Draft Childcare (Early Years Provision Free of Charge) (Extended Entitlement) Regulations 2016

Lord Mackinlay of Richborough Excerpts

Monday 5th December 2016 General Committees

[Caroline Dinenage]

I thank the Opposition spokeswoman, the hon. Member for Hampstead and Kilburn, for her welcome for some parts of the policy. I am grateful for her constructive approach and will be happy to respond to some of her questions.

I start by reiterating my opening comments—that we want the 30 hours free childcare entitlement to have a real impact on the lives of working families by making childcare more affordable. That will ensure that parents have real choices about work and are not constrained by the cost of childcare. As I mentioned, we have undertaken extensive consultation with key stakeholders, including childcare providers and local authorities, to ensure that those who will be delivering the 30 hours of free childcare have contributed to the development of the policy. I know that their commitment will be key to making the policy a success, and I have been encouraged by their enthusiasm and determination to meet the needs of parents and children.

We have been very pleased with the early implementers, which is why we went live with the 30 hours offer in eight local authorities in September. The programme is going extremely well, with more than 3,700 children already accessing a 30 hours place. I had the opportunity to visit Swindon last week, to see at first hand how the offer is working for those involved. The early implementers have trialled focuses on different challenges of the policy: Northumberland focused on rurality and Staffordshire and Portsmouth on low-income families, which the hon. Lady mentioned. Swindon is championing flexibility; it has a nursery that is co-located at a hospital site, where staff work some obviously quite challenging shifts. Newham is supporting children with special educational needs and disabilities; I hope to visit them in the next week or so. Wigan and Hertfordshire are also exploring partnership working and focusing on low-income families. We are capturing the learning from those areas throughout the year and sharing it with every area, to make sure that the full roll-out benefits from learning from their successes and experiences.

With regard to the funding, the hon. Lady is absolutely right: we need to get the funding right and ensure that early years providers are funded on a fair and sustainable basis. That is why we are delivering our promise by spending an additional £1 billion a year by the end of this Parliament on free childcare. That will provide more than £300 million a year to increase the funding rate and it will be allocated on a much more fair and transparent basis. In the Government response to the consultation on the funding formula, which was published last Thursday, as the hon. Lady mentioned, we announced that the new national average funding rate paid to local authorities would be £4.94 per hour per child. We have also introduced a minimum funding rate of £4.30 an hour, which will reassure some of the areas that are at the lower end of the scale.

Equally important is ensuring that that funding reaches providers, so that they can deliver all of the free entitlements on a sustainable basis. The new funding rate will give local authorities the scope to pay providers, but we are also maximising funding to the frontline by requiring local authorities to pass 95% of the funding through to providers, and we are making sure that there is fairness in local formulae by moving towards the universal base rate for all providers in a local area. We are also creating a better deal for children with disabilities, as the hon. Lady mentioned, by introducing a new £12.5 million disability access fund, which is worth £615 per child per year, and we are legislating for every area to set up a local inclusion fund for children with special educational needs.

The hon. Lady is rightly concerned about the burden on local authorities. We have committed to undertake a new burdens assessment for the extended entitlement, and we will respond to the findings. We are committed to ensuring that we do not add unnecessarily to the workload of local authorities, which is one of the reasons that the guidelines for the way that this is calculated is done in partnership with tax-free childcare. The aim is not to impose an additional administrative burden on families or add to their confusion.

The hon. Lady mentioned sufficiency. We do not expect that the 30 hours free childcare offer will double the demand for childcare places, as we know that many parents of three and four-year-olds are already accessing more than the 15 hours of free childcare per week and paying for the additional hours themselves. We expect that the market will need to adapt and respond to meet the need of additional demand for places. It has shown that it can do that through the successful rollout of the 15 hours of free childcare for disadvantaged two-year-olds that was introduced in the last Parliament.

As well as learning from the eight early implementer local authority areas, which I already mentioned, we are supporting localised sufficiency needs by providing £50 million of capital investment to support the creation of additional places. We have also appointed a new delivery contractor, Childcare Works, which will be a conduit between the Department for Education and local authorities and work with local authorities to ensure that there will be sufficient 30-hours places from September 2017.

I am grateful to the hon. Lady for her comments on maintained nursery schools. We very much recognise the work that they have done to help the most disadvantaged children to achieve their potential, and we also know that they bear costs over and above other providers. It is important that they have certainty to be able to plan for the future. I am also grateful for her comments on provision for children with special educational needs and disabilities, which I think I have covered. The local authorities’ inclusion fund in their local funding systems for children with SEN will be helpful in that.

I am pleased that the regulations are broadly supported. We all agree with the underlying policy that we must do more to support parents with childcare.

[Craig Mackinlay (South Thanet) (Con)]

There is a small, technical point that the Minister might be able to help me with. It relates to the calculation of income for the self-employed in regulation 6(3). There are some concerns that the regulations are introducing a different method for calculating self-employed income from normal bases. We now have cash basis for smaller businesses, which allows items of a capital nature to be deducted in calculating the old D1 income under self-employment, but regulation 6(4) says clearly that

“receipts and expenses of a capital nature are to be disregarded.”

It therefore seems that we will be going back to the normal basis that we are all used to in calculating someone’s income under self-employment, but I am rather concerned that we will have two bases with one for tax purposes and another for calculating what is deemed income under the regulations. That is a fairly technical point and I wonder whether my hon. Friend can offer some assurance.

[Caroline Dinenage]

My hon. Friend makes an important point. We have sought as far as possible to co-ordinate everything we have done with other Departments to avoid any misunderstanding of that kind or extra bureaucracy or burdens, but to be on the safe side, I will double-check and write to him with the answer to his question.

Question put and agreed to.