Alex Cunningham
Main Page: Alex Cunningham (Labour - Stockton North)Department Debates - View all Alex Cunningham's debates with the HM Treasury
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Alex Cunningham (Stockton North) (Lab)
I rise to support new clause 1 and specifically to speak to amendments 1 and 2, which are aimed at getting a fairer deal for parents with disabled children by respectively rethinking how we identify qualifying children to expand the definition beyond that planned by the Government, aligning it with the prescriptions of the Childcare Act 2006, and increasing the amount of top-up payment available to support parents of disabled children.
The provisions in clause 14 relate to “qualifying children” and lay out the criteria that such children must meet to be eligible for the scheme. Clause 14 is therefore fundamental to the entire Bill, so it is of the utmost importance that we get its provisions right. Failure to do so risks undermining the entire scheme.
After this amendment was brought forward in Committee, I understand that the Government’s intention was to frame regulations such that a “qualifying child” is defined as one aged under 12 or, in the case of a disabled child, under 17. I do not need to recap fully on the reasoning I set out in Committee; suffice it to say, as I mentioned at the time, that the stated definition of a disabled child does not fit easily with section 6 of the Childcare Act 2006, which places a duty on local authorities to provide sufficient child care for working parents with disabled children aged up to 18 “as far as practicable”.
The Exchequer Secretary objected to raising the age of eligibility for disabled children to 18 on the grounds that the age limit was set in line with the child care element of universal credit. However, it is important to recognise that the regulations on the child care element of universal credit reflect a maximum age that was set more than a decade ago when the child care element of working tax credit was established. Put simply, markedly less evidence was available on how families use child care, and our understanding has improved greatly since.
The Childcare Act 2006, however, was designed to take into account the evidence of child care needs in families with disabled children, which in many cases remain significant up to 18 and beyond. It therefore makes sense to adopt the maximum age set by the Childcare Act, which set a higher age because it was based on a comprehensive review of the available evidence, rather than revert back to an historical maximum age that no longer reflects our best understanding of families’ child care needs.
Through the tax-free child care scheme, the Government are committing significant new resources to support parents with child care costs. This will come at a cost of more than £800 million each year, and my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) made it very clear that we welcome that. There must be some scope to ensure that a balance exists between supporting all parents and those who face significant additional costs.
The additional costs of raising a disabled child are well documented, and the Minister herself noted in Committee that she was “conscious” of these additional child care costs that families with disabled children might have to meet. I need not go into any great detail, but these can include such things as extra nappies or continence supplies, specially designed shoes, IT adaptations and communication aids, as well as specially adapted toys or equipment. That is on top of the day-to-day premium that is paid already in the shape of higher travel and activity costs, and the like.
Maria Miller (Basingstoke) (Con)
I understand what the hon. Gentleman is saying, because it accords with my experience in my constituency, but does he not think that local authorities have an obligation to ensure that there is sufficient care for disabled children? KIDS nursery in my constituency is a specialist nursery for disabled children. Should not local authorities be thinking about providing such services as well?
Alex Cunningham
I have been fighting the ending of specialist nursing provision at my local hospital, because it meets the specific needs of parents of disabled children. There has been a considerable reduction in the amount of money that enables local authorities to meet the demand for essential services—if they were given more means, they might well be able to expand provision—but I agree with the right hon. Lady that someone should take responsibility, and I think that my amendment goes some way towards ensuring that that happens.
In Committee, the Minister said:
“It is right that we make the new scheme consistent with the current framework.”––[Official Report, Child care Payments Public Bill Committee, 23 October 2014; c. 192.]
I urge her to reconsider her decision not to increase support for parents of disabled children. She can help today by increasing the maximum age at which disabled children become eligible for the tax-free child care scheme—and, in future, for the child care element of universal credit —to 18, to align the scheme with the prescriptions of the Childcare Act sufficiency duty, and to give the families of disabled children the support that they need and deserve.
At the same time, the Government should aim to establish a framework that would include all children with disabilities in child care in order to fulfil the basic principles of equality and inclusion. Equitable access to affordable, flexible, high-quality child care would be hugely valuable to children’s social and educational development, not to mention parents’ well-being and long-term economic prospects. In its present form, however, the tax-free child care scheme will not effectively remove the additional affordability barriers from parents with disabled children. To address that inequality, the Government should provide the additional top-up payments for disabled children through the tax-free child care scheme that amendment 2 would provide. I hope that the Minister will consider that proposal.
The Exchequer Secretary to the Treasury (Priti Patel)
It gives me great pleasure to speak in the debate. Let me begin by thanking everyone who contributed to the Committee stage, engaging in constructive dialogue, submitting the Bill to line-by-line scrutiny, sharing their views and giving evidence. I think that all Members found the evidence sessions extremely helpful. Opposition Members tabled a number of well-considered probing amendments that were designed to seek clarification throughout—
Priti Patel
I thank my right hon. Friend for her intervention and comments. She is absolutely right; as she will know from discussions in Committee, this scheme has been designed to be parent-focused—parent-friendly is, I think, the term to use—and to work with employers, because this is about engaging both parties to communicate, educate and inform. Employers have an important role to play—we must not forget that—so working with employers on the scheme design is key.
The introduction of this new scheme sits alongside strong early-education entitlement for pre-schoolers to support families and hard-pressed families with their child care costs and support parents to work more if they want to do so.
As I said in Committee and we have touched on again today, we have already committed to reviewing the impact of this new scheme after two years, and it is hard to see what purpose would be served by a review only three months after Royal Assent, given the Government’s clear commitment to reviewing the scheme.
I shall now move on to the points made about amendments 2 and 1 and the comments of the hon. Member for Stockton North (Alex Cunningham). I welcome his comments and I followed his remarks with interest, and we discussed these matters in Committee. We fully accept that child care costs are higher for parents with disabled children; there is no disagreement here at all. The families and parents of disabled children struggle with the challenges of raising and looking after their children. We had a very fluid debate about this in Committee.
The effect of amendment 2 is straightforward. It would increase the level at which the Government top-up payments are paid to parents of disabled children from 20% to 40%. This would mean in practice that for every £10 spent on child care, the Government would contribute £4 and the parent the remaining £6. This contrasts with the position set out in the Bill, which is that the Government would contribute £2 of every £10 spent on child care.
I am very well aware of the keen interest the hon. Gentleman takes in families with disabled children. He spoke with great eloquence in Committee and I thank him for his contribution on this point. As he rightly pointed out, families with disabled children face significant costs, and that fact ought to be reflected in the scheme. A number of witnesses who gave evidence to the Committee made similar points. I have already put on the record that I fully understand the arguments the hon. Gentleman and others have made and it is absolutely right that parents of disabled children are properly supported, which brings me to why I will ask him not to press his amendments.
Alex Cunningham
I thank the Minister for her kind comments, but the multiplication that I want to achieve for disabled children does not even reflect the multiplication factor in their child care costs. Child care can cost £20 an hour, but all I am asking is that the Government double the amount of support they give. I am not asking them to increase it by four or five times.
Priti Patel
I thank the hon. Gentleman for his comment. I outlined measures relating to disabled children in Committee. We recognise the high costs faced by parents of disabled children, and the specialist care that their children need, but increasing the amount of top-up is obviously not appropriate, for the reasons that I have already outlined. I have made a commitment on disabled children, and I am exploring the possibility of increasing the maximum amount that a parent of a disabled child can pay into their child care account. For those reasons, I ask the Opposition to withdraw their new clause.
Alison McGovern
It is important for all of us to recognise the extra pressures on families in rural areas. People’s circumstances are different. We want to increase employment in rural areas as well as in suburban and urban areas. The hon. Gentleman makes an important point.
Alex Cunningham
My hon. Friend helps me to talk about the needs of parents with disabled children. When inflation and prices go up, the increase is felt particularly acutely by those families. Does she agree that the Government really need to think again about that particular element?
Alison McGovern
Again, I support the views of my hon. Friend. Too often, parents of children with disabilities are forgotten in our debates. They have the most important responsibility. Children with disabilities deserve all our care and attention. I hope that, by raising this matter, we can remind ourselves that their parents might not have the time to make these points, so it is important that we all remember the extra costs and the circumstances that those parents face. We all have an interest in this matter. It is why Labour is sceptical about the wisdom of a demand-side-only approach.
In general, better value for money and better outcomes could be achieved through a radical expansion of the free child care entitlement to three and four-year-olds, from 15 hours a week to 25, paid for by an extension of the bank levy. There is no better week than this to be making the argument about extending the bank levy, as once again we are seeing banks being taken to task for their poor behaviour. I make no apology for reminding Members about the importance of that bank levy, especially as it could pay for something as vital as child care.
As we saw from the debate on new clause 1, the Government are not about to accept the policy—more fool them—but we want to ensure that Ministers are required to keep track of the inflationary impacts. New clause 2 requires that within three months of the Bill’s becoming an Act and every three years subsequently, the Chancellor will have to review the impact of the subsidy on making child care more affordable, on what the average cost of child care for parents in work is and on whether supply-led measures could be more effective. That is not a massively onerous burden on the immense capabilities of the Treasury, but a very valuable canary in the coal mine regarding child care inflation.
In Committee, the Minister was consistently against any suggestion of hourly rate capping or other means of placing a brake on any inflationary pressures arising from the policy. A regular review might demonstrate whether the post hoc implementation of such provisions might in fact be necessary if the subsidy is to be anything more than a damp squib.
The Bill is a blunt instrument that fails to target Government funding and gives the most financial support to the best-off families. It will possibly provide some short-term relief for parents, but does little to deal with the underlying problems of inflation, supply and quality in the child care system. There are 40,000 fewer child care places in England than there were when the Government came to power and almost 4,000 fewer suppliers. Childminder numbers are down by 13%. For tens and likely hundreds of thousands of families across the country, the proposals in the Bill will mean little or nothing because they simply cannot find a child care place or access one that will offer the flexibility in hours to fit around work. We need radical reform of the broken child care market. This Bill does not provide it, but by supporting new clause 2 today Members can at least take a step that will help guard against its being a worse than a useless creator of child care cost inflation.
Alex Cunningham
My hon. Friend the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) has already talked about the complexity of the Government’s scheme. Amendments 12, 13 and 3 to 11 are all aimed at simplifying the relationship and interaction between the tax-free child care scheme and other sources of support, particularly tax credits and universal credit.
Members might be aware that I tabled amendments 3 to 11 in Committee with the intention of broadening the provisions of the Bill and allowing those households in receipt of tax credits that do not receive any support for their child care costs in their tax credit award to receive support from the tax-free child care scheme. My hon. Friend the Member for Wirral South (Alison McGovern) has already outlined that the working poor have been hit most by the policies of this Government and I would like that not to apply to child care.
Giving those people help will entail several minor changes being made to the clauses dealing with the special rules affecting tax credits and universal credit claimants: specifically clauses 30, 32, 35 and 36. In Committee, the Minister was very clear about the need to deliver a welfare system that is
“designed to encourage progression into work”.––[Official Report, Childcare Payments Public Bill Committee, 23 October 2014; c. 223.]
However, that is not what will result from the Bill in its current form.
Let us take as an example a parent who is offered 15 hours of work a week on a low rate of pay. Most, if not all, of any gains from this employment could be totally lost in child care costs. They would not get any support from the Government to meet those costs and might therefore not be able to afford to take the work in the first place, and I for one would not be surprised if they chose to spend the time with their children instead. These amendments, however, would create a much greater financial incentive for people to start working part time.
It is important to be clear from the outset that the purpose of the tax-free child care scheme is to provide support for child care costs for those who are not eligible for help from elsewhere. As I mentioned when I raised the matter in Committee, there is an anomaly in the Bill if we are serious about encouraging people to go back into work or to stay in work—particularly those who are on the lowest earned incomes in our society.
The Bill as it stands says that the Minister recognises that there are some who do not get any help through tax credits but that the Government will do nothing to help. I am sure that that is not what she intends. Indeed, in Committee, she specified that the new scheme should not interfere with financial incentives for people to work more hours, let alone create perverse incentives, but that is precisely what the Bill will do.
Many parents who claim tax credits are both working and incurring child care costs, but they are not entitled to claim the child care element because, for instance, they do not meet the minimum number of working hours per week to qualify. Clause 30, however, makes it clear that any tax credit award will be terminated when a valid claim for the tax-free child care scheme is made, regardless of whether the child care element of working tax credit is received. Put into context, that means that households in which one parent is working full-time while the other works 12 hours a week will not be entitled to receive the child care element of tax credits to support them in the payment of child care costs. Similarly, single parents working 15 hours or fewer per week on average will also not be entitled to the child care element of working tax credit. Both would have to pay for their child care out of their own, potentially low, earnings.
Hywel Williams
I very much agree with the thrust of the hon. Gentleman’s argument. His point applies particularly to people in seasonal industries such as agriculture or, as in my constituency, tourism. I am sure that he agrees that there is a particular problem for those sorts of workers.
Alex Cunningham
Yes. I am grateful to the hon. Gentleman for that intervention. I most certainly do agree with him. Pieceworkers and others can have hours and wages that fluctuate over a long period; they will most certainly be affected. I feel that the
“easy-to-use online tool”––[Official Report, Childcare Payments Public Bill Committee, 23 October 2014; c. 222.]
promised by the Minister in Committee will prove elusive.
On top of the sizeable potential for confusion, the different mechanisms by which child care costs are to be paid under the tax-free child care scheme and universal credit are also worrying. As we are aware, under the tax-free scheme, payments will be made through child care accounts. That will provide families who are in receipt of tax-free child care with an important budgeting tool to help them manage their finances; that is particularly important as payments will be made through child care account top-ups before costs are paid by the parent. However, child care support received through tax credits and universal credit cannot be provided through child care accounts. That means that child care payments are not aligned, which gives rise to the potential for further confusion and complexity for parents, and it means that an important budgeting tool for households in receipt of tax-free child care is not available to those receiving child care support through universal credit.
It is worth highlighting that the Children’s Society report “The Debt Trap” found households in poverty containing dependent children to be twice as likely to be in some form of arrears as families on higher incomes. It is precisely these families who are most likely to need help with budgeting, but who will be given the least support. Moreover, universal credit payments of child care costs will be made in arrears. As Members will be aware, parents are usually required to pay child care providers one month in advance, but families on low incomes claiming universal credit are likely to have the lowest savings, if any at all; this will inevitably result in many being forced to borrow money to pay for their child care up front. We should be under no illusion: that could be a hefty sum, and if child care costs are higher during school holidays, further loans may be required to meet those costs. This runs the obvious risk of forging a cycle of dependence. Reporting requirements for universal credit are significantly greater than those for either tax credits or tax-free child care, and any failure to report in time will lead to the loss of all payments for that assessment period.
Mark Durkan (Foyle) (SDLP)
Does the hon. Gentleman not think it strange that in this time of austerity and everything else that we hear about, the Government have come forward, under this Bill, with a child care payment scheme that gives more, including more flexibility, to those who have more? I am thinking of the bankable allowances and so on. Compare that with what the Government are providing, in terms of child care, under the universal credit rules. It really is one scheme for the better-off, and another, much worse scheme for the less well-off.
Alex Cunningham
I most certainly do agree with my hon. Friend. It is a peculiar world—I would use the word “bonkers”—when someone earning £100,000 can benefit more from a new Government scheme than somebody on perhaps £20,000. It is important that the Government think again on some of these points.
Let us not forget that families on higher incomes will get their child care accounts topped up by the Government before they have to pay their provider, so the rich get paid up front, while the poor do not get any payment at all. One possible solution that could be explored further is the provision of child care accounts and tax-free child care to families in receipt of child care support through tax credits or universal credit. Allowing these claimants to use child care accounts to receive their payments of child care costs would allow receipt in advance of payment, but without the risk of any overpayments being lost within wider family budgets. However, as things stand, the Bill would not permit that without additional primary legislation. These minor amendments to clauses 11 and 15 would allow the tax-free child care scheme to go forward as designed, while allowing us the time to consult and to assess these issues fully. We would have the flexibility to make changes by regulation, rather than through additional primary legislation.
Universal credit is still in its infancy and is being gradually rolled out. It seems to make little sense to limit how it may evolve by putting barriers, in the form of primary legislation, in the way of what may be sensible reforms. I would like to hear from the Minister what further considerations she has given to extending the tax-free child care scheme in this way, and expanding child care accounts beyond the scheme. I hope that she will support these minor amendments, which would allow for the potential benefits that those changes could deliver, particularly for some of the poorest people in our society.
Priti Patel
I welcome the hon. Member for Wirral South (Alison McGovern) to her position and post. It is good to hear from her. Obviously, she did not have the full benefit of participating in the Committee, so it is good to hear her views today.
New clause 2 is about the Bill’s impact on child care costs, an issue that we discussed at some length in Committee. The new clause would require the Government to publish a review of the Bill’s impact on the cost of child care three months after it passed into law, and every three years thereafter. The review would have a particular focus on the effectiveness of the Act in making child care more affordable, the average cost of child care for working parents, and the impact of supply-led measures on costs.
As I have said many times in debates on this Bill, the Government have made a clear commitment to review the impact of the scheme two years after full implementation. That was set out in the impact assessment published alongside the Bill. The Government feel that a two-year assessment period is reasonable and will allow sufficient time for the scheme to become bedded in, so that the full impacts can be assessed and properly evaluated in the context of wider Government policy. We do not think that there is anything to be gained from adding a further review after only three months.
I think that all hon. and right hon. Members are rightly concerned about the impact that high child care costs have on working parents. We understand the cost of child care, and the Government are committed to supporting parents to meet that cost; that is the purpose of the Bill.
Priti Patel
I thank my hon. Friend for his comment. Naturally, we want to get this right, so there is oversight at every level. Later in my remarks, I shall touch on areas where his remarks are valid and pertinent.
We know that child care is an expensive outgoing for many families across the country. This Government understand the need for both demand and supply-led measures to ensure that the costs of child care do not spiral out of control. We have been taking steps to ensure that both sides of the problem are properly considered. The Government believe that increasing supply is an effective way of limiting further price rises, and are therefore making significant reforms to support the child care sector in increasing the supply of places.
The Government are taking actions beyond the scope of the Bill to improve the quality and supply of child care provision. These reforms are designed to ensure that any increase in demand for child care arising from the new scheme will be matched by increased supply and not by increased costs. The latest figures show that there are about 100,000 more child care places than in 2009, and the Government are taking action to grow the supply of child care still further, which will improve choice and affordability for parents. For example, we are making start-up grants of up to £2 million available to help people set up new child care businesses. We are also enabling good and outstanding childminders to access funding for early education places. Only 4,000 do so currently, but as a result of our reforms, up to 32,000 will be automatically eligible. We are making it simpler and easier for schools and child care providers to work together to increase the amount of child care available on school sites, and only this year we have introduced childminder agencies, which are designed to improve the support available for both childminders and parents, and to simplify existing regulatory frameworks to allow nurseries to expand more easily.
We recognise that child care costs place a significant financial burden on many families, but research shows that after 12 years of consistently rising prices, the costs of child care in England have stabilised for the first time. There is encouraging evidence that costs of some of the most popular types of child care are falling in England. For example, the Family and Childcare Trust reported in March that the cost of nurseries in 2014 was 2% lower than in the previous year in real terms. Similarly, the cost of after-school clubs reduced by 5% in real terms during the same period. Once inflation is taken into account, costs for the majority of parents have fallen. This means that more parents are able to access affordable child care and support their families, and shows that the Government’s reforms are making a difference. We should compare that with the situation under Labour, when costs rose nearly 50% between 2002 and 2010, and the average cost of child care rose faster than inflation.
Alongside these measures to increase the provision of good quality, affordable child care, the Government have taken significant steps to support families in meeting their child care costs.
Alex Cunningham
I welcome the fact that more families may well be able to access child care because of falling costs, but the costs are still high and they are paid by the poor as well as the rich. Will the Minister please outline what she will do for the working poor who do not qualify for anything under any of her schemes?
Priti Patel
I will come on to the hon. Gentleman’s amendments and refer specifically to the points he makes.
For low earners, the Government will continue to pay up to 70% of child care costs through working tax credit, and under universal credit this support will be extended to up to 85% of costs when both parents are working, as all hon. Members heard in Committee. In addition, as we have touched on, the Government fund an early years entitlement of £15 a week.
The Government are making good progress in tackling the root causes of child poverty, to which the hon. Member for Wirral South referred. All Governments are committed to ending child poverty once and for all, but I reiterate that work remains the best route out of poverty. We discussed this at length in Committee, including the interactions between universal credit, making work pay, and interdepartmental measures on child poverty.
Priti Patel
We had much debate in Committee on universal credit and the way in which the scheme interacts with it. The hon. Member for Manchester Central (Lucy Powell) made some strong and valid contributions in this regard.
Amendment 12, tabled by the hon. Member for Stockton North (Alex Cunningham), would allow regulations in future to permit parents to receive support under the new scheme and universal credit at the same time. As I have said, we must not forget that families in receipt of universal credit already rightly receive generous support with their child care costs. Child care support is offered to parents on universal credit as part of a welfare system designed to make sure that work pays and that those who need the support get it. Up to 300,000 more people are likely to be in work as a result of universal credit, and we expect a significant proportion of those to be households with children. But it is not right for a parent to receive support under the new scheme in addition to universal credit, when parents will receive 85% of their child care costs from April 2016. It will be easy for parents to access support that best suits their circumstances, so I reassure the hon. Gentleman that parents who are eligible for universal credit will be able to opt out and claim support under the new scheme should they wish to do so. We shall be supporting parents in making those decisions.
As we said in Committee—hon. Members have touched on it again today—we shall be launching the online support tools, the calculator and clear guidance. Draft guidance has been published well ahead of the launch of the scheme and shows our commitment to work in close collaboration with parents, child care providers and employers, and their feedback will ensure that guidance is tailored to meet their needs.
This is about ensuring that support remains focused on those on lower incomes, and the introduction of the scheme gives parents confidence that as they increase their income and move off universal credit, they will continue to receive Government support with their child care costs, which is vital.
Alex Cunningham
I do not want to go over the top on this, but will the Minister please outline what help she proposes for families who do not qualify for anything at the moment but who are still the working poor?
Priti Patel
There is support that remains focused on those on lower incomes. As I said at length in Committee, the Government’s overall child care system is very much focused on those on lower incomes, and it is wrong to suggest that that is not the case. Families in receipt of tax credits receive more generous support with child care costs. We have already discussed universal credit, which is being extended to cover up to 85% of the costs of child care. All the analysis shows that the benefits of the scheme are focused on households on lower incomes. The new scheme ensures that for the first time parents can be certain that support will be available for them; yes, obviously, at the lower end, but importantly, as they move into work and increase their incomes too. The scheme is much more fairly targeted than the existing scheme of employer-supported child care. It supports working families, getting households and families back into work. It was debated at length in Committee, and I reassure the hon. Gentleman that that is the case.
Today’s debate has shown that the Government are taking a broad range of actions to support families with the costs of child care, not just through this scheme, but through improvements in the welfare scheme—
Priti Patel
I take this opportunity to re-emphasise that the scheme in no way creates confusion. In Committee we touched briefly on the situation in Northern Ireland and provided information and guidance in that regard. This is about working with all the players—parents, employers, and other stakeholders. It is about making the system abundantly clear and simple, not about complexity. Guidance has been drafted. We are working with third parties. We are designing a calculator tool, as we have discussed before. This is all about giving guidance and providing clarity.
I shall briefly cover amendments 3 to 11 on families in receipt of tax credits. The child care element of tax credits is just one component of the package of support designed to help lower-income households. I emphasise that there is support for those on low incomes, in particular. We should reflect on the fact that under the new scheme more working families than ever before will be eligible for support with child care costs. The scheme will be an important component of the overall offer to working families. It will sit alongside existing schemes to ensure that support is available to those increasing their incomes as they move off benefits.
Alex Cunningham
Does the Minister not see any advantage in leaving the door open by amending the Bill to allow for the scheme to be extended at a later stage? As I said in my speech, it will take primary legislation to extend the scheme any further, whereas she could accept an amendment that would mean that the door was open to simple, straightforward regulation instead.
Priti Patel
I commend the hon. Gentleman for his tenacity in making that point again, as is absolutely right and proper. I reiterate that the Government are committed to reviewing the scheme, as I have outlined previously in Committee and during today’s debates on new clauses 1 and 2. It has to be right and proper to have that review. Once the scheme has bedded down and we have had the full assessment and evaluation, we will look at all its aspects. I hope that I have given the hon. Gentleman sufficient reassurance. I ask him to withdraw his amendment and Labour Front Benchers to withdraw their new clause.
Question put, That the clause be read a Second time:—
Priti Patel
I beg to move, That the Bill be now read the Third time.
The Bill has been many months in development through consultation, drafting and detailed discussion in Parliament, and I am sure the House will agree that it will leave the Commons in good shape.
Before I proceed, I would like to pay tribute to my right hon. Friend the Secretary of State for Education who, as Financial Secretary, was responsible for some of the key features of the scheme and introduced the Bill in the House of Commons in June. I spoke on Second Reading as a Back Bencher, and it is an honour for me to appear today as the Minister responsible for the Bill.
I welcome this further opportunity to speak on the Bill and to reflect on the important role it will play in the Government’s broader strategy to get people into work. One of our fundamental principles has been that every person who can stand on their own two feet should do so. That means being in work, making their contribution and taking responsibility. We want to empower people in their choices. As a mother myself, I strongly believe that child care costs should not be a barrier to work. Since 2010 we have introduced a comprehensive package of measures to help working families cover nursery costs for their children. The new child care scheme will greatly expand the support we provide to working families towards their child care costs.
Even before the financial crisis, there were around 5 million people in the United Kingdom of working age on out-of-work benefits, some 1.4 million of whom have spent the past decade unemployed. The number of households where no one had ever worked almost doubled between 1997 and 2010, so when we took office in 2010 we made getting people back into work one of our key priorities. We can be proud of some major successes. Figures from the Office for National Statistics have shown that unemployment fell by 154,000 to below 1.97 million in the three months to the end of August, the first time it has been below 2 million since 2008. Since 2010, the UK has created over 2 million more jobs for people to go to—the fastest rate of job creation of any major economy, or, as the Financial Times put it in September, more jobs than the rest of the European Union combined. Female participation in the work force is at an all-time high, and we should welcome that.
As ever, there is more that can be done. If we had the same levels of men and women participating in the labour market, the OECD says that could lead to an increase in GDP of around 10% by 2030. Survey data from the Department for Education suggest that more than half of mothers would prefer to be in paid employment if they could arrange reliable, convenient, affordable, good quality child care. The Government are therefore taking action to ensure that high-quality child care is available and affordable. We recognise that child care costs are a major part of most working families’ budgets so we are putting in place measures to help every working family in the UK with their child care costs.
We have almost doubled the amount of child care support available to most middle earners, and we are doing even more for those on low pay. We are already funding 15 hours a week of free child care for every three and four-year-old, funding 15 hours a week of free child care for 40% of two-year-olds, and increasing the child care support for low income families to 85% under universal credit. Now, this scheme will significantly broaden access to child care support. Hundreds of thousands of families who are excluded from the current employer-supported child care scheme will be able to benefit from the scheme, and up to 200,000 self-employed parents will have access to child care support.
We have paid particular attention to designing the scheme so that it suits the needs of part-time workers. Parents earning as little as £52 per week—averaged over a quarterly entitlement period, or over a tax year for self-employed parents—will qualify for support.
We do not believe, however, that providing direct support to parents is the only way to address the high cost of child care. That is best achieved by supporting the child care sector to increase supply, which will ensure that any increase in demand for child care will be matched by increased supply measures, rather than just increased costs.
The latest figures show there are now 100,000 more child care places than there were in 2009. We are making start-up grants available to help people set up new child care businesses. We have made up to 32,000 good and outstanding childminders automatically eligible for early education funding. We are making it simpler and easier for schools and child care providers to work together to increase the amount of child care available on school sites before and after school. Only this year, we have created childminder agencies, which will improve the support available both for childminders and for parents, and simplified existing regulatory frameworks to allow nurseries to expand more easily.
The evidence shows that our reforms are having an effect. After 12 years of consistently rising prices, the costs of child care in England have stabilised for the first time. Indeed, the costs of some of the most popular types of child care in England are now falling. Once inflation is taken into account, costs for the majority of parents have actually fallen, which means that more parents are able to access affordable child care and support their families. By contrast, the costs of some types of care have risen in Scotland and Wales, where these reforms do not apply.
As we have discussed in previous debates on the Bill, child care costs are not the only pressure on family budgets. We can never forget the impact of the 2008 recession and its effect on incomes for every household.
Alex Cunningham
I welcome the fact that prices are coming down and that more places are available, but the vast majority of the new jobs to which the Exchequer Secretary has referred are low-paid, part-time, insecure and involve zero-hours contracts and similar, which do not make anybody’s life easier as they consider care for their children. Perhaps that is why we are seeing an overspend of many billions of pounds in the Government’s social security budget.
Priti Patel
I re-emphasise a point I have made consistently throughout the passage of the Bill: the Government’s overall system of child care remains focused on those who are on lower incomes. We are concentrating on supporting families getting into work and ensuring, as we have touched on in previous debates, not only that work pays, but that child care support remains focused on those on lower incomes.
Living standards—the cash in people’s pockets and what they can buy with it—are perhaps the biggest issue facing British families. The tough decisions we have taken as a Government have a very clear end in mind, which is to help create prosperity and boost living standards. Alongside that, we want to make sure that the Government have the right measures to support working families and households and to ensure that work pays.
Since coming to power, this Government have taken decisive action to ease the pressure on households and families. We are providing free school meals for all infant school pupils in reception year and in years 1 and 2. We have increased the personal allowance to £10,000 and in April 2015 it will increase to £10,500. During the course of this Parliament, we have cut the income tax of the typical taxpayer by £805, taking more than 3.2 million individuals out of income tax by 2015-16 and boosting the take-home pay of 25 million people.
Additional measures on living standards include freezing council tax in real terms and cutting the cost of driving by freezing fuel duty until the end of this Parliament, saving a typical motorist £680. We recently announced that the cost of driving licences will also be cut. Ultimately, however, as every family knows, the best way to raise living standards is by being in work, and we are pulling out all the stops to help those who want to work get into work by making work pay and introducing this Bill, which provides important financial measures to support child care.
I thank all Members for the opportunity to debate all the issues associated with child poverty as the Bill has passed through the House. Child poverty is an extremely important issue and this Government are fully committed to the goal of ending child poverty in the UK by the end of 2020.