The Secretary of State for Education (Nicky Morgan)
I beg to move, That the Bill be now read a Second time.
I am delighted to open this Second Reading debate. At the general election, the Prime Minister promised that a Conservative Government would
“give working parents of three and four-year-olds 30 hours of free childcare a week”.
We put the early years at the heart of our manifesto because we know how important those years are for children’s school readiness and future educational success. We also know that working families struggle to find flexible, affordable and high-quality childcare. For many parents, this challenge is the biggest barrier to work. So I am determined—and this Government are determined—to deliver these measures that will give children the best start in life, support parents to work and allow our economy and our society to prosper as a result.
We brought forward this Bill so that we can give working parents an extra 15 hours of free childcare—in addition to the current 15 hours of free early education for all three and four-year-olds. The 30-hours offer will give hard-working parents a real choice to earn more by going out to work or working more hours, if they want to do so. We have not wasted any time in delivering on this commitment. Just one month after the election, we introduced this legislation to the other place and launched a review of the cost of providing childcare—something that providers had long called for to inform a fair and sustainable funding rate.
Mrs Maria Miller (Basingstoke) (Con)
My right hon. Friend rightly says that she wants to make sure that her measures are delivering for all children. How is she going to make sure that this Bill delivers for disabled children and their access to childcare, which can be so important for helping parents who want to get back into work?
Nicky Morgan
I thank my right hon. Friend very much indeed for that question. She raises an important point. We want local authorities—in fact, they are under a duty—to ensure that they provide places for all children, including those with disabilities.
This Childcare Bill and the 15 additional free hours it provides is, of course, part of an overall package of childcare measures being introduced by this Government. My right hon. Friend has already talked today about the fact that we are spending over the course of this Parliament £1 billion more on childcare every year. I shall come on to talk about this in more detail.
We will conduct an early years funding formula review, as we want to understand how providers cater for children with disabilities and special educational needs. I should also point out for the sake of completeness that our tax-free childcare proposals mean that the maximum amount parents of these children could pay into their childcare accounts is double the amount that could be paid for children without disabilities. Parents can use that money for children with disabilities until they are 18, and for children who are not disabled until they are 12. I hope my right hon. Friend will agree that we are offering a comprehensive package of childcare support for all children and all families.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I am very grateful for what the Secretary of State has said, but can she reassure nursery providers in my constituency, such as Broadstone Christian nursery and Montessori nursery in Lytchett Minster, that there will be a fairer funding formula? We heard about the formula a few moments ago, but it is particularly important for childcare providers.
Nicky Morgan
I am delighted to hear about the work of the nurseries in my hon. Friend’s constituency. Yes, I can give him that assurance. The national funding formula review will apply not only to schools but to early years, and it will include the high-needs block of funding as well.
Bob Stewart (Beckenham) (Con)
The doubling of hours for childcare is great, but how will we ensure that the quality of the care that our children receive will be doubled up? How will we ensure that there are sufficient places, and that they are of the right quality?
Nicky Morgan
My hon. Friend has raised an important point. We are, of course, doubling the entitlement to free childcare for two-year-olds, which originally applied to 20% who were the most disadvantaged, and now applies to 40%. The sector responded by creating an additional 230,000 places over the last Parliament. It has already risen to the challenge, and will do so again. I shall go on to say something about the way in which families will respond to the entitlement and how they will use the additional hours—I am sure that other Members will speak about that as well—but we know that there is already spare capacity in the system.
Emily Thornberry (Islington South and Finsbury) (Lab)
The right hon. Lady will correct me if my reading of the Blue Book is wrong, but I understand that the maximum amount will be £5,000 per child. If that applies only to term-time, we are talking about 30 hours times 38—1,140 hours—which, as things stand, means a maximum of £4.38 per hour. In my constituency, where childcare costs more than £9 an hour, that will not be enough to pay for it.
Nicky Morgan
I shall go on to talk about the hourly rate. I shall be publishing the findings of the funding rate review, but as part of the funding formula review, we want to ensure that as much money as possible goes to the front line.
Julian Sturdy (York Outer) (Con)
The Secretary of State is right to refer to the fairer funding formula, which is vital to nurseries. She will probably come to this later, but what measures is she introducing to guarantee that local authorities will pass on all the extra funding to nursery providers, and will not top-slice it?
Nicky Morgan
I will come on to that, but my hon. Friend is absolutely right. As I have said, we want as much money as possible to go to the frontline, and that will be one of the issues that we will raise as part of the funding formula review.
Nicky Morgan
I am going to make some progress. I think the hon. Lady will want to hear what I say about rates. She may want to ask a further question after that.
The hon. Member for Manchester Central (Lucy Powell) is on record as saying that she is pleased to see that the Government are offering more support for early years, and wants to see our policies turned into reality. Today, she has the chance to demonstrate her support by joining us in the Lobby to support the Bill. It appears that she will be doing that, and I welcome the support of the Labour party.
Questions were raised in the other place about why the Bill was introduced so early. My response to that is “Why would we wait?” It is clear from the interest expressed by Members today, and from the reaction of our constituents, how successful and important the existing 15-hours offer is in supporting better outcomes for children. As the OECD’s latest “Education at a Glance” study reminds us, the United Kingdom is one of 13 OECD countries in which more than 90% of children aged three are enrolled in pre-primary settings, and pupils who each received one year of pre-primary education in the United Kingdom perform better at the age of 15 than their peers who did not.
We also know that the extension of free childcare is something that working parents want, so instead of waiting, we committed ourselves to implementing the extended offer early in some areas, from September 2016. We know that that is what parents want because we have listened to them. Over the summer, my Department consulted nearly 20,000 members of the public and 750 employers. Those who took part told us that they wanted 30 hours of free childcare and that the increase in hours would support their work choices. I heard that myself on a visit to Rolls-Royce in August with the Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah), who has responsibility for childcare and education. Employees talked to us about their childcare decisions and what they are looking for from the entitlement to 30 hours of free childcare. It was a pleasure for us to meet them and I thank them for sharing their views. They were very clear that they want more flexibility and choice in how they can access childcare.
I am determined to ensure that high-quality, affordable childcare is available to those parents, so that pressure is taken off their household budgets, and so they are more financially secure and better able to plan for their future. I am confident that we have a childcare sector that will deliver. The childcare market is flourishing: it has grown by 230,000 places since 2009.
Mrs Flick Drummond (Portsmouth South) (Con)
Does my right hon. Friend agree that the 124 childminders who create 597 places in Portsmouth make a big difference to the overall quality of childcare? Will measures be put in place to support them with administration, in particular?
Nicky Morgan
I thank my hon. Friend for her intervention. Childcare by childminders is very much part of the response. They are popular and flexible. We want to continue to do what we did in the last Parliament—to offer childcare business support grants, which enable people to set up in business as childminders; often they are women setting up in business for the first time. We welcome their contribution to this market.
Providers have demonstrated what they can do through the two-year-old free entitlement programme, with nearly 60% of eligible children accessing a place at the beginning of this year, four months after the entitlement was extended. Now we will increase our overall investment in the childcare sector and set an increased funding rate that will enable providers to deliver the entitlement and ensure fair value for the taxpayer.
The Chancellor has just made the autumn statement and he could not have demonstrated more clearly the Government’s commitment to funding the early years and childcare. In the last Parliament, we invested around £20 billion to support parents with childcare. The Chancellor’s announcement today, along with the funding announced at the Budget in the summer, mean that this Government will go even further and invest a record amount in childcare.
The Government will provide more support than any other in history, with, as I have mentioned, a package that includes rolling out tax-free childcare from 2017 and more support for families on universal credit. The extended entitlement means that working families will be entitled to receive an unprecedented increase in childcare support, with savings of up to £5,000 per child per year for working families. By 2019-20, we will be investing more than £1 billion a year to fund our manifesto pledge for 30 hours of childcare for working parents of three and four-year-olds.
As well as being the only party to commit to extending free childcare to 30 hours, at the general election we were the only party to commit to raise the average funding rate paid to providers. Today we are confirming we will do so.
Carol Monaghan (Glasgow North West) (SNP)
Will the Secretary of State give way?
Nicky Morgan
I am going to make some progress on this paragraph and then I will come back to the hon. Lady.
The increase in funding includes nearly £300 million for a significant uplift to the rate paid for the two, three and four-year-old entitlements. That will deliver a new national average funding rate paid to providers. Both rates will increase by at least 30p per hour. For three and four-year-olds, the new average rate will be £4.88, including the early years pupil premium and the rate for two-year olds will be £5.39. With that increase we have set the level of funding that providers need to deliver high-quality childcare, while at the same time providing good value to the taxpayer. We will also consult on a package of reforms to improve efficiency in the sector and further ensure value for money. I can also confirm that the early years pupil premium will not change and is worth £50 million in 2015-16, helping to ensure that three and four-year-olds from the most disadvantaged backgrounds have the best start in life.
The increase in the funding rate is supported by the robust review of the cost of childcare carried out over the last six months. Today that review is being published and will be made available in the Library of the House. I thank those who responded to the call for evidence as part of the review, as well as those who were involved in attending round table discussions across the country.The participation and engagement of organisations including the Pre-school Learning Alliance, the National Day Nurseries Association, the Professional Association for Childcare and Early Years, the Independent Schools Council and other key partners, meant we were able fully to understand the concerns and arguments around the funding of the entitlement.
As the Chancellor has also announced, we are committed to ensuring that funding is allocated in the fairest way. Next year, we will consult on an early years national funding formula, which will give due consideration to funding for disadvantaged children and to special educational needs funding for the early years.
Emily Thornberry
I am sorry; I remain genuinely confused. I hear the Secretary of State talking about a fairer funding formula. In Islington, the rate is £9.40 per hour. Will money be taken from other boroughs to pay for the childcare there? Obviously, an amount less than £4.50 an hour will not be enough to pay for it. These are not my figures.
Nicky Morgan
I suggest that the hon. Lady look at the review, which is being published as I speak. The figure of £9 an hour is not one that we recognise. No such case has been made to us in the course of the review. As I have just set out, the average rate is going to go up to £4.88 for three and four-year-olds, and to £5.39 for two-year-olds. We are confident, based on the evidence we have gathered, that that increase will provide high-quality childcare for children in Islington and elsewhere in the country.
Nicky Morgan
Let me just answer the hon. Lady’s other question. She asked about the funding formula review. That is about making sure that as much money as possible goes to the frontline. I hope she has also had a conversation with Islington council. The duty is on me, under this Bill, to procure the places, but the local authority’s role is to provide a sufficient number of places for families needing childcare and it must pass on as much of the money as it possibly can—we have already talked about top-slicing—so that the front-line providers get the money that the taxpayer is providing.
Emily Thornberry
As I understand it, the figure of £9.50 that I quoted was provided by the Daycare Trust. The Secretary of State really ought to be aware that there are boroughs, particularly in inner London, where the price of childcare is much more than £4.50 an hour. We simply will not be able to afford to provide childcare for the amount that is being announced today.
Nicky Morgan
The Bill is going to enter Committee and I am sure that there will be debates on this, but the evidence-based review we are publishing today does not support the figure the hon. Lady mentions. She might be talking about the additional rate that some providers will charge, but we are talking about the free entitlement and about the hundreds of millions of pounds of hard-earned taxpayers’ money that this Government are going to spend to ensure that working families get the support for childcare that they need.
Michelle Donelan (Chippenham) (Con)
The subject of councils siphoning off a bit of the money has been mentioned. That happens in Wiltshire, and I welcome my right hon. Friend’s intention to try to stop it. What measures will be put in place to achieve that, so that people in Wiltshire will get just as much as everyone else?
Nicky Morgan
Part of the reason for having the funding formula review, which is part of the wider review of school funding, is to ensure that we talk to the local authorities, and the other bodies that receive the money, to find the best ways of doing this. In my opinion, that should involve maximum transparency so that people know how much money is being given by the Government, how much the local authority is receiving and how much is being passed on. That would enable the childcare-providing businesses and the families who were potentially going to be paying additional costs to know exactly how much money was not making it through to the frontline. We need to have that review and ensure that we get contributions from across the country.
Julian Sturdy
Is this new money going to be ring-fenced? I am a bit uncertain about that. I had assumed that it would be ring-fenced specifically so that it could go to nursery providers.
Nicky Morgan
The money for childcare providers is paid to local authorities as part of something called the dedicated school grant, and it is obviously paid for the provision of childcare. This goes back to the point I have just made about transparency. We need to know exactly how much of it is being spent and how much is reaching the frontline. In this case we are talking about childcare providers, but this also applies to the other money that local authorities receive for their education budgets.
Let me turn to the funding review clause, which was added to the Bill in the other place. Now that we have carried out a substantial funding review and acted on its findings, we want to get on with implementing free entitlement. However, the first clause in the Bill, which aims to establish an independent funding review before the Bill comes into force, will put early implementation at risk. Despite claiming to be on the side of working parents, Labour peers were willing deliberately to delay these important measures by asking for a further funding review.
I appreciate that the hon. Member for Manchester Central and other Opposition Members might be feeling a little embarrassed as the Chancellor has comprehensively debunked all their scaremongering and doom-mongering of recent weeks about education funding. She now has the opportunity to redeem herself by backing the Bill and helping us to overturn the amendments that seek to delay the implementation of the extended entitlement. If she does not, then I do not think working parents will look kindly on her attempts to delay their access to more free childcare.
The Government deliver on their promises, so the Bill intentionally places the duty to secure 30 hours of free childcare on the Secretary of State. Local authorities are very successful in delivering the first 15 hours of free early education for all three and four-year-olds, with a take-up rate of 96%. The Bill places the duty to secure free childcare on the Secretary of State, but I will discharge it through English local authorities, which are best placed to ensure that working parents are able to access their free entitlement.
The Government are committed to working with local authorities as we develop the delivery of the programme now, through the early implementer stage from September 2016, and beyond that into full roll-out of the system from September 2017. We have been working closely with the Local Government Association and I would like to thank it for the work it has done with us and for its co-operation. About 1,800 local authorities and providers have already come forward to register their interest in taking part in the early implementer pilots. There are huge opportunities through the early implementers to test capacity, flexibility and innovation, and to make sure that all eligible children, including those with special educational needs, are able to access the 30 hours offer.
As part of early implementation, we particularly want to encourage innovative approaches to providing flexible childcare for working parents whose children are disabled. I am clear that early years providers should be able to meet the needs of all children in their care. In the previous Parliament, the Children and Families Act 2014 delivered the most significant reforms to the special educational needs and disability system for 30 years, putting early identification and integration at its heart. We are committed to continuing to make a real difference for families through inclusive early years provision.
We also want to encourage providers to offer the free hours at the times of day that will help working parents with their busy lives and offer flexibility to those working outside of nine-to-five. That means delivering flexible, full-day childcare, which is the type that parents often need. The Government recognise that the need for childcare does not end when a child starts school. That is why we are also going to give more working parents something the best schools already do. We will give parents of school-aged children the right to request childcare in the form of breakfast and after-school clubs or holiday care at their child’s school.
Jess Phillips (Birmingham, Yardley) (Lab)
I welcome the news about before and after-school clubs. Will the Secretary of State guarantee that parents will be able to access those places? I recently lost all breakfast facilities for both my children and was offered only one morning a week on two separate mornings for each of my children, which is absolutely no use to me. Will she guarantee that parents like me will be able to get that?
Nicky Morgan
The hon. Lady sets out precisely the problem we are trying to solve. She and other parents at her children’s school would be able to contact the governing body and request that. I will publish more details shortly. There is a real need for schools to make their facilities available for the schools or others to provide both before and after-school clubs and activities. That would extend to having provision during school holidays, which are another time when it is very difficult for working parents to juggle their parental responsibilities while keeping employers happy.
I talked about tax-free childcare. I do not know the ages of the hon. Lady’s children, but up to the age of 12 she will be able to pay money into the account. The Government would top that up, up to £2,000 a year. She could also then use that for provision. In my experience, when schools and others realise there is parental demand they want to respond to it.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
I am delighted to see that the Government are trying to implement more Labour policy. The Secretary of State talks about the provisions that schools can make, so will she confirm that she has allowed the Chancellor to deliver a £600 million cut to the academies budget, through the education services grant?
Nicky Morgan
First, the hon. Gentleman should be pleased the Conservative party is on the side of working people, as he will know that his own Front-Bench team are not at the moment—if he would like to join us, he would be very welcome. Secondly, when he was shadow Education Secretary at the general election, his party did not commit to increasing the funding for early years in the way we have done. We can, of course, have a wider debate about the schools budget, but that is not the subject for debate today. I just point out to him that not only have we committed to protecting the schools budget in real terms, but by the end of this Parliament the Department for Education’s resource budget will be higher than it was at the start. His policies would never have delivered that.
Emily Thornberry
I have a number of questions, but I will just stick to the money. When Labour was promising 25 hours a week in term-time only, as opposed to 30 hours a week in term-time only, the Minister at the time told us it would cost £1.6 billion. Is not the Secretary of State’s problem that she is missing £1 billion? That is why she cannot cover childcare at its real cost.
Nicky Morgan
Yet again, I do not agree with the hon. Lady’s figures. The point is that she is missing the additional help we also giving to families through tax-free childcare and through universal credit, which net each other off. She needs to look at the funding review rate that has been published today, where she will see the response from those who are working in the sector regarding the rate they have been asking for and the reason the figures have been arrived at today. I have just mentioned them and they are an increase. She should also take note that we are going to be spending £1 billion more on childcare every year in the course of this Parliament. If she wants to be a member of the Committee, I am sure that she would be very welcome and that her Whips will ask her to do that.
Let me turn to eligibility for this childcare package. One of the key messages from parents during the consultation was a desire for a simpler system. We confirmed in the other place that eligibility for the 30-hour entitlement will align with tax-free childcare. As the Chancellor set out, parents will be able to access the 30-hour entitlement if they each work at least the equivalent of 16 hours per week at the national living wage—or national minimum wage for those aged under 25—including those who are self-employed. In the case of lone-parent households, the same threshold will apply. This makes it a significant offer of additional support and means that anyone earning more than £107 a week, at this year’s minimum wage rate, will be eligible.
As many parents and children will be able to benefit from both the extended entitlement and tax-free childcare, it makes sense that parents will be able to apply for both schemes through a joint online application being developed by Her Majesty’s Revenue and Customs. This will provide a simple and straightforward way to access both schemes, saving parents and providers valuable time. The Government recognise that families are complex and that different circumstances need to be taken into account, so the additional free hours will be available where both parents are employed but one or both parents are temporarily away from the workplace—for example, on maternity or adoption leave. That will ensure continuity and will limit disruption for young children and providers. The additional free hours will also be available where one parent is employed but the other has substantial caring responsibilities or where one parent is disabled.
We are making a significant commitment to investing in the early years, but doing so at a time when we are facing difficult decisions across all spending areas. At the centre of these difficult decisions has been the belief that it is right for those with the broadest shoulders to bear the greatest burden. We therefore intend to introduce an income cap, whereby parents who earn more than £100,000 per annum will not be able to access the additional entitlement.
We want to support parents to make informed choices about what is right for them and their children. To do so, it is vital that parents have easy access to information about the childcare available in their area, including hours offered and cost, as well as suitability for disabled children. That is why, through the Bill, we have introduced a requirement on local authorities to publish information and advice for parents on childcare in their area. The childcare.co.uk digital app, which now allows parents to search for free childcare for two, three and four-year-olds based on where and when they need it, will make it even easier for parents to find out about high quality and flexible childcare places. That will mean that parents can access the information they need to find the childcare that is right for their child and that suits their family’s circumstances.
The message and the measures in this Bill are clear: the Conservative party is the party of working people and this Government are on the side of working parents. Through the passage of this Bill, we will fulfil our manifesto pledge to do more to help ease the pressure on many working families by supporting them with the costs of childcare. We are pushing forward with this legislation to get families that support as quickly as possible and it should be supported from all parts of the Chamber.
I look forward to hearing Members’ contributions, and I hope that the principles behind the Bill are ones that everyone in the House will support. The Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah), who is responsible for childcare and education and I look forward to working with all Members on this Bill.
Lucy Powell
With respect, neither has the hon. and learned Lady seen the review, and she misunderstands the nature of the market. The hourly rate that is paid to nurseries via local authorities is not a cap on the cost of the childcare but a cap on the amount that the nursery can claim. The true cost of the childcare, as we have heard, is significantly more. In places like Islington, the true cost of the childcare provided can often be as high as £9 an hour. In the case of nurseries in my constituency, it can be considerably higher than the hourly rate, which I understand has gone up by 30p. Therefore, the private providers cross-subsidise from the free offer that they make to parents, with paying hours that other parents pay for. The hon. and learned Lady may well look puzzled. I know a considerable amount about this topic, having been the shadow childcare spokesperson for two years, so she can have a debate with me if she likes.
I do not need to see what has been put in the Library to know that there are major problems with the childcare market, even if the hourly rate is increased by 30p, and even if the early years pupil premium is used to cross-subsidise, taking money from elsewhere.
The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)
The cost of childcare review that was undertaken by the Department over a period of six months had 2,000 responses, including from all the sector representatives. The hourly rates that have been announced today reflect the data that were given to us by the sector, including the profit and loss accounts of providers. I would encourage the hon. Lady to look at that before criticising the rates that have been announced.
Lucy Powell
Of course I will look at it. Perhaps next time we are having a Second Reading debate where funding is so critical, Ministers might care to let Opposition Front Benchers have sight of such important information before we embark on it. As the Minister knows, there remain key issues about the ability of the vast majority of providers in the sector, who are private and voluntary providers, to deliver these free hours, notwithstanding the challenges that remain for schools.
Emily Thornberry
Reference has been made to the cost of childcare review, and we have been told that 6,000 people have put in for it. It has 184 pages. We know that it is yet to be found in the Library, because people are burrowing away there looking for it.
Emily Thornberry
Yes, but it is taking a certain amount of time to print it off. Therefore, we have not been able to look at it in advance of this debate, nor even during the debate. In those circumstances, my hon. Friend presumably agrees that it really is a farce having this Second Reading debate now.
Lucy Powell
I do of course agree with my hon. Friend, who makes a very good point. This is all regardless of the fact that this policy still has a considerable funding shortfall, even under the new hourly rates, as the Minister himself has said. When Labour announced before the last election that we were seeking to increase the number of free hours from 15 to 25, he said that that policy would cost £1.2 billion. That is far greater than the funding allocation that the Government have put forward for an additional five hours a week. There are big funding gaps that they have yet to address, regardless of the hourly rate being paid and the information that has been put in the Library.
House of Commons Library analysis has shown that there are over 44,000 fewer early years childcare places today than there were in 2009. In addition, six in 10 local authorities tell us that they do not have an adequate supply of childcare for local parents. There is a downward trend in childcare places that should cause concern. As I said, private and voluntary providers make up the vast majority of childcare places in England. If there is not adequate resource for these nurseries, they will simply not offer the 30 hours, leading to a reduction in choice for parents. I welcome the increase in the hourly rate, but questions remain about how many new places will be provided. Without an increase in supply, costs will continue to rise for parents.
Parents will also be very concerned that the quality of childcare could be damaged by the Government’s failure to adequately support their proposals. A wealth of evidence from the Education Committee and Ofsted clearly identifies strong links between outstanding provision and the best qualified staff. Poor childcare is worse than no childcare, as the Committee reported, and can be detrimental to a child’s development. I am very concerned that unless the Government have answers on adequate funding, the result will be a diminution in quality provision. Can the Secretary of State give a commitment today that, beneath the proposals and those outlined in today’s autumn statement, there are no plans to reduce quality, to increase ratios or to lower requirements for those who can offer the free entitlement? In summary, insufficient funds and poor delivery could have the opposite effect to what the Government want and lead to fewer places, poorer quality and higher cost for parents.
The Government have ample time to address those concerns before their policy is due to be introduced in autumn 2017. We want to work with Ministers to ensure that their plans are credible and affordable and meet the tests we have set out. Part of the problem is that the Government have no clear strategy for childcare. I hope the Education Secretary will reflect on that and come back to this House in due course with an overarching childcare strategy. [Interruption.] Would the Under-Secretary of State for Education, the hon. Member for East Surrey (Mr Gyimah) like to intervene?
Lucy Powell
I would be happy if the hon. Gentleman had a childcare strategy; this is a very complex market that could do with a proper strategy.
We will continue to support the progress of this Bill through Parliament, but it is the Secretary of State’s responsibility to satisfy this House and the other place—and, indeed, parents—that the plan for childcare is deliverable, sustainable and affordable. To make the policy work, she must set out her funding plans and reassure us throughout the passage of the Bill. Other questions also remain unanswered. For example, who will be liable to prove that parents are working and are on sufficient hours, and how will disabled children be supported by the Bill?
I want this policy to work. I want it to be a success, to have real meaning for parents and to ensure that children are supported to achieve a great start in life. I look forward to working on it with the Education Secretary, and I recommend that we support the Bill this evening.
Tristram Hunt
I do know that fact, but if I were an SNP representative I would certainly not defend its role in further education. The SNP has supported higher education at the expense of further education, hammering the poor. I am being dragged away, however, from the Second Reading of the Childcare Bill.
As the shadow Secretary of State suggested, we can all welcome the Government’s policy of extending free childcare for three and four-year-olds to 30 hours a week for working families. This builds on the Labour party offer at the last general election of 25 hours of free childcare, which we were told was unaffordable and could never be delivered. More importantly, it builds on decades of work by hon. Members on both sides of the House in making the case. Any legislation that aims to tackle the childcare crisis, to increase maternal rates of employment and to generate long-term growth has to be welcomed, but over the last five years the Government have made it much harder for parents to find the childcare hours they need. Compared with 2010, there are more than 40,000 fewer childcare places, and six in 10 councils report that they do not have enough childcare available for working families—not least in Oxfordshire, where I know the Prime Minister is leading the anti-austerity movement.
At the same time, childcare prices are crippling families that are already under pressure with parents spending more than £1,300 extra on childcare than they did in 2010. In Stoke-on-Trent, costs have increased by almost 73%, so anything that attempts to redress those impacts on families is to be welcomed. The question, I think, is how it is to be funded.
I welcome the Chancellor’s announcements today of the £300 million of additional funding for the scheme to increase the hourly rate childcare providers will receive, once this measure is introduced from 2017-18, alongside the £50 million of capital investment to create additional places in nurseries to be brought in from the same year. As my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) will explore in her incisive speech, however, the figures do not quite add up. We can reflect again on the irony that we were told during the election campaign that 25 hours was wholly unrealistic and could not be done, while the Government have now come up with some completely different figures. I am sure Chairman Mao would have had a witty aphorism about that.
This ignores the massive childcare places crisis that is hitting the sector now. As the shadow Secretary of State suggested, the Government’s free childcare policy is already vastly behind schedule. Today, Ofsted is announcing an 11,000 fall this year in the number of childcare places provided by nurseries. We are actually seeing a drop in the course of this year, which is leading to many providers having to close, resulting in a further shortage of places. In my own Stoke-on-Trent constituency, there are 74 fewer registered providers than in 2009, which is evidence that the underlying infrastructure needed to deliver the Government’s announcements today is creaking to breaking-point.
The Institute for Public Policy Research has warned in its recent report on the Bill’s implementation that if more childcare providers close it will drive down childcare quality, with poorer outcomes for children and less choice for parents as the market shrinks. In the face of increasing demand and decreasing provision, it is likely that the Government will have to deregulate childcare or weaken childcare ratios—we can go back to that old debate—to make the plan sustainable.
Tristram Hunt
I am delighted that this is probably the third or fourth U-turn of the day—it is hard to keep up—but it is important, when we think about this question, to focus on not only the economics, but the quality of early years provision. As the shadow Secretary of State said, there is strong evidence for a link between a judgment of “outstanding” for childcare provision and the presence of better qualified staff. It is vital that practitioners and settings are appropriately funded.
The Education Committee clearly set out in its excellent report that poor childcare is worse than none and can be detrimental to a child’s development. It is always a depressing moment when one sees young women—it is usually women—who struggle with their own educational attainment working with young children from disadvantaged backgrounds. All the challenges in oracy and early childhood development show that high quality of provision is essential.
Mr Gyimah
Is the hon. Gentleman aware that we are doubling the entitlement, but not necessarily the demand? Many parents already buy more than 15 hours, which is the current free entitlement, of childcare. The policy changes who pays for it. All the scaremongering about reduction in quality does not stack up.
Tristram Hunt
I am arguing not about reduction in quality, but for an improvement in it. I understand the point about doubling the provision, but when there is such ingrained inequality in our society and such disadvantage in so many communities, surely the quality of provision needs to improve.
We know that investment in the early years is about more than just announcing more childcare. The Government have repeatedly ignored, cut and deprioritised a huge part of the infrastructure for early years education. Time and again, children’s centres, a huge part of this country’s early years architecture, have come under assault from the Government. The previous Labour Government tried to make Sure Start centres and early years an essential part of the welfare state. This Government’s ambition to dismantle the welfare state means stripping away one of the elements that are such a civilising part of our society, with more and more centres being forced to close and drastically cut back their services owing to inadequate funding.
There were no announcements today for funding for children’s centres or support for the early intervention grant. According to the Children’s Society, when the early intervention grant, which funds children’s centres, was introduced, its total value was around £3.2 billion in today’s prices. However, by 2015, the value of the grant has been more than halved to around £1.4 billion. By the end of 2015-16, the allocation provided to local authorities through the revenue support grant will have been cumulatively reduced by £6.8 billion compared with funding for comparator services before the Budget in 2010.
Overall, local authorities in England reduced spending on children’s centres and young people’s and family support services by some £718 million in real terms between 2010-11 and 2014-15. That amounts to cumulative spending reductions of more than £1.5 billion. With local authority budgets coming under extra pressure, the outlook for children’s centres is bleak.
The Government do not like this figure, but over the past five years more than 700 centres have been closed. We know that effective early intervention does not begin at the age of three, but with antenatal classes, drop-in health clinics and open access provision. It begins with teaching parents the importance of bonding and attachment. If anything, those first years of a child’s life are the most important for child development. The more we discover about neurological development and the growth of the brain in those early months and years, the more startling it is that the Government have piled on the cuts for the earliest years. They are not serious about tackling disadvantage and inequality. If they were, they would not be making all the cuts in that area. It is no wonder that great charities like Teach First say that poor kids do worse under this Government, and it is no wonder that we see the effects of that in our education system. The Government’s record on protecting the architecture and delivery of early-years education over the past five years is wholly lamentable.
The Labour Government protected the entire education budget, including the crucial early intervention grants that were part of our election promise. This Government protected only schools. Today’s announcement about sixth-form and further education is welcome, but it really means an 8% cut in those budgets over the coming five years. Despite the global financial crash, and with the help of the Sure Start architecture, we slashed child poverty by 900,000 during our time in office. That is what Labour Governments do: that is what progressive Governments do. On the basis of the latest figures from the Resolution Foundation, we know that we shall see child poverty rocket under this Government. Time and again, the early years have been deprioritised.
Labour Members have an enduring commitment to the emancipatory power of early-years education. We believe that it is the most effective way of narrowing the achievement gap so that no children are left behind when they take their first steps inside a reception classroom. We are—I am—supportive of working families—
Emily Thornberry (Islington South and Finsbury) (Lab)
Providing more free childcare for working parents was supposed to be an easy win for the Government. There should be nothing difficult or controversial about it, given the level of support in the country for it in principle and the amount of support the Government would have in this House for it in principle. The Government, however, seem to have somehow made an extraordinary mess of the Bill. In fact, I cannot remember another occasion when a proposal that was so warmly received in principle produced a Bill that was so comprehensively rubbished by everybody who set eyes on it. There are so many questions in relation to it. The defence of the Bill we have heard today is high on rhetoric, but what we want is reality. We do not want fiction. The problem is not a lack of enthusiasm for the Bill in principle. The trouble is that, as my nan used to say, warm words butter no parsnips.
Surely the most important place to start is this: how is it going to be paid for? I am not an expert, but I have been looking at the Blue Book published today and asking some obvious questions. If the amount spent per child from September 2017 will be £5,000—if I am wrong about this, perhaps the Minister could please interrupt me—and we are talking about term-time only working, so 38 weeks a year, then 30 hours multiplied by 38 is 1,140 hours. On the face of it, that means £4.38 per hour will be spent on childcare. I have already explained to the Minister that the average price of childcare in Islington is £9.40 per hour. I am then told that I am wrong, the figures are pooh-poohed, or there seems to be some suggestion that not all the money has been put into the frontline, as if the head of my early years is upholstering her three-piece suites in mink, but that is just the price of education for three and four-year-olds in Islington. The prices are high as they are—it is just a fact.
Then I am referred to a cost of childcare review, which I am told is in the Library but it is not. I send people off to have a look in the Library and they ask around but nobody can find it. Then I am told it is online and that it consists of 184 pages, but I have not got all of them. I have got the ones I could and they total 59 pages. I have therefore had 59 of 184 pages during this debate. I am told that 6,000 organisations have contributed to this review, but I have nothing from any of them. I would like to read this sort of thing, because I take this seriously.
Emily Thornberry
Let me give the hon. Gentleman my view, which, again, is based on experience from my constituency. What happens is that the free entitlement is given to parents and a deal is done, whereby they get their free 15-hour entitlement and then they have to pay over the odds to be able to—[Interruption.] He shakes his head but I am telling him that this is what happens. Parents have to pay over the odds for the additional hours or they pay more money for meals; somehow or other this money is raked back to nursery providers, because they simply cannot provide the childcare at the level currently provided for. He has asked me a question, so I will ask him one, and I wonder whether he will be able to help me with it.
As I understand it, at the moment my local authority gets £4.84 per hour for three and four-year-olds, which is much less than the average charged of £9.40 per hour. If the new national rate announced today with such fanfare is introduced, will Islington actually be getting a cut and will our rate be going down to £4.35 per hour?
Mr Gyimah
As the Secretary of State said in her opening speech, as part of announcing this rate we will be introducing an early years national funding formula, which will seek to ensure that the early years funding is allocated on the basis of need, rather than historical circumstances. Some local authorities get quite a lot of money whereas others get less. We will be looking to make sure that all local authorities are treated fairly.
Emily Thornberry
Again, that sounds great, but it does not make any sense. Does it mean that my local authority will get a cut in its rate or not? If the hon. Gentleman knows, he may intervene on me again, because this is important. As I say, if Islington is going to get a cut in its rate to £4.35 per hour for it to provide places for nursery school children—three and four-year-olds—when the average price in Islington is £9.40 an hour, this is extremely bad news for Islington.
Mr Gyimah
The hon. Lady is throwing out lots of numbers, but nobody has mentioned the £4.35 she has just thrown out there. To answer her question, we have said that we will consult local authorities in order to design the early years national funding formula. Part of that consultation will be about recognising how authorities such as Islington are funded and making the appropriate decisions then. She can contribute to that consultation, as can every other local authority in the country.
Emily Thornberry
I would be interested to know whether the Minister regrets producing the document entitled “Cost of delivering the early education entitlement” halfway through the debate rather than earlier, if it was produced some time ago. He knows that one problem throughout the passage of the Bill in the Lords was that people criticised the fact that it was a cut-and-paste job from the Tory party manifesto put in a four-page Bill and that it has had no detail. The reason the Government have been getting into trouble is that everyone has been saying, “Where is the detail? Where is the plan? How much money are we getting?” And when the Bill finally reaches this place, keen people like me get a copy of half of this document halfway through the debate.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sorry. You are winding up the debate, so you will have a chance to come back to the hon. Lady, but I am sure that she will give way, as she has been very generous so far. At this moment though she has given way to Helen Goodman.
Emily Thornberry
The point is—[Interruption.] I am just pointing out that the Blue Book refers to
“a minimum weekly income level per parent equivalent to 16 hours (worked at the national living wage)”.
A parent could be working 16 hours at the national minimum wage, but still not get free childcare. That is as I understand it, but we are not in Government. We are involved in scrutiny.
Mr Gyimah
The eligibility will be checked by HMRC, and it will be based on the actual income earned, so at 16 hours on the national living wage, someone would have to earn £107 a week in order to qualify for 30 hours of free childcare. In addition to the 30 hours of free childcare, that person may get other support such as the childcare element of tax credits or tax-free childcare. This is an incredibly generous offer, but that is not what the hon. Lady is suggesting.
Emily Thornberry
Is the Minister therefore saying that people do not need to be earning a minimum weekly income at the national living wage, because tax credits would make it up? Or is he saying that people have to get an income equivalent to 16 hours worked at the national living wage, and then they will get tax credits and the 30 hours? These are important questions. This Bill has already been in the Lords. We are now in the Commons. It is important for us to understand the Bill.
We are not against childcare, as some have suggested. We are absolutely in favour of childcare, but we would like it to be funded properly so that people get proper access to it, and that includes my single mothers from the Market estate who may be working only a few hours at the moment, but who would like to have additional childcare available to them so that they can look for other jobs, because if Asda will not increase their hours, they will try to find a job somewhere else. They need childcare if they have three and four-year-olds so that they have some time to fill in their CVs, and go to Jobcentre Plus to get the assistance they need to work further hours. I hope that the Minister understands that.
Mr Gyimah
The answer to the hon. Lady’s question is simple: a lone parent would have to earn £107 a week to qualify for 30 hours of childcare. Eligibility is judged not on hours but on someone’s earnings, because HMRC can monitor earnings, not the hours that people work. If someone earns £107 in half a day that gets them 30 hours of childcare, and if someone earns that in a week they still receive those 30 hours of childcare.
Emily Thornberry
Therefore, someone who works 16 hours on the national minimum wage will not get 30 hours of childcare a week. That is an important point, and I am grateful to the Minister for clarifying it. That message needs to go out if we are talking about fairness. No wonder the end of paragraph 2.61 of the Blue Book states that this measure
“will save £215 million by 2020.”
If we are talking about fairness, opportunity, and ensuring that women are able to go to work, I am concerned about the changes being made.
Emily Thornberry
I am grateful to the Minister for making that clearer. Over the next few days I am sure that many more questions will be asked and many more answers given, and we will get a better understanding of exactly what the country is being offered.
On Second Reading in the other place, the Bill was repeatedly described as a “skeleton” piece of legislation—well, absolutely. Lord Touhig went a step further and called it a “missing Bill”. Their criticisms were well summarised by the Delegated Powers and Regulatory Reform Committee, which in a scathing report observed:
“While the Bill may contain a legislative framework, it contains virtually nothing of substance beyond the vague ‘mission statement’ in clause 1”.
As I was saying, it is a cut and paste job from the Tory party manifesto. The job of the Lords is to scrutinise legislation, as is our job in this Chamber. How can we do that if we do not get a plan or a proper understanding of what the funding will be?
I come to this issue blinking into the light after the Welfare Reform and Work Bill Committee. I became concerned about this issue because, as I am sure the Minister knows, mothers with three and four-year-olds will be forced to look for work on the understanding that adequate childcare will be available for them. Given what the Minister has just said, 15 hours of childcare may be available to them whether they work or not when their children are three and four, but they will need to work additional hours, or earn the amount that the Minister indicated, to receive the full 30 hours.
We are talking about getting women with three and four-year-olds into work, and the other problem that struck me is the obvious point that this is just about term-time working. We are asking the question that single mothers and parents ask all the time: what are people going to do in the summer? For 38 weeks people may get 30 hours’ childcare, but how do they cover the summer period if they are doing low-level work and do not earn a great deal? If they do not accept a job, they could be sanctioned or receive a penalty because they will not be working properly.
In the Welfare Reform and Work Committee we tabled an amendment to say that women should not be forced to look for work when they have three and four-year-olds unless adequate childcare is available. As I explained, if the Government are so confident that adequate childcare will be available for working women, surely they would not vote against that amendment, but they did. That is what has brought me to be so concerned about this Bill, which impacts on the lives of women in whatever department. I am a shadow Work and Pensions Minister, and if the Minister is able to introduce a proper Bill that will support women and their children and help women get into work, that will have an impact across the piece, as I am sure he appreciates.
The House of Lords has said that the Bill contains virtually nothing of substance beyond the vague mission statement in clause 1. In other words, the Bill has almost nothing more to say than the Conservative party manifesto. Clearly, the Government like the idea of doubling working parents’ free childcare entitlement; they just have not worked out exactly how to do it. They might as well have written a Bill saying that the land would flow with milk and honey—we would all agree with that.
Perhaps inevitably, the most glaring admission involves the cost of the free childcare extension, about which we have heard a little today. That seems to raise more questions than it answers. If the level of payment is such as to be less than half the amount that childcare costs in my constituency, there are obvious questions in relation to that. As everyone speaking in this debate is likely to know, childcare does not come cheap, and it rarely, if ever, comes free. Costs have been rising dramatically in the past five years to the point where families in England pay more for childcare than in any other country in Europe apart from Switzerland.
The average cost of part-time childcare for two children under primary school age now exceeds the cost of the average mortgage. Given the spiralling housing costs that this Government have presided over, that is quite an achievement. In my constituency, the cost of a part-time nursery placement of 25 hours a week has risen by 183% since 2010. At an average of £235 a week, childcare costs in Islington are the highest of any local authority in England apart from Kensington and Chelsea. Imagine if someone has two children—how are they going to be able to work? While existing support for childcare costs may be a helpful contribution, it has not solved the problem of a large number of working parents.
The Government say that the Bill doubles for working parents the free 15 hours already available to all parents of three and four-year-olds, but there is no such thing as a free lunch, and, in many ways, no such thing as free childcare. As is well known, the free 15 hours are chronically underfunded as it is. There is no legal obligation on any childcare provider to provide them to any parent, and according to a survey by Citizens Advice, a quarter of them do not. The Minister should be concerned about this. We are concerned about it, and working mothers are concerned about it. Those that do provide it will find themselves faced with a conundrum. The significant shortfall between providers’ reimbursement rate and their actual costs means that somehow a way has to be found to square the circle. The options are limited, and none of them is good. Either the cost of the extra hours will rise, new charges will be added for hidden costs such as activities, pencils, books or whatever, or the supposedly free hours will come with so many strings attached as to prohibit most parents from being able to use them.
It is not at all uncommon for parents to be told that they can access their 15 hours free entitlement but only if they pay more for additional hours on top. For working parents with up to 50 hours’ childcare a week, taking into account the early drop-off and late pick-up, the 15 hours may be free but then there is the additional charge for the 35 hours that are supposed to be provided at much higher levels. With fees at the level that they are in my constituency, this means that even with the free hours, families face annual childcare costs in excess of £20,000 a year—and that is for one child. Let me tell Ministers that not many single parents on the Market estate in Islington have that kind of money lying around. The idea of doubling the entitlement to free childcare without addressing the underlying funding gap is simply out of touch with the reality of the lives of people whom I represent, and we all represent.
The IPPR, in a report published last month that has already been quoted, but which I will quote again, described the Government’s estimate of the costs of free childcare extension as
“inexplicably low compared to other estimates, as well as to current funding.”
It concluded:
“The Government’s drastic underfunding gives rise to concerns that the hourly rates that it will give to providers to deliver this care will be too low, resulting in falling quality, poorer outcomes for children and less choice for parents as the market shrinks.”
As recently as this summer, when the Bill was introduced in the other place, the Government were maintaining the ludicrous fiction that the extension could cost no more than £365 million. It is right for Labour Members to say clearly that that is not right. To a certain extent, I am pleased that we have had a little bit of an answer today with the extra £300, but frankly it is still not enough, and the Minister knows it. He, as I understand it, endorsed what the original childcare Minister, the hon. Member for East Surrey, said when the Government were costing the amount, and we were saying what we wanted to do—[Interruption.] I am so sorry—I did not realise that the Minister is the hon. Member for East Surrey. I do apologise. He will remember saying that Labour’s pledge to extend free childcare for three and four-year-olds to 25 hours would cost £1.6 billon. I am so sorry that I did not realise that it was he who said that, but I am sure he remembers saying it. He is not providing £1.6 billion for 30 hours’ childcare for three and four-year-olds, so how can it work, particularly when the costs of childcare continue to go up? Childcare is so expensive in areas such as mine. I accept that my constituency has a large number of single parents who are not working and who find it extremely difficult to find work, but one of the major reasons for that is the cost of childcare.
I want to support this Bill. I want it to help the single mothers on the Market estate, but I just do not believe it will. I will vote for it—I am not going to vote against it—but it is not as though my criticisms have not already been raised in the House of Lords. They were raised in another place at great length and by people who are much more articulate and much better informed than I am. Indeed, concerns continue to be raised, but what happened today? Halfway through the debate, we got the report. I have only half of it and my copy is still warm because it had to be printed off a computer, so I apologise that I have not had a chance to scrutinise it in depth.
When this Bill came here from the other place, the major criticism of it was that the funding was inadequate and that there was no adequate explanation of how it would be viable. To produce a document that we have to print off a computer in the middle of a debate is not democracy; it does not give us an opportunity to scrutinise what the Government do. The Government should not behave with the arrogance of a Government who have a majority of 120. Their majority is 12, and Bills such as this should have complete cross-party support. We should all be able to work together and not go away with a feeling that the Government are playing games, but I fear that that is what they are doing. It was not necessary to produce the report halfway through the Second Reading debate.
Emily Thornberry
I assure the hon. Gentleman that it was produced halfway through. We sent people to the Library to look for it. It eventually appeared on the internet and attempts have been made to print it out. The process should not be some sort of marathon. If the report had been produced yesterday, we would all have sat down and read it overnight. I am sure my hon. Friend the Member for Manchester Central (Lucy Powell) would have read all of it, even if I had not. We would then have had an opportunity to scrutinise the Bill properly. Given that the criticism throughout has been of inadequate funding and a lack of clarity on that funding, the situation is disappointing, to say the very least.
I think I have made my point. I am not an expert on the subject, but I am concerned about the inadequate amount of childcare that will be produced on time, before single mothers of three and four-year-olds are forced to look for work. I am very concerned that there will not be sufficient childcare, that it will be available only during term time, that it will not be sufficiently flexible and that it is not sufficiently funded. I am particularly concerned about the process we have indulged in on the Bill. It has already been discussed in the other place, but the details we have been given are still inadequate. I am very disappointed.
Pat Glass (North West Durham) (Lab)
This has been a really good debate, with informative contributions from Members on both sides of the House. I will highlight a few of those contributions.
My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) hit the nail firmly on the head: there is a huge funding gap between the hourly rate the Government are making available for childcare and what parents are actually paying. The hon. Member for Glasgow North West (Carol Monaghan) talked about the importance of early learning in childcare, and my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) spoke of falling numbers of childcare places and the shrinking market in childcare. The hon. Members for Kingston and Surbiton (James Berry) and for Ayr, Carrick and Cumnock (Corri Wilson) talked about the importance of narrowing the gap between those children from the most advantaged and affluent homes and those from the least well-off homes. The hon. and learned Member for South East Cambridgeshire (Lucy Frazer) talked a lot of sense about the barriers that a lack of childcare can place in the way of women wanting to return to and contribute in the workforce. I applaud her remark that the Bill should have the needs of the child at its core.
I confirm that Her Majesty’s Opposition welcome the Government policy of extending free childcare for working parents to 30 hours a week. However, the promise of 30 hours of free childcare has gradually been whittled down, in the other place and in this place, to something very different from what parents would expect. We want the provision to be inclusive, high-quality and supportive of good outcomes for all children. We want it to narrow the attainment gap between those from well-off homes and the rest. We know that that gap begins to open from the age of 22 months.
Any parent who has worked, either by choice or necessity, and has placed their child in someone else’s hands will know just how hard that is to do. It is much easier for parents to work if, as they go out to work each day, they can be confident that their child’s provision will have a positive long-term impact on their child’s development, their health and wellbeing, and their future life chances.
We need to be realistic about what is now happening in relation to childcare. We have already heard that there are 40,000 fewer childcare places now than there were in 2010, that six in 10 councils do not have enough childcare available for working families, that working families are spending on average £1,500 more on childcare today—if they can access it—than they did in 2010, and that 40% of parents of children with a disability who want childcare cannot even get access to the 15 hours to which they are entitled.
We want to work with the Government to make the policy work for families, and particularly for children, up and down the country, and we want it to be in place as quickly as possible. Unfortunately, however, as the Bill stands—even after today’s announcement about the 30p per hour increase in the rate the Government pay to providers—there remain really serious concerns, many of which have already been raised in the other place, not least about the lack of detail in the Bill, which the Minister really must address.
The Opposition’s first concern is the funding gap. I do not believe that the Government have adequately explained during the Bill’s passage to date, including today, how the policy will work in practice and how it will be properly funded. The Government have been all over the place on this matter. As we have heard, when talking about Labour’s promise of 24 hours of childcare, the Minister said that it would cost £1.2 billion. However, when he first announced the Government’s offer of 30 hours, he said it would cost £350 million, or £365 million to be precise. By their own admission, they have recently revised the figure to £640 million. However, the Institute for Public Policy Research has identified a £1 billion funding gap in the Government’s plans, even on the basis of the current hourly rate. We welcome today’s announcement, which on the face of it shows that the Government understand there is a funding shortfall, but we believe that the policy is still £1 billion short of the true cost.
The Government have called this Bill the Childcare Bill, and the Department for Education has responsibility for taking it through Parliament, but in fact it is an economic Bill targeted first and foremost at getting parents, particularly mothers, back into employment. There is nothing wrong with that, but it does not put the child at the centre of the Bill. Given the massive funding gap, there are serious concerns that quality will be the first casualty of this policy, and capacity the second.
A wealth of evidence, not least in the 2013 Education Committee report on Sure Start centres and the foundation years—I was the Opposition lead on the Committee—and from Ofsted, clearly identifies the strong links between an Ofsted judgment of outstanding and the presence of better-qualified practitioners and of appropriately funded settings.
In its report the Education Committee highlighted the fact that the cost of poor quality childcare is not neutral. It went on to say that poor quality childcare is worse than no childcare at all and can be damaging. It can have negative long-term impacts on the development of children, particularly children who are already disadvantaged. If the policy is to work, it cannot be at the expense of good quality childcare or a widening of the already wide attainment gap between those from better-off homes and the rest.
Providers have been clear that unless the policy is properly funded, it could result in more poor quality childcare and less, not more, childcare provision. If that happens it will be, as is always the case, the few, well-off, sharp-elbowed who get access to 30 hours of good quality childcare, at the expense of the many, less well-off and less advantaged. That cannot be allowed to happen.
The Bill lacks detail so, as we go through the Committee stage, we will be looking for detailed answers. How will the Government pay for this policy without reducing quality or capacity within the sector, without increasing ratios or reducing regulation, which would have implications for the safety and well-being of children? How will the Government ensure that we have both the premises and the staffing necessary for this expansion in the sector to occur? How will the voluntary sector be helped to contribute to the extension of childcare without pushing out the pensioners luncheon clubs, the WI and the many other groups that currently use church halls alongside mother and toddler and childcare groups?
Exactly who is going to qualify for the extra 15 hours of childcare? Will it apply to those who work non-standard hours, those on flexible working hours, zero-hour contracts, self-employed parents, and parents in education or training who want to return to the workforce? As has been asked many times in the House today, how will the Government ensure that the parents and carers of disabled children can access the extra 15 hours when the overwhelming evidence now is that those parents and their children cannot even access the 15 hours that they are entitled to at present? Some 41% of parent carers of disabled children report that they cannot access the 15 hours of free childcare currently on offer, either on the grounds of cost or because staff are not trained and sufficiently confident to care for their children.
Only 21% of local authorities say that they have sufficient childcare for disabled children in their area. The Minister may recall that I chaired a parliamentary inquiry into childcare for disabled children. I was going to say that I was shocked by the outcomes, but actually I was not shocked; I was incredibly disappointed that disabled children and their parents matter so little in our society that we are not prepared even to make sure that they get access to the minimum entitlement to childcare. Parents have talked to me about institutional discrimination and systematic discrimination in childcare, and that is with the current 15 hours. They are very concerned that the existing awful situation for disabled children will deteriorate further unless the Government specifically address this issue.
I mentioned earlier that the manifesto promise was 30 hours of free childcare. That has been whittled down ever since. The Secretary of State told us today that the rates that will be paid are £4.88 for three and four-year-olds and £5.39 for two-year-olds. However, early analysis shows that when the early years pupil premium is taken into account, the 30p increase is, in fact, 17p. Taken with the Government’s plans for reviewing funding in the maintained sector, this will result in 250,000 children in 31 local authorities being less well funded than at present. For those local authorities whose rates will drop, including Manchester, Bristol, parts of London and Birmingham, as we heard earlier, the Government must put in place transitional funding to make sure that the 250,000 children and their families who are potentially affected do not miss out.
We heard today from the Chancellor of the Exchequer that the eligibility rate will change from eight hours to 16 hours. Early analysis tells us that this will affect at least 1.4 million workers working less than 16 hours, most of whom are women. The Minister said that there would be a cumulative effect, and that the criterion would be not hours, but money. However, he confirmed that workers on 16 hours who were on the minimum wage would not qualify. Those will mainly be women.
Pat Glass
That means that those on low pay and short hours—mainly women—will be affected.
We have heard today that the thresholds for access have increased; that there will be further delays in implementation, so none of this will be in place before 2017; and that there is a massive shortfall in funding. Quite honestly, parents who voted Conservative in May on the basis of this manifesto promise will be feeling seriously short-changed this evening.
We want the policy to work and we want to help the Government to make it work. However, the Government must be able to answer the questions we have during the line-by-line scrutiny of the Bill, because they have studiously avoided answering them so far. Good opposition is about scrutiny and challenge. We cannot scrutinise and challenge when there are outrageous situations such as the publication of all this information halfway through the debate today. Quite frankly, it is disingenuous. The Minister can be absolutely sure that when he comes to Committee, there will proper scrutiny and challenge of this policy. We want it to work, but it will not work unless we get it right. Proper scrutiny and challenge is exactly what he will get.
The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)
Today is an exciting day for the childcare sector. At a time of austerity when we still have to work hard to balance the books, the Government have made a strategic decision to invest more in early years and childcare. As my right hon. Friend the Secretary of State said, by 2019-20, £1 billion will be invested in the manifesto pledge of free childcare for the three and four-years-olds of working parents.
The hon. Member for Islington South and Finsbury (Emily Thornberry) said that it looked like we had cut and pasted the Bill from our manifesto. I am pleased that people think we are delivering what we said in our manifesto.
The shadow Secretary of State started her speech by talking about Labour’s legacy. She mentioned Sure Start and maternity leave. As she spoke, it occurred to me that the Labour party is still living in the past when it comes to childcare. At one point, there was only one Back Bencher on the Opposition Benches. There clearly is not as much interest in the future of childcare on that side of the House.
Given that the shadow Secretary of State dwelt on Labour’s legacy, let me tell her what our legacy is in this area. In the last Parliament, we invested £20 billion in childcare. We increased the free entitlement for three and four-year-olds from 12.5 hours to 15 hours. We introduced 15 hours of free childcare for disadvantaged two-year-olds. We introduced the early-years pupil premium for the most disadvantaged three and four-year-olds to ensure that they do not start school behind. This Bill builds on a strong track record of success.
The extremely generous funding that the Chancellor announced for the sector today is, for the first time, built on detailed analysis. This is the first time that any Government have undertaken an analysis of the cost of providing childcare. It is important to distinguish between the cost of providing childcare for providers and the cost of childcare for parents. We looked at 2,000 responses, looked at the accounts, analysed the true cost of providing childcare and came up with a couple of rates—£4.88 for three and four-year-olds and £5.39 for two-year-olds—that are fair for the taxpayer and sustainable for the sector.
Some Members have asked whether the first 15 hours of provision will be different from the second 15 hours. We will pay the same rate for each, so there is no dumbing-down of the policy, as some researcher who was quoted in the debate has said. Nor are we changing staff to child ratios again, as some reports have said we will have to do to deliver the policy. Staff qualifications will remain the same.
Lucy Powell
Aside from the hourly rate, the bigger question that the Minister has been asked today is about the overall package of funding for the offer, which by any calculation falls well short of previous predictions. The key variable is the number of families who will access the offer. On the basis of the original calculation of a cost of about £1.5 billion, about 650,000 families would have been accessing it. However, the costings that the Government have outlined today suggest that they now believe fewer than 250,000 families will access it.
Lucy Powell
Well, the Minister can work out the maths himself. I can help him if he likes.
Mr Gyimah
That point is completely irrelevant. The first 15 hours will be a universal offer. Every three and four-year-old in the country will get 15 hours of early education. The Chancellor outlined today that there will be an income cap for the second 15 hours, so that people who earn more than £100,000 do not get it. The progressives on the Conservative Benches believe that is right. We also believe that, given that the measure is a work incentive, it should encourage people to work more hours.
The overall cost has been mentioned a number of times. The Labour party’s proposed 25 hours of childcare would also have applied only to working families, and Labour did not say that it would increase the rate paid to providers, which we have done. I am on record as saying that the proposal would have cost £1.5 billion. The reason for the discrepancy between Labour’s numbers and our numbers is that we recognised that if we extended the free entitlement, there would be less demand for other Government-funded childcare programmes. Once again, Labour got its numbers wrong.
Lucy Powell
I actually made the costings calculation myself at the last election. The discrepancy in the figures is way bigger than the Minister has outlined. The cost per year of the Government’s additional hours proposal will be about £2,500 for each family who qualifies for it. If the Minister divides the overall budget that they have allocated for it by that number, he will find that his Department has significantly reduced the number of families that it anticipates accessing the offer from about 600,000 to about 250,000.
Mr Gyimah
The hon. Lady is absolutely right that fewer families will access the additional hours, particularly among the well-off. It is right that we have introduced an income cap.
My right hon. Friend the Member for Basingstoke (Mrs Miller) made some fantastic points. I particularly welcome her suggestion that Hampshire participates as one of the early implementers of the policy, which I would definitely like to consider. She rightly mentioned childminders, who are often forgotten in debates on childcare. They offer excellent childcare based in the home, and they can offer parents much needed flexibility. We will look at the burdens of bureaucracy that affect them.
My right hon. Friend also mentioned the need to make the offer as simple as possible for parents, and we will examine that in detail. It should also be simple for providers, as my right hon. Friend the Secretary of State said. We want not only to provide more money to the sector but to reform the system that underpins it. That means having a national funding formula that allows as much of that money as possible to get to the frontline. It also means examining the bureaucracy that means that a provider operating across different local authority areas has to have different contracts within different systems. We will look at that to ensure that providers can deliver as easily as possible.
The hon. Member for Glasgow North West (Carol Monaghan) made some good points about the distinction between childcare and early education. She is right to say that early education is about the child’s development, while childcare is about the parents. This policy ticks both boxes. The first 15 hours, which is the universal offer, applies to every child and is about school readiness, whereas the second 15 hours helps parents to work more hours. That said, I do not necessarily agree with her point about Scotland being a good example. Just 15% of Scottish local authorities, for example, said that they had enough childcare for working parents in 2015 compared with 23% in 2014. I do not think Scotland is the best example as regards sufficiency issues.
Carol Monaghan
Of course, we are talking about ambitious targets and the Minister is outlining his Government’s targets. Those targets are also ambitious, but targets are something that we work towards. We are working towards our targets, as I am sure the Minister will have to work towards his.
Mr Gyimah
I am glad to say that in England we have ambitious targets, but also targets on which we are delivering. For the first 15 hours, 97% of four-year-olds and 94% of three-year-olds are enrolled. The latest information from the early years foundation stage profile shows that more children than ever before are reaching a good level of development.
The non-economic eligibility criteria were mentioned, specifically as regards disabilities. I am pleased to say that in families where one parent is unable to work because they are disabled, three and four-year-olds will be eligible for 30 hours of childcare. We have also committed to including in the eligibility criteria for 30 hours parents who are unable to work because of caring responsibilities as well as lone parents and those on zero-hours contracts. To recognise these situations, there will be a grace period so that if parents lose their jobs, they do not automatically lose their entitlement to childcare.
My hon. Friend the Member for Norwich North (Chloe Smith) gave a very good speech, focusing on the need for sufficiency. I want to reassure her that, as she will have heard in the Chancellor’s statement, £50 million is being made available to increase the number of places in early years provision. Now that free schools can bid for funding to create nurseries, we project that 4,000 nursery places will be created through that programme. I understand and note her concerns about local authority top-slicing, which was mentioned a number of times in the debate, and we will be looking at that very closely as we implement the policy.
The hon. Member for Stoke-on-Trent Central (Tristram Hunt), who is no longer in his place, spoke eloquently, as he often does, but misguidedly about quality in the early years sector. As I have said, 85% of providers are rated good or outstanding and the Government have not only raised the qualifications criteria for staff but are seeing quality increase as well.
My hon. Friend the Member for Kingston and Surbiton (James Berry) made a good case for the value of pre-schools and underscored why this policy, particularly the entitlement for two-year-olds that we have kept in the spending review, is so important. We know that early education can make a huge difference to outcomes at school, particularly for disadvantaged children.
The hon. Member for Islington South and Finsbury (Emily Thornberry), with her usual bluster and conjecture, sought to criticise the policy at every turn but ended her speech by saying that she will support the Bill today. I hope that she will join the Committee, because I would very much like to go through the Bill line by line with her to ensure that we get it right for working parents, which is what I am sure she wants to do.
As the father of an 18-month-old in full day care who I drop off every day, I know what it is like for parents to be concerned about their children being cared for by high-quality professionals and I know what it is like to need flexibility and for it to be affordable, as I know many parents up and down the country do. This Bill and the spending settlement announced by the Chancellor today deliver precisely that: high-quality affordable childcare for parents.
Question put and agreed to.
Bill accordingly read a Second time.
Childcare Bill [Lords]: Programme
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Childcare Bill [Lords]:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 15 December 2015.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Proceedings on Consideration and up to and including Third Reading
(4) Proceedings on Consideration and proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.
Other proceedings
(7) Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—(Simon Kirby.)
Question agreed to.
Childcare Bill [Lords]: Money
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Childcare Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of:
(1) any expenditure incurred under or by virtue of the Act by the Secretary of State; and
(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Simon Kirby.)
Question agreed to.