Front-loaded Child Benefit Bill [HL]
Friday 8th July 2022
(2 years, 4 months ago)
Lords ChamberFront-loaded Child Benefit Bill [HL] 2022-23 View all Front-loaded Child Benefit Bill [HL] 2022-23 Debates Read Hansard Text
Lord Farmer (Con)
My Lords, the Bill enables the Government to give flexibility to parents in how they receive child benefit. A key effect would be to increase parental choice in how they care for their children in the early years. State support for childcare is of increasing political importance in many developed countries, but only 41% of nought to two year-olds in England are in paid childcare. This is partly because there is limited state help for infant childcare costs, despite this being a particularly expensive stage of life. As well as childcare for those who want to return to work, a new baby can cost a lot to feed and house, and their arrival often requires moving into larger accommodation for all their equipment and for extra bedrooms. More generally, the multiplicity of different childcare support schemes is confusing and off-putting, as some benefit claimants are paid in arrears.
The Government announced that they are making childcare more affordable to ease the cost of living. However, once again it is the Ford-ist approach: “You can have any colour as long as it’s black”—or, “We’ll offer all sorts of help with childcare as long as you pay someone else to do it”. During the first years of infancy, many parents prefer care to be carried out by themselves or, if available, by grandparents or other extended family members who have a very tangible stake in their future. Biological theory refers to kin altruism: humans are inclined to behave more altruistically toward kin than toward unrelated individuals. That inclination is very important when deciding who will care for one’s precious child. Public awareness has grown of how formative the early years are for emotional, physical and particularly neurological development. Some 80% of a child’s brain develops in their first three years, during which adult-infant interaction strongly influences brain architecture and long-term chemical balance.
Key systems for stress response, emotional regulation and the ability to demonstrate kindness and empathy are very immature at birth. An infant’s development in these areas is dramatically affected by their relational experiences because the brain is a social organ. When infants consistently receive kindness through attuned and kind looks and words, their brain’s prosocial systems develop in response. In the absence of sufficiently calming, soothing and emotion-regulating interactions with parents and other key adults, an infant’s stress response can become hypersensitive. They can grow up unable to handle stress well, hypervigilant and more prone to anxiety, depression and anger, both in childhood and later life—hence many parents want to be there in their children’s early years. Some 39% of children under two are looked after by their parents. However, this requires a considerable and increasingly insurmountable sacrifice of income.
My Bill would enable the Treasury to give parents the option to have their child benefit front-loaded, putting more money into their pockets at this frighteningly expensive life stage. Clause 1 would amend the Child Benefit (Rates) Regulations 2006 to allow the recipient of child benefit the choice of receiving it on a sliding scale, getting more in their child’s early years and less as they get older. The total amount of child benefit paid over childhood would be the same as if paid at the current flat rate. Clause 2 provides for the Bill to extend across the UK, as child benefit is reserved to the UK Government. Having this option could help to facilitate parents’ preference not to work outside the home for a short time, or indeed help to pay for childcare. They would then receive less child benefit when their children are older. Receiving the same flat rate of child benefit throughout childhood no longer fits the financial realities of many families.
It was 77 years ago, in 1945, that the UK Government passed the original Family Allowances Act to support families and reduce family poverty, with a weekly sum of five shillings for the second child onwards. This was extended in 1956 to all school-age children. In 1977, the Government reformed family allowances to introduce child benefit, which is payable to mothers from their first child onwards to alleviate child-related costs. Children aged nought to 16 are eligible, as are 17 to 19 year-olds in approved education or training. The weekly allowance is now £21.80 for the oldest child in a family and £14.45 for younger children.
Child benefit’s iconic and attractive features have been retained over the years. For example, it can be paid into the mother’s purse instead of the father’s wallet, it follows the child, and its relative simplicity has significant administrative advantages. However, it was designed for a completely different age—albeit during similarly parlous times for national and family finances—and needs further reform. Patterns of work and childcare are now far more varied. Both parents typically work through necessity, if not choice, and the primary carer is often the father.
The quantum leaps we have made in digital delivery of state support mean that this benefit can and must be delivered in a more sophisticated way so that this significant spend supports families more flexibly. Some 12.5 million children in 7.2 million families were supported by child benefit in 2020-21, at a cost of £11.25 billion. Over the same period, UK expenditure on foreign aid was £11.5 billion and investment in environmental protection was £12.5 billion, and the health and social care levy is worth about £11.4 billion. Expenditure on all these budget items follows significant debate and has an appropriately granular approach, but the Government are legally bound to dispense child benefit in a one-size-fits-all way. This deliberately simple Bill merely provides the legislative lever around which the Government of the day can build detailed policy—for example, how that sliding scale of child benefit can operate across a child’s life. In 2009, Policy Exchange recommended paying half the child’s total entitlement to child benefit during their first three years and the other half over the remainder of childhood. In 2005, the noble Lord, Lord Field, argued that a quarter of the lifetime entitlement should be paid during the first two years of a child’s life.
The diverging up-front costs of different options mean that these decisions are for HM Treasury, as there would be an initial budget shock during the phase-in stage of this reform. New cohorts of children would receive the higher payment, with no immediate compensating savings elsewhere. However, this would also help parents with high childcare costs in the first two years. Any future Government will undoubtedly come under pressure to do more in this area. Importantly, in the long run this proposal is cost-neutral, because over their first 18 years a child would receive the same total amount of child benefit as they would through a flat rate. The Bill also does not tie the Government’s hands in decisions around eligibility. They might want to make higher rates of child benefit in the early years conditional on, for example, attending parenting education and/or objective indicators such as school attendance of previous children or professionally recorded signs of neglect. The Social Justice Policy Group also recommended this reform in 2007. Its polling found that 85% of people agreed or strongly agreed that parents receiving money from the state to bring up their children should be willing to attend parenting classes if necessary.
For this to become law, a government Minister will need to steer it through the Commons, with additional clauses concerning secondary legislation and statutory guidance where policy detail would lie. This legislative shell would effectively need to become a handout Bill in the other place. I urge the Government to do this to help facilitate choices on early years that are beyond many parents’ reach, to work for the hours they want—be they many, few or none—but without further complicating childcare support or “paying parents to stay at home”. With the exception of higher-rate taxpayers and those subject to the benefit cap, child benefit has always been freely given. This Bill enables that freedom to be extended. I beg to move.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, there are two points I wish to raise regarding the Bill proposed by the noble Lord, Lord Farmer. The first refers to the expense of raising a child in the latter years of their youth and the second to the potential unintended consequences of allowing eligible parents to front-load benefit payments.
With the cost of living crisis and our current rates of inflation, the cost of raising a child is higher than ever. A study conducted by the Child Poverty Action Group found that, in 2020, 28% of parents were using their child benefits for general expenses. Following a similar study conducted in 2012, this figure was a mere 2%. Inflation is now at its highest rate for 40 years. What percentage of parents do noble Lords think are using child benefits for general expenses today? Surely it can only be greater than the 28% that were doing so in 2020.
According to the noble Lord, Lord Farmer, the answer is to give eligible parents the opportunity to front-load the benefits in the early years of their offspring’s youth. The Bill in question strikes one as interesting, shall we say, in light of figures that reveal the age-specific expense of raising a child. From research conducted by Moneyfarm, we know that the period between the ages of 15 and 18 is when raising a child is the most expensive. From nought to three years old, food costs alone are on average £675 annually, whereas between the ages of 15 and 18 that increases to a staggering £2,489. The evidence here swims against the tide of the Bill. If anything, it seems wiser to backload the benefit.
The director of policy, rights and advocacy at the Child Poverty Action Group, a person who is well equipped to speak on this issue, warns us that
“now’s the time … to reflect on the erosion of child benefit”.
In real terms, with freezes and sub-inflationary uprating, child benefit is worth 23% less than it was in 2010. It is the erosion of child benefit that ought to be the focus of our attention, not its arrangements. Child benefit amounts to £21.80 weekly for the first or only child and £14.45 for each additional child. Some may be keen to point out that from April the Government increased child benefit by 3.1%. Let me point out what that increase amounts to: it translates to 65p per week per eldest child and 45p per week for each consecutive child. What could you do with an extra 65p a week?
There is currently a campaign under way, endorsed by over 70 organisations, calling on the Government to increase child benefit by £10 a week, per child. According to their calculations, this would cost an estimated £6.6 billion per year, yet it would do more to tackle child poverty than even the £20 uplift to universal credit, which has of course now been withdrawn.
I am sure that your Lordships’ House can appreciate the importance of child benefit as a means of ensuring that targeted support directly reaches those children who need it. The constancy of payments provides a vital layer of security for eligible parents, who can be assured that they have a steady source of income for their children whether they are in work or not.
Of course, giving eligible parents the opportunity to increase the sum of money received in the early years of their child’s youth gives such parents a much-needed layer of financial security when their child’s needs are often most acute. But when making the choice to front-load the benefit, will such parents bear in mind the fact that they must accept a lower sum when the child is older? How does the noble Lord, Lord Farmer, propose that we avoid the prospect of backloading the financial problems by front-loading the benefits?
If the financial situation of the person to whom child benefit is payable worsens by the time their child has reached the latter years of their youth, would they still be forced to receive the reduced amount of child benefit? What does the noble Lord, Lord Farmer, suggest such parents should do in that situation, given that we have just learned about the rising expense of raising a child as the child grows older? The Bill appears to be an indirect way of reasserting the same inadequate rate of child benefit that falls short of what is needed to prevent millions of children from slipping into poverty.
This is not the first time the idea of front-loading child benefit has been brought to our attention. Such a proposal was previously suggested by the Centre for Social Justice, predicated on the suggestion that the early years of a child’s life are the most critical. But all years of a child’s life are equally critical. In the words of the noble Lord, Lord Farmer, the Bill is about increasing choice for parents. I put it to him that the best way to increase choice is to increase child benefit, not adjust the timing of its payments. Pay what is deserved, rather than change when it is paid. Put simply, if the benefit were high enough, there would be no need for this Bill. A time of unprecedented price rises is not a time for minor tweaks to our social security system; it is a time for us to start talking about major increases to child benefit to secure the future of our children.
I conclude by saying that when we have these debates, I always think of our dear and much-loved friend Lady Jowell, who is missed, and the work she did in developing Sure Start, which the coalition Government and the Government opposite destroyed. That is to their eternal shame.
Lord Balfe (Con)
My Lords, I rise to support this short and simple Bill. Such policies have been around for a long time. Indeed, the noble Lord, Lord Kennedy, just mentioned the Social Justice Policy Group of 2007. One of its conclusions was that
“the first three years of a child’s life are the most critical in the development of cognitive and social skills.”
I think that is absolutely right. The first three years of a first child’s life are also the most significant in terms of the disruption and changes in family life. Two of my three children have now produced grandchildren, so I speak as a grandfather, and I have seen the changes in their families, caused by their sudden enlargement and changes to the way that everything had to be looked at.
I must disagree with my good friend the noble Lord, Lord Kennedy. All ages of a child’s life are not the same. Those first three years—in fact, the first few years—are crucial. However, I certainly agree with him on one thing: the way in which the coalition Government and Governments since treated the Sure Start programme was not good at all. It was a very clear attempt to deal with the problems of child development at the very early age when they can be affected.
Let us be clear: this is not a compulsion; you do not have to take the benefit, so there is a level of choice. By enabling a level of choice the Bill will help families to adjust. It is not only the costs of setting up a family for a new child. Even if you do not move, cots, beds, bedding and other things cost a huge amount. I know, as a grandfather who has been buying Christmas presents and thinking about what the baby needs. These things cost a lot and anything we can do to help is good.
There are also the back-to-work costs. My daughter has left work and is still off work with the baby. That has cut the family income considerably, but she is a professional person and will be going back to work in due course, so the income gap will change. But it is not only the income gap: women who leave the workforce also have to have regard to their own careers. One of the points about particularly a professional woman’s career is the need to keep up with the changes that take place in working practices. Careers do not stand still. You do not suddenly become a doctor, a HR professional or an accountant and then nothing changes for 50 years. Things are changing all the time and, if you are going to keep up with developments in your profession, you have to get back to work after a reasonable time.
My daughter works for a pretty good place which gives up to three years of maternity leave, but two years of it is unpaid. You are faced with the dilemma—I know, as we have done the maths—that you either go back to work and get paid, then pay out all the money that you earn on childcare; or you stay out of the labour force and get slightly further behind. Of course, in my daughter’s case, her job is kept open for only three years, because they need you to be up to date. It is as simple as that.
I see the Bill as providing a degree of freedom and flexibility which will be of value to many families. I hope that it can be adopted, because if we can help to get flexibility into the system and help families, enabling parents to make rational choices—at no cost, let me say, to the taxpayer overall; in fact, possibly there will be a saving, at the rate inflation is going—that is a thoroughly good thing to do. As such, I commend the noble Lord, Lord Farmer, and the Bill, and I hope that it will get a fair wind from the Government.
The Lord Bishop of Durham
My Lords, I rise to speak to this Bill with a degree of curiosity. I thank the noble Lord, Lord Farmer, for introducing it.
Children, and the family who cares for them, should be particularly supported in their early years. This is when their most important development happens, so we must want them to thrive. These early years are still too often overlooked in the impact they have on both the leading of a happy and healthy life or the long-term harm of adverse childhood experiences. The Bill is an interesting one, as I can see some of the arguments for front-loading child benefit. However, I also have some quite deep concerns. I understand that the noble Lord, Lord Farmer, has intentionally kept his briefing for the Bill minimal to accommodate the policy-making that would have to accompany it, but there are some key details to learn, or note.
One of the arguments previously made for this policy was that it would enable mothers, or fathers, to stay at home with their children rather than feel that they have to go back to work. Perhaps the inverse of this is that it could be put towards childcare, the prices of which are very high, as we are all aware, and which can be a significant barrier to parents being able to work. However, if my calculations are correct, even at the highest rate of child benefit—that is, for the first or only child—the front-loaded half of the benefit over a period of three years would be less per week than the average rate of childcare for just 25 hours per week, according to the NCT. Because of the high ratio of people to children, childcare for ages nought to two is particularly inaccessible. So, unfortunately, while the figure might take some pressure off, it will be insufficient to cover childcare and almost definitely insufficient to allow a mother or father not to work.
Another concern is that if we are really trying to offer support to children in their early years who most need it, surely, we would have to ensure that the front-loaded rate was not subject to the benefit cap, as it currently is. If this is a benefit that is not means-tested, surely it should not be grouped under the cap in this way.
One of the previous two propositions of this policy suggested that the front-loading element be dependent on engagement with services—the noble Lord, Lord Farmer, noted some of these earlier. However, we need to be careful that we are giving people sufficient dignity and support, and any conditionality element of a front-loaded child benefit would need to be properly resourced with support for children and their families. I wonder whether, currently, there is simply the infrastructure or the political will to resource this.
Finally, I am concerned that this would overcomplicate child benefit, which has the advantage of being very straightforward for all to understand and simple to administer.
So, I conclude that I would prefer to see increased support for all children in their early years, including more adequate provision for childcare and its costs. As the Bill proceeds to Committee—I hope it will—I will want to ensure that it is not to be misused unhelpfully for the support of children throughout their childhood, so significant amendments would be required.
Baroness Berridge (Con)
My Lords, I begin by thanking my noble friend Lord Farmer for introducing the Bill, which is yet another example of his friendly pressure on Her Majesty’s Government on behalf of some of the poorest in our society. He is resurrecting in the Bill a matter that has never been fully looked at, and I hope my noble friend the Minister will commit to sending it out for proper consultation.
The Bill is not suggesting that children in their teenage years do not cost as much or maybe more than children in their early years. Although in countries such as Denmark and Norway, child benefit decreases with the age of the child, in others such as the Netherlands it increases. What is different, as other noble Lords have said, is that in the early years transitions are needed, maybe to larger housing, with the attendant costs, and the purchasing of various essential items, but most obviously much more intensive childcare if a parent or parents want or need to continue working. Also, we increasingly know how important the early years are for cognitive, behavioural and emotional development. I believe that giving parents the option to take a greater proportion of child benefit in the early years is an idea worth exploring.
One can think of many examples where such an option would be helpful to parents. If one child becomes ill and requires frequent hospital visits or stays, there can be increased costs, not only for such visits; if you have other children, you will therefore have increased childcare costs. Of course, there are other benefits, such as carers allowance, but they may not cover all the extra expenditure.
In addition, such flexibility—I argue for great flexibility—might help sort out the vexed issue of parents going on to universal credit or who are on universal credit when their first child is born. Both universal credit and the childcare element, where you can reclaim 85% of the costs, are paid in arrears. However, a universal credit advance is available if the claimant cannot wait the five weeks until their first payment. That advance is repayable over 12 months. As far as I am aware, there is no corresponding advance to cover the upfront costs of childcare. The charity Save the Children says that 90% of childcare providers require payment in advance, and 78% of low-income families with children in England have no savings. Also, one must remember that 2.3 million UC claimants are in work.
The UC childcare payment can be £1,108 if you have two or more children. It is not a surprise, then, that there is evidence that families are going into debt to cover these upfront childcare costs and in reality, if there is a delay in payment, they may have to cover more than one month. While to some this might seem a small level of borrowing, in these circumstances it might be from unorthodox sources with higher rates of interest, and for low-income families on universal credit it is easy to see how this can lead to a debt spiral. Obviously, I am arguing for great flexibility to be able to use quite a large proportion of child benefit in these circumstances. However, could not allowing some front-loading of child benefit in specific circumstances, such as claiming UC, be helpful? A consultation could consider ideas such as this.
Of course, there could be unintended consequences to such a policy. Would it lead, as the noble Lord, Lord Kennedy, suggested, to parents not having enough money for their children in their teenage years? I believe there should be a floor regarding the proportion that can be front-loaded. Also, according to the House of Lords Library, no other country has provided such flexibility in child benefit payments, so we would be the first.
I hope my noble friend can say that Her Majesty’s Government will be able to consult on this matter in the autumn, when matters have settled down.
Baroness Sherlock (Lab)
My Lords, I thank the noble Lord, Lord Farmer, for introducing his Bill and explaining the reasoning behind it, and I thank all noble Lords who have spoken.
I am rather attached to child benefit, and not just because it was a Labour Government who introduced it, phasing it in from 1977, replacing family allowances and child tax allowances. I am not claiming that we invented state support for kids; of course, child tax allowances go back, I think, to 1798, although they disappeared for most of the 19th century. However, after a long campaign by the likes of Eleanor Rathbone, child tax allowance having come back, it was joined by a universal payable family allowance in 1945 as part of the post-war settlement. Of course, family allowance was one of the three pillars of the welfare state in the Beveridge report, along with health and maintenance of employment. It was introduced originally at five shillings a week—I think Beveridge wanted eight shillings but got negotiated down to five shillings; the Minister may recognise that, even in modern times—and after some initial controversy, it was paid direct to the mother.
Eventually, however, the Labour Government decided to replace both family allowance and child tax allowance with a universal, non-means-tested payment for all children: child benefit. It has been incredibly popular ever since: so popular that, although its value has been allowed at times to erode, the principle of universality has never been touched. There was one exception, however: George Osborne decided to claw it back from higher-rate taxpayers, which in my view was an unwise and messy piece of policy-making.
As a universal payable benefit, child benefit represents the transfer of resources from taxpayers as a whole to families with children. Those who do not have children subsidise the cost of raising all children because it has always been recognised, in the language of economics, that children are a public and private good—or, in normal language, parents love their kids and are responsible for them but we all have a stake in this because we all need children as the next generation to staff our public services, run our economy and, crucially, pay my pension. We all have a stake in making sure that we contribute.
My noble friend Lord Kennedy and others have mentioned the costs of raising children. CPHE does regular research into the additional basic cost of a child from birth to the age of 18. In 2020, it was £71,611 for a couple family and £97,862 for a lone-parent family. If you add in housing and childcare, those figures go up beyond £150,000 and £185,000 respectively. I have been doing some back of the envelope—or calculator on an iPhone—calculations. My rough attempt is that, in today’s money, child benefit gives £20,400 for the first child from birth to the age of 18, and £13,500 for later kids. It is helpful but, as we can see, it does not begin to cover the costs of raising a child—nor is it expected to. Of course, extra help is available on a means-tested basis.
What of the idea of front-loading it? As has been noted, this is very much a framework Bill, so I will have to work on some assumptions around the ideas in the reports from the Social Justice Policy Group and Policy Exchange, which have been mentioned previously. They suggest allowing the front-loading of perhaps as much as half the total lifetime allowance in the first three years and tying it to some form of inspection to make sure that parents are being good parents.
The interesting point is that different cases are being made by the noble Lord, Lord Farmer; I am sympathetic to all of them in different ways. There is the case that the early years are particularly important for a child’s development and that it is good for a parent—often, but not necessarily, a mother—to be at home with the child during that period. I am sympathetic to the state enabling a parent to make a choice about being with their child in the early years but I have a specific question: what would this policy be designed to do? Is it to encourage or enable a parent to stay at home with their child in the early years? Is it to direct more money into families in the early years because of a recognition of either the scarring effects of poverty on early life or, as the noble Lord mentioned, the importance of neurological development? Is it because parents believe that the early years are more expensive? We might find different policy solutions to those different problems.
If the policy is designed to enable a parent to stay at home, we need to look at the question asked by the right reverend Prelate the Bishop of Durham: how much would it need to be to make a difference? Again, here are my admittedly probably dodgy calculations. If you directed half of a child’s lifetime child benefit into the first three years, in today’s money, that would give you about £65 a week instead of £21.80 for the first child, and about £43 a week instead of £14.45 for later children. I am sure the Minister will be able to correct that if needed from his Treasury brief, but that was the best I could do with my iPhone’s calculator. That money would be welcome, but I have a question for the noble Lord, Lord Farmer: would it make enough of a difference to enable a parent to stay at home, as opposed to not doing so? Failing that, would it make enough of a difference to enable a parent to pay for childcare so that they can go out to work, as opposed to not being able to make that choice?
The noble Baroness, Lady Berridge, made a really important point about the problems with the support we offer through universal credit for childcare. The Government must take action on that. It is great to offer parents 85% of their childcare costs but, frankly, if they cannot afford to pay the first month’s money, they can never use it; it is therefore of no value at all. Even worse, it is of most value to parents with the most money because they are the ones who can afford to pay the first month and get into the system in the first place. However, I will take some persuading that the best way to deal with the fault in the design of universal credit is by redirecting child benefit, which parents will also need for the costs of raising children, not just the costs of paying for childcare.
Perhaps, then, the aim of the policy is to direct money into the early years? I believe very strongly in investing in early years for both children and parents, which is why I am so proud of the work of the last Labour Government in this area in increasing financial support for children, particularly in the early years, and, crucially, providing support through things such as Sure Start. On one level, I would say that, wouldn’t I? I was an adviser to Gordon Brown, working in the Treasury on these matters at the time. I have to say, probably the single most heartbreaking moment of my life in politics came when I sat on the opposition Benches and watched all that work be dismantled when I first came into this House. It really was heartbreaking. I suppose my question to the noble Lord, Lord Farmer, is this: although we both want to see investment in the early years, given the worrying rates of child poverty among families with children of all ages, is he convinced that this investment is best funded by taking money from a child’s later years?
Then there is the question of where the financial pressures come. When parents first have children, they are often absolutely convinced that the early years are the expensive age; the noble Lord, Lord Balfe, gave us some examples of why they are incredibly expensive. However, I think most parents would confirm that, when children reach their later years, they do not get cheaper; they are just expensive differently. There is a lot of research on this but, if you go to any parenting board or on to any parenting website, you will see debates on it. One discussion on Mumsnet has parents arguing, with some saying, “Oh no, it’s childcare in the early years because they grow out of baby clothes so quickly”, but others saying, “No, no, it’s teens”. One wonderful comment says:
“Teens. Everything costs more, they grow out of expensive shoes on a weekly basis, they eat you out of house and home, they want clothes, they have hobbies, expensive school trips, calculators, books, pocket money, laptop, phone, bike, sports gear, then they leave it all on the bus”.
Not everybody would have, or could afford to have, all those things, but the underlying point is there: children have costs at every single stage. I am sure the noble Lord, Lord Farmer, has considered the impact on families who choose to take more money early in life then find, as my noble friend expressed, that things are very expensive later in life or that their circumstances change. They may have a child who needs extra help later in life. Their family may break up. Their employment circumstances may change. They are then left with even less money than the state thinks they need to raise a child.
My final musing is on the impact of any change such as this on the future of child benefit; the right reverend Prelate the Bishop of Durham alluded to this point. I think child benefit has survived for so long in an area where change is common and rapid because it is popular, simple and effective. Everybody understands it because every parent is entitled to get it for every child. I would not want to do anything to undermine that, so I wonder whether the noble Lord, Lord Farmer, has considered whether making it less simple and less obviously universal might in fact put its future popularity, and therefore funding, at risk?
This has been a very interesting debate. I would just say, in the margins, that my noble friend Lord Kennedy made the point that the thing parents most need is enough money to feed and raise their children. We cannot look at this without being aware of the context in which the Government have significantly—really significantly—cut benefits for children since 2010. Even when things got very bad recently and they had to intervene, all the interventions discriminated against families with kids. The universal credit uplift was welcome but there was no uplift in children’s benefits; it was the same for a single person as for a family with three kids. The recent Social Security (Additional Payments) Bill was again welcome but it offered the same amount of money for a single person as for a family with three kids, even though their energy costs and all other costs are much higher. We need to consider both the amounts of money being made available and the ways in which they are being made available and chosen.
Having said all that, I remain grateful to the noble Lord, Lord Farmer, for his continued interest in family policy and his determination to push his own Government to keep looking at how families are supported. At a time when politics is in turmoil, we have had a chance to take a deep breath and reflect on what is probably one of the most important questions in our political life: how do we, as a nation, enable parents to raise children who will not just survive but flourish, and will be the next generation of our country in the way we would all hope for?
Viscount Younger of Leckie (Con)
My Lords, I congratulate my noble friend Lord Farmer on introducing this Bill and securing its Second Reading. Before I begin, let me say that my imagination was running wild to the extent that, if my noble friend’s Bill was eventually successful, perhaps the value of any front-loaded child benefit might end up in schools’ lost property offices. However, I think we should move on from that.
I thank all noble Lords who participated in what has certainly been a considered and thought-provoking debate, with a good few ideas being promulgated. As my noble friend Lord Farmer set out, the Bill would allow parents to receive a higher rate of child benefit during a child’s early years and a reduced rate as that child grew older. The Government understand the important principle of supporting people who want to start families. This is a subject on which my noble friend has spoken eloquently today. He is known for his interest in family policy and the welfare of children, and continues to be influential in advocating for such changes. I applaud him for that and commend him on the work he does.
I start with some comments in response to a couple of questions that were raised. My noble friend Lord Farmer spoke about recent childcare reforms, and I assure him that a new consultation will look at increasing the number of children that can be looked after by each staff member in early years settings. This could reduce the cost of this form of childcare by up to 15% and could particularly lower the cost for those aged nought to two, which he alluded to.
The importance of the cognitive development of children was raised by my noble friends Lord Farmer and Lord Balfe, and by the right reverend Prelate the Bishop of Durham, and they are completely right in what they say. Children develop quickly in the early years and a child’s experiences between birth and the age of five have a major impact on their future life chances. Good parenting and high-quality early learning provide an essential foundation for children. I assure the House that the Government understand that.
I would like to acknowledge a slightly separate point which is linked to this subject. The Government fully understand the pressures that many families are currently facing with the cost of living. This is why we are providing £37 billion of support to households, including providing the most vulnerable households with at least £1,200 of support this year to help with these costs. The Government also understand the importance of providing support for parents with the costs involved in raising children. Over 7 million families in the UK receive child benefit payments, at flat rates of £21.80 per week for first children, as was mentioned earlier, and £14.45 for each additional child.
Child benefit ensures that families receive predictable, consistent support from the Government for the additional costs of raising a child. The noble Lord, Lord Kennedy, made an important point about the costs of teenage years and I very much took note of the concerns that he raised about money pressures for parents during this time. It is not just about the early years, but I acknowledge the points made by my noble friend Lord Farmer about the expenses of the early years. Unquestionably, he is right to that extent.
However, child benefit is not intended to cover all the costs involved in early years care, as the House will know. The UK offers generous parental pay and leave which is judged by international standards. Women are entitled to take 52 weeks of parental leave, 39 of which are paid. This is more than three times the EU minimum requirement and more than double the OECD average. Parents can share up to 50 weeks of leave and 37 weeks of pay between them, via shared parental leave, a new initiative brought in recently, as the House will know. The standard weekly rate of statutory maternity pay and maternity allowance, at £156.66, is considerably higher than the level of other out-of-work benefits and reflects the special position of new mothers.
My noble friend Lady Berridge asked about hospital care for children and what support exists for them. In the 2020 Budget, the Government committed to introducing neonatal care and leave for parents whose babies need hospital care after birth. It is subject to finding parliamentary time and I am not quite sure when that will be.
New parents in receipt of certain benefits can receive a one-off payment of £500 towards the cost of having a child, through the Sure Start maternity grant. The noble Baroness, Lady Sherlock, spoke about the importance of early years development, and I took note of her remarks. The Government also remain committed to helping parents to access high-quality childcare to support parents in work. Through the DfE’s early education entitlement, as the noble Baroness will probably know, all parents of three and four year-olds can access 15 hours of free childcare per week, regardless of circumstance. Eligible working parents of three and four year-olds can also access an additional 15 hours of free childcare per week. This is described as 30 hours’ free childcare. Some parents may be able to access the disadvantaged two year-old offer, which gives 15 hours of free childcare per week to two year-olds who meet certain social and economic criteria.
Universal credit claimants can also claim up to 85% of their childcare costs, which is worth up to £13,000 a year for a family with two children. Parents not eligible for universal credit or tax credits can use tax-free childcare and receive up to £500 every three months for each child, increasing to £4,000 a year if the child is disabled. Also, on Monday, as the House may be aware, the Government announced ambitious new plans to improve the cost, choice and availability of childcare, which will benefit hundreds of thousands of parents across the country.
I note the cautionary comments made about the Bill by the noble Lord, Lord Kennedy, the noble Baroness, Lady Sherlock, and the right reverend Prelate the Bishop of Durham, but I also noted some positive comments, particularly from my noble friend Lady Berridge. As I said at the beginning, a lot of comments and ideas have come out of this most interesting debate. While supporting families remains a priority for this Government, I regret that we cannot support making changes to child benefit in the manner set out in this Bill. I would like to give the reasons for this.
First, the Government are committed to making the benefit system simple and navigable for claimants. Child benefit is therefore a simple and well-understood benefit, paid at a consistent flat rate to parents. This simplicity has contributed to high uptake rates. Currently, 91% of those eligible are claiming child benefit. Front-loading child benefit would make claiming it more complex, and impose an undue burden on claimants, for example, in respect of submitting certain financial data and completing necessary forms online.
Secondly, it would oblige claimants to make complex, long-term decisions about their future benefits, several years in advance, with no certainty over their future circumstances or income. This slightly plays into the comments raised by the noble Lord, Lord Kennedy. Claimants’ circumstances could change in future. For example, a relationship might break down, as they do, or they might unexpectedly lose a job. By providing consistent child benefit payments, the Government ensure that parents receive guaranteed, predictable support, regardless of how their future circumstances might change.
Thirdly, we must not underestimate the complexity of delivering the proposals set out in this Bill. The Bill would require fundamental changes to how child benefit operates, which would require significant changes in IT systems and upskilling of staff. I suspect that my noble friend Lord Farmer would acknowledge that, in that he has said that this is very much an enabling Bill.
Finally, it is not clear how front-loading child benefit payments would work in practice. It is not clear in the Bill what the new rates would be, at what rate they would be discounted over time or how the Government would ensure consistency and fairness for claimants. It is also not clear in the Bill how we could implement this proposal in a way which is fair for taxpayers.
Making these changes would ultimately necessitate additional government borrowing, given the upfront costs to taxpayers, meaning that we cannot ensure that this change would be fiscally neutral for the taxpayer, as my noble friend Lord Farmer stated. Responsible management of the public finances remains incredibly important at the current time.
The noble Lord, Lord Kennedy of Southwark, asked about uprating child benefit and said that we should uprate by 10%. CPI has been the default inflation measure for uprating these benefits since 2011. This ensures that benefits retain their value in relation to prices. This is a well-established practice, as he will know. We ensure that the welfare system is fair to claimants and taxpayers.
While the Government remain committed to supporting new parents and households across the UK with the cost of living, for the reasons I have outlined, the Government cannot support this Bill, nor consult on it—to respond to a question raised by my noble friend Lady Berridge. However, going back to what I said at the beginning, I recognise and welcome the passion and commitment of my noble friend Lord Farmer on family policy and child welfare. I am sure that he will continue to press the Government on these important issues.
Lord Farmer (Con)
My Lords, I thank all noble Lords for their contributions, albeit they have been somewhat critical. My noble friend the Minister was certainly negative.
I will respond first to the noble Lord, Lord Kennedy, on his point about the later years being more expensive. This Bill is actually about choice: the parents of a young child would have the choice whether to take more child benefit in the early years and less in the later years. My experience, and I think that of many other parents—I do not have the data here—is that, as children grow up, the parents work so their wages increase. They are probably both at work if they need to be.
One of my points was that the Bill would give an option for a parent—a kin, if you like—to look after the baby rather than pass it out to childcare, where that kin altruism is not so strong. As a child grows up to a teenager, not only might he be able to work in a shop to earn some pocket money but both parents and maybe grandparents would be in a better position. They would be earning more money and they would not have quite the same stresses that are prevalent in the first three years of life, with that tremendous stress that a new baby brings into the world with them.
It is a question of choice; my noble friend Lord Balfe made that point. You do not have to take it. You might want to take it to give up some of your childcare allowance in order to stay at home and look after the child. I will not go on about it because we have had a message from the Minister, but I will say to him that this is an enabling Bill. It is a lever and a gift to the Government. There is no flexibility on the statute book about child benefit at the moment. I made that point in my speech. It is a flat rate. At the moment, the Government cannot alter child benefit in any way. Fine, it is simple administratively, but times have changed, as I pointed out in my earlier words. Here is a lever that any Government, of either party, can use in future years when it is on the political radar screen that primary care in those early years is so important that parents need more money then rather than later.
It is a question of choice. All I am saying to the Government is that this is something that they do not even have to enable, but it would be on the statute book, which it is not at the moment. It is a lever that can be used by any future Government if they so require.
I thank noble Lords for the debate. I will not continue further. I beg to move.