Bill to allow for the scheme to be extended at a later stage? As I said in my speech, it will take primary legislation to extend the scheme any further, whereas she could accept an amendment that would mean that the door was open to simple, straightforward regulation instead.
Priti Patel
I commend the hon. Gentleman for his tenacity in making that point again, as is absolutely right and proper. I reiterate that the Government are committed to reviewing the scheme, as I have outlined previously in Committee and during today’s debates on new clauses 1 and 2. It has to be right and proper to have that review. Once the scheme has bedded down and we have had the full assessment and evaluation, we will look at all its aspects. I hope that I have given the hon. Gentleman sufficient reassurance. I ask him to withdraw his amendment and Labour Front Benchers to withdraw their new clause.
Question put, That the clause be read a Second time:—
Priti Patel
I beg to move, That the Bill be now read the Third time.
The Bill has been many months in development through consultation, drafting and detailed discussion in Parliament, and I am sure the House will agree that it will leave the Commons in good shape.
Before I proceed, I would like to pay tribute to my right hon. Friend the Secretary of State for Education who, as Financial Secretary, was responsible for some of the key features of the scheme and introduced the Bill in the House of Commons in June. I spoke on Second Reading as a Back Bencher, and it is an honour for me to appear today as the Minister responsible for the Bill.
I welcome this further opportunity to speak on the Bill and to reflect on the important role it will play in the Government’s broader strategy to get people into work. One of our fundamental principles has been that every person who can stand on their own two feet should do so. That means being in work, making their contribution and taking responsibility. We want to empower people in their choices. As a mother myself, I strongly believe that child care costs should not be a barrier to work. Since 2010 we have introduced a comprehensive package of measures to help working families cover nursery costs for their children. The new child care scheme will greatly expand the support we provide to working families towards their child care costs.
Even before the financial crisis, there were around 5 million people in the United Kingdom of working age on out-of-work benefits, some 1.4 million of whom have spent the past decade unemployed. The number of households where no one had ever worked almost doubled between 1997 and 2010, so when we took office in 2010 we made getting people back into work one of our key priorities. We can be proud of some major successes. Figures from the Office for National Statistics have shown that unemployment fell by 154,000 to below 1.97 million in the three months to the end of August, the first time it has been below 2 million since 2008. Since 2010, the UK has created over 2 million more jobs for people to go to—the fastest rate of job creation of any major economy, or, as the Financial Times put it in September, more jobs than the rest of the European Union combined. Female participation in the work force is at an all-time high, and we should welcome that.
As ever, there is more that can be done. If we had the same levels of men and women participating in the labour market, the OECD says that could lead to an increase in GDP of around 10% by 2030. Survey data from the Department for Education suggest that more than half of mothers would prefer to be in paid employment if they could arrange reliable, convenient, affordable, good quality child care. The Government are therefore taking action to ensure that high-quality child care is available and affordable. We recognise that child care costs are a major part of most working families’ budgets so we are putting in place measures to help every working family in the UK with their child care costs.
We have almost doubled the amount of child care support available to most middle earners, and we are doing even more for those on low pay. We are already funding 15 hours a week of free child care for every three and four-year-old, funding 15 hours a week of free child care for 40% of two-year-olds, and increasing the child care support for low income families to 85% under universal credit. Now, this scheme will significantly broaden access to child care support. Hundreds of thousands of families who are excluded from the current employer-supported child care scheme will be able to benefit from the scheme, and up to 200,000 self-employed parents will have access to child care support.
We have paid particular attention to designing the scheme so that it suits the needs of part-time workers. Parents earning as little as £52 per week—averaged over a quarterly entitlement period, or over a tax year for self-employed parents—will qualify for support.
We do not believe, however, that providing direct support to parents is the only way to address the high cost of child care. That is best achieved by supporting the child care sector to increase supply, which will ensure that any increase in demand for child care will be matched by increased supply measures, rather than just increased costs.
The latest figures show there are now 100,000 more child care places than there were in 2009. We are making start-up grants available to help people set up new child care businesses. We have made up to 32,000 good and outstanding childminders automatically eligible for early education funding. We are making it simpler and easier for schools and child care providers to work together to increase the amount of child care available on school sites before and after school. Only this year, we have created childminder agencies, which will improve the support available both for childminders and for parents, and simplified existing regulatory frameworks to allow nurseries to expand more easily.
The evidence shows that our reforms are having an effect. After 12 years of consistently rising prices, the costs of child care in England have stabilised for the first time. Indeed, the costs of some of the most popular types of child care in England are now falling. Once inflation is taken into account, costs for the majority of parents have actually fallen, which means that more parents are able to access affordable child care and support their families. By contrast, the costs of some types of care have risen in Scotland and Wales, where these reforms do not apply.
As we have discussed in previous debates on the Bill, child care costs are not the only pressure on family budgets. We can never forget the impact of the 2008 recession and its effect on incomes for every household.
Alex Cunningham
I welcome the fact that prices are coming down and that more places are available, but the vast majority of the new jobs to which the Exchequer Secretary has referred are low-paid, part-time, insecure and involve zero-hours contracts and similar, which do not make anybody’s life easier as they consider care for their children. Perhaps that is why we are seeing an overspend of many billions of pounds in the Government’s social security budget.
Priti Patel
I re-emphasise a point I have made consistently throughout the passage of the Bill: the Government’s overall system of child care remains focused on those who are on lower incomes. We are concentrating on supporting families getting into work and ensuring, as we have touched on in previous debates, not only that work pays, but that child care support remains focused on those on lower incomes.
Living standards—the cash in people’s pockets and what they can buy with it—are perhaps the biggest issue facing British families. The tough decisions we have taken as a Government have a very clear end in mind, which is to help create prosperity and boost living standards. Alongside that, we want to make sure that the Government have the right measures to support working families and households and to ensure that work pays.
Since coming to power, this Government have taken decisive action to ease the pressure on households and families. We are providing free school meals for all infant school pupils in reception year and in years 1 and 2. We have increased the personal allowance to £10,000 and in April 2015 it will increase to £10,500. During the course of this Parliament, we have cut the income tax of the typical taxpayer by £805, taking more than 3.2 million individuals out of income tax by 2015-16 and boosting the take-home pay of 25 million people.
Additional measures on living standards include freezing council tax in real terms and cutting the cost of driving by freezing fuel duty until the end of this Parliament, saving a typical motorist £680. We recently announced that the cost of driving licences will also be cut. Ultimately, however, as every family knows, the best way to raise living standards is by being in work, and we are pulling out all the stops to help those who want to work get into work by making work pay and introducing this Bill, which provides important financial measures to support child care.
I thank all Members for the opportunity to debate all the issues associated with child poverty as the Bill has passed through the House. Child poverty is an extremely important issue and this Government are fully committed to the goal of ending child poverty in the UK by the end of 2020.
Ms Margaret Ritchie (South Down) (SDLP)
As my hon. Friend the Member for Foyle (Mark Durkan) said on Report, the Northern Ireland Assembly has already debated the legislative consent motion, which will enable enactment of the legislation in Northern Ireland. Does the Minister accept that there are fewer opportunities to access child care in Northern Ireland and fewer job opportunities? Will she consider allowing the other place to debate the extension of the child care voucher scheme so that it can remain in place while the measures are being implemented and both the scheme and the Bill can run concurrently?
Priti Patel
I will come on to Northern Ireland in a moment, because I want to finish addressing child poverty. Our child poverty strategy 2014-17, which was published in June, outlines our plans to tackle the root causes of child poverty, including parents being out of work, low earnings and educational failure. That approach reflects the reality of child poverty today and, importantly, reflects our determination to achieve lasting change to protect the poorest in our society.
The evidence is clear that work remains the best route out of poverty, and children are three times as likely to be in poverty if they live in a workless family. That is why we are taking decisive action to make work pay and reform the welfare system. We have touched on universal credit, the child care support we are providing and increasing the national minimum wage.
This is a complex, multifaceted problem, and it would be wrong to suggest that there is a silver bullet. We have made good progress, but there is more to do in tackling child poverty. The Bill will support this Government’s efforts to tackle the root causes of one of our greatest social ills.
I am grateful to all those who have participated in the debates on the Bill. I welcome the support from both sides of the House for this important new scheme, which marks such an improvement on the current support available to parents. I am particularly delighted that the Northern Ireland Assembly recently voted in favour of a legislative consent motion to enable the scheme to be available to families in Northern Ireland in the same way as it will be to families elsewhere in the UK. That was entirely a matter for the Assembly, which has given the scheme a positive vote of confidence.
I understand that the Offices of the First Minister and of the Deputy First Minister will consider the impact of the scheme and its interaction with other initiatives in the context of wider work on the development of their own child care strategy, so it would be inappropriate for me to make further comment on those devolved matters. Obviously, that is work in progress.
During all stages of the Bill, we have consulted widely on the design of the scheme over the past year. We have listened to feedback from parents, employers, the child care industry and all stakeholders.
Following those discussions, we are already making several changes. We are rolling the scheme out to families more quickly. Within a year of its introduction, all families will be able to apply for support, which is significantly faster than the previously announced timetable for the roll-out, of seven years. There is a more generous cap so that families can receive up to £2,000 of Government support per child. We are making the scheme available throughout periods of paid and unpaid parental leave, and we are making changes to the minimum income level to support those in self-employment. We are extending to 14 days the time during which parents can access the scheme before starting work. I have committed to looking at the cap with reference to the costs of caring for disabled children.
The scheme will not only deliver valued support to hard-working families, but it will do so in a way that works for parents. It will be a smooth, simple and secure scheme. From the outset, it has been designed to have parents at its heart. Rather than requiring parents to report changes of circumstances in real time, the scheme will be based on quarterly entitlement periods. That will give parents the certainty that they will continue to be eligible for support for three months at a time, regardless of any unexpected changes in their circumstances. For parents to reconfirm for the next quarter will simply take a few clicks through the system that we are designing and setting up. Those are just some of the ways in which we have engaged with stakeholders and, importantly, learned lessons from the experience of tax credits. Our ambition is for the new scheme to represent a real step change in user experience.
The scheme will be a vast improvement on the current employer-supported child care scheme, which provides support to a limited number of employees. As well as being available much more widely, it will be better targeted, make payments on a fairer basis—on the number of children, rather than the number of adults—and will be much more efficient. That is why we will close the current scheme to new entrants when the scheme is introduced, although those who already receive support under it can stay in it, if they so choose, for as long as they wish.
As a result of the Bill, more working families than ever will be eligible for Government support with their child care costs. Our proposals have been welcomed by families and child care providers around the country. The Bill represents an important part of the Government’s strategy to get people into work, and I commend it to the House.
Catherine McKinnell
Any new investment in child care—particularly support for struggling families up and down the country who are battling to juggle their work and family lives—is clearly welcome. The Bill is therefore important, but it is long overdue for thousands of parents.
Fundamentally, we remain concerned that the Bill will simply not address the situation in which too many parents have been left. The evidence is now overwhelming. The cumulative changes to tax and benefits over the Government’s time in office have hit families hardest, as is clearly shown by new research published today. From our analysis of official statistics, we know that some families in which both parents are in work will be £2,000 a year worse off on average by the next election as a direct result of the Government’s tax and benefits choices. Researchers from the London School of Economics and the university of Essex have released findings showing that the clear losers under the Government are lone-parent families, large families and children.
This summer, the Prime Minister announced that all Government policies have to pass a families test. It is interesting that that is his aspiration only now, because it is abundantly clear that the Government have completely failed the families test to date. We share the widely expressed concern that the Bill will not go anywhere like far enough to make up the shortfall that families face, partly because of the tax and benefits changes, but also because of soaring child care costs.
Aside from that central issue, we have several other concerns. We are worried that parents will be left exposed to inflated child care prices, as my hon. Friend the Member for Wirral South (Alison McGovern) clearly set out in her speech on new clause 2. The Government have only one chance to get the hugely important IT infrastructure right, but crucially there is huge concern that parents might face a nightmare of complexity and confusion if the Government fail to provide adequate support and information to help them to make informed choices and to navigate between the schemes for universal credit and for the top-up payments.
Welcome though the support is, for far too many parents it will be far too little, far too late. I hope that the Minister has taken on board the concerns we raised throughout the proceedings in Committee and on Report, whether on some of the more technical aspects of the Bill’s operation or on the more fundamental issues.
Ms Ritchie
My hon. Friend is making some compelling points. Is she aware of research by the Resolution Foundation that found that 80% of the families who will benefit from the top-up payments available through the tax-free child care scheme are in the top 40% of the income distribution scale, and that the remaining 20% will go to families in the middle of it? How will the scheme help those on low incomes, lone parents and those with large families?
Catherine McKinnell
My hon. Friend has herself made the point very powerfully. I was concerned when the Minister spoke at length about child poverty because the Bill will do very little to deal with such issues, and we know that such figures will only increase. Levels of child poverty have increased significantly under this Government, as the facts and evidence prove.
Although we should focus on what the Bill will achieve—it will provide support in meeting demand for some payments for child care—my hon. Friend clearly sets out which parents will benefit most from the support. However, even those parents are concerned that the scheme might unduly complicate their lives. It might be burdensome for parents to navigate it, particularly those at the lower end of the income scale who have to navigate between a reduction in universal credit support and a movement into the top-up payments scheme, where potentially disastrous child care support pitfalls await them. We discussed that at length in Committee and we have put our concerns on the record. Other Opposition Members and I very much hope that the Minister has taken all such concerns on board and can deliver on the reassurances that she has given.
Let me take this last opportunity to urge the Government to recognise the value to parents not only of this support with child care costs, but of the extension of the free entitlement to three and four-year-olds. Quite simply, that would ensure that working parents are better off. It would help more parents to get back into work or to work more hours, and it would help to bring home more pay for the hours they work. We know that so many parents are desperate for such support. It would be simple and effective, and it would not place any more burdens on parents than those they already face. It would not add any more complexity to a child care market that is already hugely complicated.
Parents have struggled for four years under this Government with a child care crunch of rising prices alongside stagnant wages. Although we will support the Bill tonight, I urge the Minister to ensure that she, her officials and her partners who deliver the scheme fulfil the promises that have been made during its passage in Committee so that parents can receive this much-needed support.
I look forward to the arrival, in 2015, of a Labour Government who will ensure that parents receive not only the support provided in the Bill, but an additional 10 hours of free child care for three and four-year-olds. That will deal with many of the supply-side and price inflation concerns, and it will also provide child care support for the parents who will not benefit at all from the scheme.
Maria Miller
It has been a privilege to have served on the Bill Committee, and I pay tribute to the two hon. Ladies who have led the debate. My hon. Friend the Minister has navigated us through the Bill with incredible style. She has listened to the arguments, acted on what she has heard and understood the importance of flexibility for parents in this scheme.
The Minister also listened closely to the hon. Member for Stockton North (Alex Cunningham) and his powerful arguments, both today and in Committee, about the particular needs of disabled children. None of us could have anything but admiration for the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), who obviously has her own interest in child care issues. She has led from the Opposition Benches incredibly well.
My hon. Friend the Minister is right to say that child care costs should not be a barrier to work for parents, and the Bill goes further than ever before to help achieve what we all want—for parents to have the opportunity to go back to work after they have had children, or to continue in employment when they have children of a young age. I am glad that the Opposition will support this important Bill tonight, because child care costs are not a problem only for those on very low wages; they are a problem for almost all the parents I have talked to, and it is right for the Government to consider how to address it.
Under this Government, more women are in work than ever before and, interestingly, the cost of child care for parents is falling—perhaps those two issues are not entirely separate. The Government have set the standard when it comes to enhancements to child care, not only by taking on what the Labour Government put in place, but frankly by going a great deal further: free entitlement to 15 hours a week of early-years care for four and five-year-olds and 40% of two-year-olds; new support under universal credit; and tax-free child care, which will mean that for the first time ever, people who are self-employed can get access to important child care help and support when running their own businesses.
I disagree with comments made by the hon. Member for Newcastle upon Tyne North about the Prime Minister and the families test, because I think the Bill passes that test with flying colours. It shows that we have been listening to parents and families, and that the Government have acted.
Parents want choice on child care—the Minister knows that, as do the Government. We all want child care that will fit around our children’s lives and needs and our family life. I believe that the Bill takes us one step further towards giving freedom to parents to choose the child care they want and need for their children. That will provide an enduring framework for changes to child care in the future. I hope the Minister will come back to the Dispatch Box when the Bill becomes an Act, and say how we can use it as a framework to provide further support in the future. I am sure she will.
Question put and agreed to.
Bill accordingly read the Third time and passed.