Oral Answers to Questions
Andrea Leadsom Excerpts(10 years ago)
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Angela Smith (Penistone and Stocksbridge) (Lab)
2. What recent representations he has made to the European Union on the proposed cap on bank bonuses.
The Economic Secretary to the Treasury (Andrea Leadsom)
In September, the Government launched a legal challenge to the bonus cap provisions agreed under EU capital requirements directive 4. We feel that those rules were rushed through without any assessment of their impact and that they will undermine the progress we have made to try to align remuneration with risk by pushing bankers’ fixed pay up rather than down.
Angela Smith
The Chancellor has chosen to prevent the Royal Bank of Scotland from paying bonuses to employees that are worth more than double their salary, but he has not done the same with Lloyds. Will the Minister explain why what is good enough for RBS is not good enough for Lloyds?
Andrea Leadsom
RBS has made a good start on its return to growth under Ross McEwan. It now has a good strategy to be the best small and medium-sized enterprise bank in Britain, but it still has a very long way to go. Therefore, we felt, and United Kingdom Financial Investments Ltd agreed, that the right thing to do was to not allow RBS to do what other private sector banks have done, which is to go for the maximum of 2:1 in terms of bonus to salary. Lloyds, on the other hand, is much further along the road to recover, so it was fine to allow it, in line with other private banks, to go ahead with that 2:1 plan.
Mr Julian Brazier (Canterbury) (Con)
May I say how good it is to see my hon. Friend in her new position? I welcome her answer. Does she agree that the best way to tackle widespread concern about excessive bonuses is through opening the banks up to proper shareholder inspection and answerability, as we are gradually doing?
Andrea Leadsom
Yes, my hon. Friend is absolutely right. One of the priorities of this Government has been to ensure proper scrutiny of directors’ pay and remuneration, so the changes in the Prudential Regulation Authority guidelines introduced last year, strengthening improvements made by the Labour Government, are designed to do just that—to put us at the forefront of scrutiny and transparency in pay for banking.
Mr George Mudie (Leeds East) (Lab)
May I offer my congratulations to the hon. Lady on her much-deserved promotion? The whole House welcomed the Chancellor’s intervention to stop loss-making RBS paying these bonuses to its investment bankers. However, it has now emerged that RBS intends to pay that money as allowances. What is the Government’s intention on this matter?
Andrea Leadsom
May I first thank the hon. Gentleman for his congratulations and say how very much I enjoyed working with him for several years on the Treasury Committee? As with many Opposition Members, there has been a lot of agreement between us on issues of competition and minimising pay. With regard to allowances, the key point to remember is that bonuses at RBS are down 68% overall since 2009. The figure we want to focus on is the restriction in pay and bonuses across that bank.
Chris Leslie (Nottingham East) (Lab/Co-op)
I, too, genuinely welcome the hon. Lady to her post and the Prime Minister’s decision to appoint her to the Chancellor’s Department. May I ask her to be very clear on this particular point? The Chancellor of the Exchequer is using the EU bank bonus cap legislation in respect of RBS, but at the same time the Government are mounting a legal challenge against that legislation. Will she clear up some of the confusion? She alluded to whether it was a UKFI decision, and it was reported that the Deputy Prime Minister apparently waded in to override the Chancellor. Was the Deputy Prime Minister at odds with the Chancellor, or was the Chancellor just at odds with himself?
Andrea Leadsom
I am grateful to the hon. Gentleman. The key point to remember is that we are challenging the proposal at the European Court of Justice because we believe that it will not suppress remuneration and create proper equivalence between risk and remuneration in the banking sector. We in this country are at the forefront of trying to ensure that risk and reward are properly aligned. We do not think that the bonus cap will do that, so it is perfectly consistent to implement the cap—since it is the law—but to challenge it in the European Court of Justice.
Chris Leslie
I very much hear what the hon. Lady says, but I am asking a question about how the decision was made. Who was involved: was it UKFI; was it the Chancellor; or was it the Deputy Prime Minister who did it? I might not get a clear answer, so maybe I can move on to the next question: how much has this cost so far? It is a legal challenge to the change that she is herself using. How much has it cost so far, and is it a good use of taxpayers’ money?
Andrea Leadsom
The legal challenge is in line with all legal challenges of this sort. To protect the British financial services sector, it is very important to try to challenge the proposal. There has been a House of Commons European Scrutiny Committee report on the cost of similar legal challenges. It is not excessive—it is £25,000 to £35,000, or of that order—but the point is that we in this Government are trying to align risk and reward, which is absolutely crucial for the success of the financial services sector.
Graham Evans (Weaver Vale) (Con)
3. What recent steps he has taken to make saving more flexible.
Robert Flello (Stoke-on-Trent South) (Lab)
4. What recent assessment he has made of the level of bank lending to businesses since May 2010.
The Economic Secretary to the Treasury (Andrea Leadsom)
In May 2010, business lending was contracting sharply in the aftermath of the financial crisis. The Government have introduced various measures aimed at improving bank and non-bank lending to businesses, in particular the business bank and the funding for lending scheme. Since 2010, survey evidence has suggested that the credit conditions for businesses have improved significantly and gross lending flows have increased.
Robert Flello
The latest funding for lending figures show that, shockingly, net lending to small businesses is down by £2 billion at RBS. Should not a bank that still has huge support from the taxpayer be serving Britain’s small businesses better?
Andrea Leadsom
The hon. Gentleman is right to point out that there has been an enormous challenge since the financial crisis. Banks still have a long way to go to work out their balance sheets and to ensure that they are again lending to small businesses. RBS announced recently that it has the single goal of becoming the No. 1 SME bank in the UK. Banks are focused on that issue and it is vital that they are.
Charlie Elphicke (Dover) (Con)
Does the Minister agree that Labour’s crash caused a massive problem in our banking system, which hurt the ability of banks to finance businesses, and that with the long-term economic plan it will become easier for banks to find the reserves that they need to get more money to business and to help grow the economy further?
Andrea Leadsom
My hon. Friend is absolutely right. The financial crisis caused a massive problem in our banking sector. The measures that have been brought in by this Government, such as the funding for lending scheme and the improved impetus towards bank competition, are helping to improve the situation for small businesses—the lifeblood of our economy.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Since funding for lending was introduced, funding for small businesses has actually gone down. Businesses in my constituency tell me that one of the biggest problems is the withdrawal of overdraft facilities by many banks. What is the Minister doing to ensure that such short-term cover is available.
Andrea Leadsom
Only recently, the national policy chairman of the Federation of Small Businesses said that funding for lending is helping to bring down the cost of credit for small businesses. It is vital that banks focus on rebuilding business lending, and many of them are doing so. As the economy recovers, we expect that to pick up. Indeed, gross lending is 12% higher than in 2012-13.
Mark Pawsey (Rugby) (Con)
Companies in my constituency tell me that confidence is at a new high. In many instances, they are able to fund investment through their own resources. Despite that, gross lending is up over the past 12 months. Does my hon. Friend agree that the concerns that funding for lending would be used for residential property purchases were misplaced?
Andrea Leadsom
I agree with my hon. Friend. The Help to Buy scheme accounts for only 0.5% of total mortgage lending, and real house prices remain 15% below pre-crisis levels. There is no evidence to suggest that the funding for lending scheme has led to a property price bubble.
Mr Robin Walker (Worcester) (Con)
5. What recent assessment he has made of growth in the economy.
Mr Andrew Love (Edmonton) (Lab/Co-op)
16. What recent representations he has received on reform of the Office for Budget Responsibility.
The Economic Secretary to the Treasury (Andrea Leadsom)
The Chancellor regularly receives representations on a wide range of matters, including the role of the independent Office for Budget Responsibility.
Alison McGovern
The Minister may have guessed that I am going to ask whether she agrees that the OBR should be allowed to audit the manifestos of all the main political parties, and I can probably guess what her answer will be, but can she explain why?
Andrea Leadsom
The hon. Lady can read my mind, Mr Speaker. Excellent!
This matter has been the subject of some debate, and, as the hon. Lady will know, it has been discussed by the Treasury Committee. I feel that, given that the Office for Budget Responsibility was established so recently, this is not the moment to start considering changing its remit. As has been pointed out by the hon. Lady’s party, it is essential for the OBR to be independent and to confer accountability on the Government, rather than becoming embroiled in party politics at such an early stage.
Mr Love
The Minister ought to be aware that it is not only the Opposition who are promoting this change in policy. The chair of the OBR himself has been sympathetic to it, and the Conservative Chair of the Treasury Committee has also been supportive. Even the Chief Secretary, who is sitting near the Minister on the Front Bench, gave us warm words during the last session of Treasury questions. It seems that the Government are isolated on this issue, but there is still time for that to change.
Andrea Leadsom
I am grateful to the hon. Gentleman for raising those points. It is true that there are those who favour the change in principle, including Robert Chote himself, but Mr Chote has also made it clear that, for very good reasons, now may not be the time for it to take place. Amending the OBR’s remit would require primary legislation, and would have huge implications for the resources available to it. We need to consider such action after the next general election, when there will be time for it to be reviewed properly in the House.
Mr Philip Hollobone (Kettering) (Con)
T1. If he will make a statement on his departmental responsibilities.
Finance (No.2) Bill
Andrea Leadsom Excerpts(10 years, 1 month ago)
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Catherine McKinnell
The point of putting the issue in context is that the rise in child care costs since 2010 is astonishing, and has made child care unaffordable for many parents. I shall say more later about the number of parents, particularly mums, who feel that the cost of child care prohibits them from going to work. I think that rather than questioning the statistics, Government Members should get real and do something about that. Waiting until 2015 to make a promise for tomorrow is just not good enough, which is why we tabled our new clause.
According to alarming new research from the Family and Childcare Trust, families are paying more on average for part-time child care than they are spending on their mortgages. They are handing over a staggering £7,500 a year or more for child care for two children, which is about 4.7% more than the average mortgage bill. Rising prices have been matched by the fall in the number of child care places. The number of places provided by nurseries and childminders has fallen by more than 35,000 since 2010, at a time when the number of four-year-olds has actually increased. Most worrying of all, there are 576 fewer Sure Start children’s centres than there were in 2010, which means that an average of three are being lost each week. At least, that was what we were seeing before the Government took their database down.
Andrea Leadsom (South Northamptonshire) (Con)
The point about children’s centres is really important. Many of those centres have simply reorganised the way in which they work, and now have operational entities in different places and a single administrative centre. That is why the headline figure suggests that children’s centres are closing. In fact, very few have closed, and those closures have been due to rationalisation rather than cuts. I find it very upsetting that Labour Members insist on making an assertion that is not correct.
Catherine McKinnell
The figure that I gave is correct. It is from the Government’s own database, before they took it down. Goodness knows what the number is now, but we know from our local communities that even the Sure Starts that remain open are offering reduced services, and that a huge number of Sure Starts are under threat as local authorities struggle to meet their current budget requirements.
Catherine McKinnell
My hon. Friend raises an important point. There is a multitude of reasons why we should support parents and enable those who want to work to do so, one of which is the benefits for children of being in that child care setting. That is why Labour has made one of our key pledges—and we call on the Government to take it up in this Budget—to extend the free child care that is available for three to four-year-olds. We call on the Government not to wait until 2015, but to do it now and to pay for it through the increase in the bank levy that we have suggested and which the Government should take up—or at least they should certainly undertake the review we are calling for today to look at the viability of that in this year’s Budget.
Andrea Leadsom
Does the hon. Lady genuinely think it is realistic and practical to implement that policy right now bearing in mind that the Government are already rolling out their offer for two-year-olds and nurseries are already under pressure from the implications of the influx of two-year-olds?
Catherine McKinnell
The amendment is perfectly reasonable. I know the hon. Lady cares about this issue and I am sure she would want to see her Government doing everything they can to provide support and to help parents up and down the country who we know are struggling with this important issue. That is why the amendment we have tabled today calls on the Government to
“undertake a review of ways in which changes to the tax and childcare systems could be used to increase the affordability of childcare before April 2015”.
It is a perfectly reasonable amendment and I see no reason why Members on both sides of this House would not support it if it could bring about the changes that parents need today, not in 2015.
Returning to the issue of maternal employment rates, for mothers whose youngest child is aged between three and five that rate is currently 64% across the developed world, yet the rate in Britain is six percentage points lower at 58%, which is the equivalent of about 150,000 mothers not being employed. The rate in Sweden is 80%.
As the interventions today have demonstrated, it seems that Government Members prefer to gloss over the uncomfortable facts and figures that do not fit with their messages when they boast about the record numbers of people in employment, much as they do when they ignore the fact that almost 1 million 16 to 24-year-olds are out of work, a quarter of them for 12 months or more.
The child care crunch, like youth unemployment, is bad not only for families but for the country and the economy. Parents who want to work should be able, and supported, to do so. There have been consultations and numerous announcements—and, indeed, re-announcements —about the Government’s new flagship child care scheme, but we see absolutely nothing in the Finance Bill that will address the spiralling costs that families face now, rather than in 18 months’ time.
Catherine McKinnell
On average, by the time of the next general election, a family in which both parents are working will be £2,073 a year worse off. A family in which one parent works will be a staggering £3,720 a year worse off, and a family in which no parents work will be £2,114 a year worse off. A lone parent in work will be £1,335 a year worse off, and a lone parent who is not working will be £1,901 a year worse off. These changes are in addition to the impact of wages falling in real terms, which has left working people an average of £1,600 a year worse off since 2010. Households have faced 24 Tory tax rises over the same period. However, while millions of families have seen their real household incomes go down since 2010, millionaires have been given a huge tax cut by this Government. The top 1% of earners—85% of whom just happen to be men, by the way—have been given a £3 billion tax cut worth an average of £100,000 for those earning more than £1 million a year.
Catherine McKinnell
I will give way to the hon. Lady, who I am sure is as disappointed as I am by that policy.
Andrea Leadsom
Will the hon. Lady confirm what the top rate of tax was during the last 10 years of the Labour Government? Will she also confirm that it changed only a couple of days before the last general election?
Catherine McKinnell
The hon. Lady is well aware that we have a budget deficit that needs to be addressed. This Government promised to balance the books by 2015, but look set to be way off that target. Of course the increase to the 50p rate was part of a balanced deficit reduction programme that Labour would have put in place. Instead, this Government came in and made cuts that slowed growth and resulted in three years of a flatlining economy. The only people who seem to have benefited are the top-rate earners who have been given a tax cut by this Government.
Going back to the subject under debate, the same tax cut came from a Conservative-led Government who, in their 2010 manifesto, promised to make Britain
“the most family-friendly country in Europe.”
They claimed:
“We will help families with all the pressures they face: the lack of time, money worries, the impact of work, concerns about schools and crime, preventing unhealthy influences, poor housing.”
Of course—[Interruption.] The hon. Member for Solihull (Lorely Burt) groans from the Liberal Democrat Front Bench. The Liberal Democrats claimed in their party’s 2010 manifesto:
“Liberal Democrats believe every family should get the support it needs to thrive, from help with childcare through to better support for carers and elderly parents. Liberal Democrats will improve life for your family.”
Oh, how they disappointed!
Andrea Leadsom
The hon. Lady is being very generous in giving way. Will she welcome the fact that one of the major newspapers today reports that wages are growing faster now than they have been in the past seven years, and that there are 1.6 million workers in private sector employment since 2010, which means that many more families are now able to afford their weekly household bill?
Catherine McKinnell
Any good news on the economy will always be welcomed, not just by Members of this House but by those out there who are struggling with the cost of living. No matter what good news we see in the coming months, it will not outweigh the fact that we have had three years of a flatlining economy in which wages have been squeezed and prices have risen much faster than wages, particularly in this area of child care costs. People will be worse off in 2015 than they were in 2010. We know that a family in which both parents work will be £2,073 worse off by the next election. Perhaps the electorate will just have to add that to the ever-increasing list of Liberal Democrat broken promises.
The Prime Minister is currently touring the country, boasting about the rise in the personal allowance—I am surprised that Government Members have not raised that yet. Incidentally, the Deputy Prime Minister claims that the Conservatives were dragged kicking and screaming to every meeting on the personal allowance. The simple truth is that working families are thousands of pounds worse off now than they were in 2010 thanks to tax and benefit changes, falling living standards and rising child care costs, all of which this out-of-touch Government have continually failed to get a grip of, and all of which contribute to the fact that child poverty is set to increase rapidly under this Government. After an unprecedented reduction in child poverty under Labour, the IFS now predicts that an extra 400,000 children will be in relative poverty by the end of this Parliament and it is clear why that is. It says:
“Tax and benefit reforms introduced since April 2010 can account for almost all of the increase in child poverty projected over the next few years.”
As we know that families will be significantly worse off by the next general election, let me turn to the Government’s proposals for tax-free child care, which were lauded in the Budget but which are missing from this year’s Finance Bill. Parents would be forgiven for thinking that they are in for a £2,000 subsidy of their child care costs, based on what Ministers have been claiming in interviews and articles in recent weeks. Let us be absolutely clear about this. Although any new money to help families facing soaring child care costs is undoubtedly welcome, this coalition will not fool mums and dads. When we scratch beneath the surface and go beyond the headline figures of £2,000 and 1.9 million families, we find that the facts very quickly come to light.
Only one in five families will receive help through tax-free child care, yet that one family in five would have to incur child care costs of £10,000 per child to get the maximum £2,000 that Government Members have been boasting about. Ten thousands pounds per child per year! How many families in Britain could possibly afford to spend the £8,000 required to receive the maximum support from the Government? Well, the latest annual child care costs survey by the Family and Childcare Trust suggests that over a year a British family spends an average of £5,487 for a nursery place for a child of two and above, which, incidentally, is £1,298 more than it cost in 2010, so in reality most families will receive at best just half the support being parroted by Government Members—[Interruption.] I am pleased that the hon. Member for Nuneaton (Mr Jones) has been enlightened by that, as he was so horrified when I enlightened him about the reality of this Government’s policy.
Catherine McKinnell
My hon. Friend makes a powerful and heartfelt point and she touches on an important issue. We are talking about the quantity of child care that is available and the cost of that child care, but we must always factor in quality too.
Andrea Leadsom
I know that this is not an issue of party politics but a straightforward issue of quality, but I want to point out that over-regulation led many childminders to want to pull out of providing that care. I have spoken to many childminders who pulled out because of the complex box-ticking—the questions about what sort of doors they had, or what sort of facilities. The important thing for our society is that very young children should be cared for by people who genuinely love them and who will take good care of them. We risk the perfect being the enemy of the good if we go down the avenue of over-regulation.
Catherine McKinnell
I think we risk going down the road of debating the quality of child care and issues to do with Ofsted registration, but I would question some of the hon. Lady’s assertions about the requirements for regulation and the absolutely fundamental importance of ensuring the quality of all child care places, including those with childminders.
Let me return to the issue of child care costs, which is what our new clause 1 seeks to get the Government to address. Gavin Kelly, chief executive of the Resolution Foundation, has pointed out in relation to the Government’s recent increase in the cap from £6,000 to £10,000 for tax free child care:
“About 80 per cent. of the gains from this will flow upwards to those in the top half of the income distribution. It’s also the case that it’s low- and middle- income parents who find the costs of childcare the biggest obstacle to taking on more work—so targeting support at them would make sense.”
I should be interested to hear the Minister explain how effective the scheme will be in supporting the very parents who need help the most. I should also be grateful if she could clarify the Treasury sums on tax-free child care because, welcome though any extra support is for families struggling with child care costs, it is curious that the Government have managed to tweak their sums so that an almost doubling of Government support per child has not cost even a penny extra.
I am sure that the IFS would also be interested to hear the Minister’s answer to that question, as it has queried the matter. It said:
“Surprisingly, today’s announcements come with no new money. Extending the new Tax Free Childcare scheme to all children under 12 within its first year will cost money compared with a world where it was limited to children under 5, but the Treasury can make this announcement without altering its public spending plans because it has significantly revised down its estimate of how many families are likely to be eligible for the scheme (from 2.5 million to 1.9 million).”
It is not clear what has led to this dramatic change, so we cannot judge whether the new estimates are any more plausible than the initial ones, but the fact that the change is so large suggests that the Treasury would benefit from being more open about the way it costs new policies. Perhaps the Minister will elaborate on these figures and how her Department arrived at them.
Ultimately, the simple truth is that, even if people spend enough to receive the full support, this help will not come until after the general election. That means no help with child care in five years from the Conservatives or the Liberal Democrats. Instead, Ministers have presided over soaring costs and cuts to tax credits for thousands of families, meaning that, even when this help comes, most families will still be worse off than in 2010.
Mr Burrowes
I am a generous person, I hope, and I recognise that there were benefits, but we have to look at the history. Let us go back to 1990, when the then Chancellor, John Major, introduced the policy that meant employees would not be taxed on the benefits they received from using a nursery or play scheme provided by an employer. Perhaps the hon. Lady would like to intervene to recognise the benefits of his proposal. He set in train a process to allow more affordable child care by ensuring that the tax system recognised the need to give benefits, in particular, to women who need to be out and working and to have affordable, accessible child care.
Andrea Leadsom
I certainly recall the efforts of Labour Members to try to sort out child care. I had two young boys at the time. I put my two little boys into a nursery and claimed the child tax credit vouchers, but then needed to get a nanny for them because my hours changed and the situation became impossible. It is rather like so many of the Opposition’s ideas: they might be all right in principle, but in practice they are absolute rubbish and do not meet the needs of our society.
Mr Burrowes
I am grateful for that robust intervention. There is obviously cross-party support for recognising that child care is a central and significant issue in dealing with parents’ ability to manage their budgets and go out to work.
The lack of affordable child care is one of the reasons for the increasing numbers of relatives looking after children, especially grandparents. Two thirds of grandparents—well over 5 million—regularly look after their grandchildren. It is important to recognise the wide variety of child care. As we properly extend formal child care, I encourage the Committee, and the Minister, to recognise the role and value of informal child care for the millions of parents and grandparents who are out there saving a lot of money—thousands of pounds a year—for working families. Yes, the cost of child care is one of the reasons for the increasing number of grandparents taking on this role, and it is an important factor in parents’ decisions, but the significance of grandparental child care cuts across many areas. One in three families relies on it; one in two single-parent families particularly relies on it. It is relied on especially by families with disabled children. Often they may be living nearby, perhaps on the margins of poverty. Grandparents play a very significant role in providing emotional, financial and practical support, often through short-term care in times of crisis which then extends into long-term care.
Black and minority ethnic households are more likely than other households to have a grandparent living under the same roof as the parents and the child, taking on caring responsibilities. As we extend formal child care, it is important to acknowledge the calls from vulnerable families in particular for more flexibility in terms of tax-free relief and, as has been said in other debates, unpaid leave for grandparents who are in work.
It is important to talk not just about pounds and pence, but about child care and development. A review on child development conducted by the Institute for Fiscal Studies and the Nuffield Foundation asked parents to rank the factors that motivated them to ask grandparents to care for their children. The top-ranking factor was trust and just below it was love. We have to recognise that. Yes, more affordable child care is needed to relieve the strain on grandparents and other family members, but at the same time what parents want is for the person looking after their child, particularly in their early years, to have a trusting, loving relationship with them. The report was published in 2012, but it still holds good. It provided evidence that care from grandparents often results in high vocabulary and socio-emotional development.
It is obvious to parents and, indeed, those relatives and friends who know their children best, that the love and general interest shown by grandparent carers is invaluable. It is hard to quantify in financial terms, but it is certainly valuable. Relatives put themselves out on a personal level and that is what we want for all our children. We want them to have that type of care, whether it be in a nursery, from a childminder or, more often than not, from a grandparent or relative. We want them to receive that extra support on a personal level, which is of immense value to the child’s development and care.
Mr Burrowes
I appreciate that and I have looked at various parts of that evidence, but it is important to recognise that the Nuffield Foundation and IFS report noted that, while being in formal child care appeared to make children initially more school ready,
“being cared for by grandparents did not significantly put children at a disadvantage in school readiness compared to children not in formal childcare”.
Andrea Leadsom
I challenge the concept suggested by Opposition Members with regard to formal versus informal child care. It is incontrovertible neuroscience that a baby’s brain develops through being stimulated by the love of an adult carer, and that is what gives a baby its lifelong potential. Of course early-years education has its place, but in those very early, vulnerable periods in the first couple of years of a baby’s life, there is no doubt that the love of an adult carer—a primary or secondary attachment figure—is far more important than whether they are in a formal or informal child-care setting.
Mr Burrowes
I pay tribute to my hon. Friend for her work on “The 1001 Critical Days”, which highlights the importance of attachment, care and attention. Parents seek to find such care in a formal as well as informal child-care setting, but the reality is that families, particularly disadvantaged families, rely on the help of grandparents and relatives who are close at hand.
Undoubtedly, the Government are right to take important steps to make child care affordable, because obviously one of the key routes out of poverty is work, which we all support, but we should also support quality child care in all its forms.
There is also a need for flexibility. I have been seeking to make the point that we must have a wider understanding of child care. It involves more than grandparents, because at least 300,000 children are cared for full time by relatives, friends or other people. That often starts in a crisis or an emergency, when friends and family members step in, particularly those in the extended family—perhaps an older sibling, an uncle or aunt. Those people may have their own challenges. They may be in work, but have to stop work to care for a friend’s or relative’s child. They may be on a pension giving a fixed income, and there may be a significant impact on them. We must therefore recognise that there is a considerable impact on carers. A significant number of children are cared for by that group of people.
It is therefore right for the Government to focus on encouraging more people into work and to ensure that it does pay to work. We must recognise the impact on families on different earnings. Reference has been made to poverty. Statistics from the Joseph Rowntree Foundation show that 52% of children living in poverty are in single-earner families. One answer to that is the straightforward one of providing the single earner’s spouse, through the opportunity of affordable child care, with the choice of going into work.
We must recognise the Government’s statistics. The “Childcare and early years survey of parents 2012-2013”, which was released this January, had some interesting findings on parents. It is important to recognise that 71% of parents at home were there by choice, while only 13% of them cited cost as a problem. [Interruption.] The hon. Member for Manchester Central (Lucy Powell) speaks from a sedentary position. If she wants to intervene, she may do so. I am simply citing a Department for Education survey from January 2014. Some 37% of working mothers said that they would prefer to stay at home and look after the children if they could afford it, while 57% said that they would like to work fewer hours and spend more time looking after their children if they could afford it.
According to the Netmums survey on “The Great Work Debate”, which had some 4,000 respondents, 33% of part-time working mums said that they would prefer to be at home. I am not here simply to bang the drum, but it is interesting that when one raises the issue of stay-at-home mums, there is immediately an artificial dividing line between yummy mummies exercising a lifestyle choice and those unfortunate mothers and others who want to work. I know that hon. Members will not want to make such a distinction, but it does happen and it can be paraded in that way in the media.
As a Conservative, I believe in freedom and aspiration. Freedom must include freedom of choice. People should be free to work, and we must ensure that affordable child care is available for them. However, we must also recognise that a considerable number of parents want to be able to choose to be at home. That involves income strands, and income is particularly relevant, as I have highlighted. Households on lower income levels, which are on the margins of poverty or indeed in poverty, often want to call on relatives and friends or their own family structures to support them. It is important to allow them the choice and flexibility to do that, and to recognise the impact on such family members in the tax system.
We can all agree that we must support aspiration as well as freedom. Aspiration includes the aspiration to work, and the aspiration of mothers or indeed fathers who want to give up their career or take a cut in their income to care for their family at home. The question is about how we can provide support. We will have a similar debate tomorrow on the transferable married couple’s allowance, which would provide some recognition of that.
We can also all agree that raising children needs time. It needs time to cultivate relationships, and that can happen in a variety of forms. Such time is what many parents are striving for. Many parents look back on the fact that, because of all their other commitments, they did not have enough time to spend with their children. As Members of Parliament, we are probably the last people who should talk about that. We have our own concerns about that, and we can certainly declare an interest about our lack of time. I have six children, so I can understand that.
We also have to recognise that many parents—from looking at some surveys I would say most parents—want more choice and more opportunities to have time with their children. They also want to be sure that if they do not have the opportunity to care for their children at home because of the choices that they have to make, or if they prefer not to, there is a guarantee that they will be able to entrust their children’s care to others who will be able to give them the time and commitment that they need.
I welcome the Bill’s provisions, which will make massive strides in providing support for affordable child care. However, let us ensure that we do not lose sight of the need for greater flexibility, freedom and aspirations for families, so that we can support good-quality child care whether it takes place in a formal setting or through grandparents, parents or other relatives.
Meg Hillier
This is such an important issue that I hope we do not end up with a false party political divide. The new clause is a sensible and proportionate measure that we should all support, because it would not tie anyone to anything much. It simply suggests that we should assess the impact of changes to the tax and tax credits system, to ensure that we all work together to make the system fairer, simpler and more cost-effective for parents and better for children.
The issue of child care is about both supporting supply and ensuring that it is affordable for the user, and both parts of that need to be simple. We have seen problems in the system, because without subsidy at the supply end there is a disincentive to provide supply. I have suggestions about how we might address that through the tax system, which I will come on to later.
Governments of all parties often talk about the difference between child care and early years education, and we have heard a little of that divide in this debate. However, I am sure that all of us who have had experience of the matter would like to see the two combined in most cases. When Governments talk about early years education, which is inevitably expensive, they mean providing 15 or 25 hours a week, not the number of hours that would be needed for somebody to work full time. I recognise that that is unaffordable at the moment, although I have ambitions on the matter—I do not speak for my Front-Bench colleagues, but I have aspirations for what they will achieve in time.
Child care needs to be different for different children. I will come to the issue of older children, but whether it is after-school care or pre-school care, flexibility is the key. I concur with the hon. Member for South Northamptonshire (Andrea Leadsom), although not completely—she decided to rubbish the Labour Government’s achievements, and I will make no apology for what Labour achieved through Sure Start, with a massive increase in the quality and availability of child care and reductions in cost in many places. As she, I and other Members recognise, flexibility is vital, because people, particularly in London, do not work nine-to-five as much as is often believed.
Andrea Leadsom
I am moved to intervene as the chair of the all-party group on Sure Start children’s centres. I once wore a hat in the Chamber so that I could take my hat off to the Opposition for having created Sure Start. However, I hold to the fact that, brilliant as the idea was, there is still a huge amount to be improved on. I urge the hon. Lady to agree that we do not do nearly enough to focus on the developmental needs of the very young.
Meg Hillier
There is cross-party support for all of that, because I agree that Sure Start was a revolution in early years support. I felt that it should continue so that there was Sure Start at the ages of five and 11. We would stray off the debate if I got into that territory, but my constituency still has 37% of children living in poverty and it is a young constituency. Families of all backgrounds have used Sure Start, learned from each other and got support. Whatever their background, people have challenges with their children at an early stage, and children really have got a sure start. Titles of Government initiatives often become glib, but Sure Start meant something to me and to many of my constituents.
The London assembly Labour group carried out a study on the London cost of living, and it found that flexibility in child care was particularly important in London, where there are long commute times and variable hours. One of the benefits of the child care voucher system, which is not universal, is that where it has been taken up it has provided a good deal of flexibility for parents to buy into properly qualified, registered child care. Again, the study proposed by the new clause could investigate how to support quality through a tax voucher system. Of course, we have seen a reduction in tax credits, although I welcome and support what my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said about the U-turn on universal credit paying 85% of child care costs. The key point is that we can have Government initiative after Government initiative, but parents want the system to be kept simple. They want to know what money they have to play with and where they can spend it, which means that both the supplier and the purchaser of a service, in this case the parent, can understand the system.
We need cross-party agreement so that we have a system that sticks and is not tinkered with time after time so that people do not have to work out, “Does that apply to me? My child is going to be that age on that date, so does it apply to them? Oh, they have missed that cut off by one day, so that whole term will be more expensive than it will be for the neighbouring child, who got in by one day.” There are all sorts of silly little bits of the system that make it complicated for people to understand. Such things can be disincentives for accessing child care and ensuring that people get the right support, particularly mothers who are going back to work.
I am a London Member, and the new clause would particularly benefit people in London, because child care costs in London are inevitably higher. The costs of premises are higher. Although there is a minimum wage, child carers are rightly paid more, and in London their wages will be higher than in other parts of the country. Research by child care site Findababysitter.com found that a quarter of parents in London who were not in work were prevented from getting a job because of high child care costs. The Resolution Foundation found that one in five mothers who were already employed would like to take on an extra 10 hours’ work a week on average but could not do so because they would need the commensurate extra child care—not just 10 hours extra but enough child care to allow them to travel to and from work.
A parent in London buying 50 hours of child care a week for a child under two would face an average annual bill of nearly £14,000, if they can find a child care setting that opens during the hours that they need to work. In the current climate, in which people are expected to work longer and harder for their money, 50 hours of child care is the bare minimum. Anyone who is not working regular hours, as the hon. Member for South Northamptonshire said, would need the flexibility of having someone come to their home, or a very flexible childminder. That might be manageable for a child under two, but things get much more complicated with children above that age who are looked after outside the home.
Just over a year ago, I called for child care to become a top priority, and it is heartening that we are having more debates on the issue, but talking about it does not mean that the Government are getting it right with the offer of so-called tax-free child care. I will not repeat the arguments made by my hon. Friend the Member for Newcastle upon Tyne North, but the Government’s offer depends on how much people spend, and it is complicated for people to understand. I know a number of people on low incomes who have a simple approach to the tax system and who will find the proposal complicated. They will not benefit to the same extent because of the amount of child care that many of them will access because of their working hours.
I represent one of the youngest parliamentary seats in the UK. More than a fifth of residents are under 16 and more than a third, about 34%, are under 24, so child care is a big concern. I am stopped on the streets of Hackney South and Shoreditch by mums, childminders and others who want to raise that concern. When I ask any working parent what the toughest part is, they say that it is sorting out the child care, which is a logistical challenge as well as a financial challenge. I know that, because I am a working mother of three, and I am lucky to be well paid enough to buy in that flexibility. For anyone who does not have a salary as generous as mine, buying in that flexibility is very difficult.
Nationally, we know that 70% of working parents do not work nine-to-five Monday to Friday, and in London, because of the journey times, doing a full day’s work means long and expensive child care, if parents can get it. We have the most expensive system in the world. The review proposed in new clause 1 could consider examples from around the world. In Denmark, a day care Act means that local councils provide child care for all between 8 am to 5 pm, with parents and the Government—this is where new clause 1 would come in—contributing to the cost. Child care is free for families on the lowest incomes. The subsidy is tapered, depending on the family income—in this country, it would need to be done sensibly through the tax and tax credit systems—which means that three quarters, 76%, of Danish women are working. That is a huge improvement on the number of women working in the UK. I will touch on the points made by the hon. Member for Enfield, Southgate (Mr Burrowes) on women wanting to stay at home, but we need women to be economically active. This is not just about child care, but about giving women their rightful place in the work force. Hearteningly, women outnumber men in the Chamber at the moment. I applaud my male colleagues of all parties for being here, because this is not just a women’s issue. Women who play their equal role in society and in the work force are more satisfied, better role models and better parents as a result, if we make things as stress free as possible, which is about providing flexibility.
Andrea Leadsom
That is such a sweeping statement. It completely undermines those women who choose to do the utterly groundbreaking and profoundly valuable job of staying home to raise their children. The hon. Lady is not being fair to those people.
Meg Hillier
I will come to that point in a moment. I am saying not that women who want to stay at home and who can afford to do so should not make that choice, but that it is important that women have the choice to work and to be economically active and play their full role in society in that way. Even women who stay at home to look after their children for a period of their child’s early years may well need or want to work at a later stage. That choice is therefore important whatever stage we are talking about. We should not conflate being at home with a very young child under five with being at home all the time. Under the hon. Lady’s Government’s benefits system, parents have to work or they will seriously lose money, and their children will be pushed into greater poverty.
In Hackney South and Shoreditch, women’s average earnings are higher than men’s, which shows what could be achieved if that was applied across the workplace. A decent universal system of child care will pay for itself in the long run. More parents working and paying taxes, and not claiming tax credits and benefits, more than pay for the state’s investment. I do not speak for my party on this, but I hope that those who do take that mantle and look towards the overall goal of a universal free child care system that will pay for itself. That is an aim we need to work towards. If the Government agree to new clause 1, we will be set on a cross-party basis along that route. It would not solve the problem overnight or mean that things will be easy, but it would mean that we can look closely at the options.
As I have said, child care costs in London are higher than in the rest of the country. I will not go into the details but, for instance, a nursery place for an under two is £140 a week typically in London compared with a UK average of £109. I know many people who pay a lot more than that. There is an idea that people have choice, but it is not often the case. Many parents take the option of what is available at the time, which is why we need to provide incentives at the supply end.
I have a couple of suggestions that the study proposed in new clause 1 could consider. It could examine the idea of a London weighting in universal credit for the provision of child care. It could also consider more family-friendly approaches by employers. Practices such as working from home arrangements and on-site nurseries could be fuelled by tax breaks. Speaking as a member of the Public Accounts Committee, we would clearly need to monitor that to ensure that it was not abused, but the brilliant brains in the Treasury, including the Minister’s, could probably work through such a system.
We need to push private and public sector providers to extend the hours available to parents, particularly late in the evening and weekends. That could happen through a tax incentive or a tax break system. There are an awful lot of opportunities. The Minister is nodding. I am sure that she, as a working mum, will recognise the challenges and needs.
I commend to colleagues the London cost of living report by the London assembly Labour group. Although it is a Labour report, it can be read by other parties. I read it as a cross-party report. The Institute for Public Policy Research has done a big bit of work on child care. It has found that directly funding child care facilities, which happens in other European countries, can function better for parents and be more cost-effective, because there is a guarantee of a place. We have to monitor and ensure that the money is not wasted, but it would mean certainty for the supplier, which means certainty for the parent trying to buy.
I want to pick up on some of the comments made by other hon. Members. The hon. Member for Enfield, Southgate talked about the importance of informal child care and I think we would all agree with that. Any parent will use informal child care at some point, whether for an evening out or as part of a longer-term arrangement with grandparents. Let us be honest, though. Not every grandparent wants to take on child care. I meet grandparents, and those whose own parents are caring for their children, who say that they do not necessarily want to take on child care but feel they should to support their child. Many of those grandparents are young and give up work to look after their grandchildren. That is fine if it is a matter of choice, but it is a real issue if they feel they have to step in because of the lack of availability and options. There is a danger of creating generational issues. For every individual who wants to work but cannot, we reduce the tax take. We need to bear that in mind.
Andrea Leadsom
It is a great pleasure to follow the hon. Member for Hackney South and Shoreditch (Meg Hillier), with whom I agree on many aspects of early years.
The first thing I want to say is that children are everything to those of us who have them, and to those of us who have young nieces, nephews and grandchildren. Children are at the centre and heart of our world. They make incredibly selfish human beings become extraordinarily unselfish. It is when a child is about to get run over that a parent gets superhuman strength to push them out of the way. People are capable of the most enormous sacrifices for the sake of their children. It is clear to us all that top quality child care is vital.
In my case, with three kids of my own—aged 18, almost 16 and 10—I have had just about every form of child care that can be imagined. I was fortunate to start off with my stepfather acting as my nanny until my second son was five years old. Therefore, I thoroughly recommend informal child care. There are not many childminders who will take two little boys out—one in a backpack, one in a frontpack—and explain to them for hours what a worm cast is, build little toy forts and play with toy cars. Even today, I cannot get to Parliament until I have dropped one off at a friend’s, sorted out another with some A-level revision and got the third out of his bed, basically. For us, particularly mums, our children and the child care at whatever age they are—I talk to people with older children who are still looking for food, money or a taxi service—are at the centre of our lives. We all spend a lot of time thinking about the safe and happy lives of our children. Child care is a vital part of whatever we can offer to support those at work in our society.
We also need to support thoroughly the choices that families want to make. They may want an au pair and to deal with someone who is living in and who, perhaps, does not speak very good English. I asked one au pair I had to make a salad. She peeled some parsnips and gave us the peel, nicely dressed, as a salad. That was an interesting one. There are also childminders although, sadly, not nearly enough of them. There is also the formal child care setting; some truly superb, others truly awful. Unfortunately it was the formal child care setting—the nurseries—that led to the old joke about “hair or care”; in other words, someone not smart enough to be a hairdresser could try to become a nursery nurse. That was the reality 10 years ago where some young girls—themselves barely out of their teens—would become the carers looking after our very young children in nurseries. Care for our children comes in all shapes and sizes.
I also want to say a word on behalf of those heroic mums—I would have loved to have been one—who have stayed home and looked after their children themselves, giving up potentially lucrative, satisfying and successful careers. They might feel very depressed about their lack of self-worth, certainly in the eyes of too many politicians. I want to pay tribute to those women who decide to stay home and raise their own children.
Meg Hillier
I just want to go back to the point about au pairs and others. Will the hon. Lady acknowledge that with the cost of housing and the overcrowding in many cases in London, the idea of someone living in your home is not an option, which is why the formal setting is particularly important in a city such as London?
Andrea Leadsom
Yes of course I agree. My point was merely that child care comes in all shapes and sizes. My real point is that we should support the choices that families want to make, which are the best choices for them. That is particularly why I am so delighted that the Government have introduced shared parental leave. What more choice could there be for a woman who perhaps is earning more than her husband than to be able to decide to go back to work in the knowledge that he will be doing that critical early part of the child care? That is a huge tribute to the Government and many families will be delighted. It will be life changing for them.
Another area for which the Government deserve a lot of credit is the introduction of the early years professional status, particularly to deal with the quality of child care. I have been told by the Under-Secretary of State for Education, my hon. Friend the Member for Crewe and Nantwich (Mr Timpson)—who is Minister for children—that early years professional status will require a great deal of training. It will involve learning about the importance of secure attachment, about how the brain of a baby develops, and about how vital it is for the baby to receive loving, attentive care, whether that care is provided by parents or in a formal setting. As the hon. Member for Hackney South and Shoreditch (Meg Hillier) pointed out, when life at home is devastatingly awful because of domestic violence, bereavement or drug or alcohol misuse, the attachment needs of a baby may be far better met in a formal child care setting than at home. What is really important is choice and good quality.
Another enormous tribute should be paid to the Government for the creation of childminder agencies. I know that that has been a contentious issue, but I believe that children’s centres that adopt childminder agency status can serve as signposts for all families who seek child care. They can provide ongoing professional development for childminders, many of whom have felt unloved and uncared-for over the last few decades—which, along with over-regulation, has been their reason for leaving the business. The agencies can help childminders to understand regulation, to become established, and to provide the top-quality care that they so want to provide.
Meg Hillier
I thank the hon. Lady for being so generous with her time. Childminders have told me that their main fear is that childminder agencies could replicate the private sector company model for older people’s domiciliary care, creaming off a profit from childminders’ salaries and not delivering a good service. The hon. Lady has described an entirely different model. Does she have any inside information about what will be announced?
Andrea Leadsom
I do not, but I can tell the hon. Lady that I have been lobbying the Minister, and telling him that children’s centres could play a fantastic and very appropriate role if they became childminder agencies. I think that the support, encouragement, training and quality control that they could offer would be good for childminders, and it would certainly be good for families.
What else have the Government done for families? They have done an enormous amount. Child care tax credit has been given a huge boost: a contribution of up to £2,000 per child will greatly help families to make the right child care choices. Even more significant is the increase in the tax-free personal allowance, which has put an enormous amount of money back into the hands of taxpayers, and which will benefit working families of all shapes and sizes. As was pointed out by my hon. Friend the Member for Suffolk Coastal (Dr Coffey), the fuel duty freeze has made the cost of living for families lower than it would have been under the Opposition.
But what have we really, fundamentally done for our children—the children who are at the heart of everything that we do? We have paid down the deficit by a third, which is no inconsiderable feat. Why is that so important? As a result of the financial crisis and the Labour Government’s overspending, we put ourselves in a position in which we stole not just from our children, but from our grandchildren. We mortgaged their future. This Government have paid down the deficit significantly, with the intention of clearing it altogether so that we can start to reduce the debts that our children and grandchildren would otherwise be paying. We have been able to keep the cost of borrowing down, because we had a credible plan for returning strength to our economy. That has enabled all families with mortgages to keep down their borrowing costs, and has been a huge boost to families that is never talked about.
What is the payback? Our economy is the fastest-growing in the developed world. Wages are rising faster than they have done for seven years—that was announced today—and the private sector has created 1.6 million new jobs. That means that well over 1.5 million new families are finding work, and are able to meet the needs of their household budgets.
Budget Resolutions and Economic Situation
Andrea Leadsom Excerpts(10 years, 1 month ago)
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Derek Twigg
My hon. Friend makes a very important point. Whose side are this Government on? They are on the side of the rich, not the people who actually run our health service—the nurses, care workers and so on—
Derek Twigg
I will not, if the hon. Lady does not mind, because I have given way once and I know that other hon. Members want to speak.
The Government are not on the side of the nurses, as nurses know and understand; they are returning to true form in cutting the NHS, as they did the last time they were in power, while doing nothing about the deficits that hospitals in this country have to carry as a result of their policies and their poor funding of our hospital services.
I want to turn to the important area of defence, which rarely gets mentioned during Budget debates. Under all Governments, the Treasury has always had a vital role in the amount of money provided for defence, but the whole of our defence policy now seems to be run by the Treasury, which is not taking account of our present and future security needs. The massive cuts in the Army, the Navy and the Air Force will create real problems in future years, and we will come to regret those cuts. This Government’s defence policy is all over the place, and we heard nothing today about what they are doing to fund defence in future. That is storing up serious problems for this country’s influence in the world and its ability to respond to threats, such as what is happening in Ukraine and Russia.
At my surgery, I see many people on benefits who deserve and need them but who are now waiting even for their personal independence payment to be assessed—it is taking months and months. The system is in absolute chaos, with people being kicked off benefits for trivial reasons. We are also seeing the impact of the bedroom tax. What is happening to some of the most vulnerable low-income people in this country is an absolute scandal. It is okay for the Chancellor to say that there should be a benefits cap, but we do not know what it actually means for those deserving people who need benefits to be able to survive and continue with their lives. We do not know the details of what it will mean, and the Chancellor said nothing about it today.
The Government are clearly out of touch with ordinary people. They are run by a bunch of public schoolboys, and their first priority is to look after the rich and to ignore the rest.
Andrea Leadsom (South Northamptonshire) (Con)
This Budget has been billed as a resilient Budget for a resilient economy. I say that it is a robustly, and indeed resolutely, resilient Budget for a really strong future economy. I completely agree with my hon. Friend the Member for Warrington South (David Mowat) that it passes all the tests of looking to the long term, rather than at short-term give-aways, which is so important in any Budget.
The first thing I would like to say is a huge thank you to the Chancellor on behalf of Northamptonshire for the contribution to a pothole fund, which Northamptonshire will be universally delighted about—[Interruption.]
Andrea Leadsom
That is a great shame. The Chancellor mentioned my hon. Friend the Member for Northampton North (Michael Ellis), so I was rather hoping that we would get to keep it all, but perhaps not.
I would like to mention the efforts that the Chancellor has made for business, which is the source of our country’s long-term recovery. Doubling the annual investment allowance to £500,000 per annum is superb for businesses and will allow manufacturing companies in my constituency, for example in motorsport valley—the area around Silverstone—to invest in plant and equipment. Doubling the UK’s direct export lending programme will enable us to create the export-led recovery for the long term that we so much want to see. Capping the carbon price support rate will save costs for manufacturers in the medium and long term. That is great news for the east midlands, the west midland, the north of England and the entire UK. I hope that Opposition Members will be honest enough to welcome those measures.
I commend the Chancellor on his work for savers and pensioners, which is truly groundbreaking. I also want to pay tribute to Dr Ros Altmann, who has long campaigned for changes to annuity rates. She has been pointing out the weakness in the annuity construction of pensions for many years. I understand that she was in fact an adviser to Opposition Members when they were in government. She has been trying to persuade Governments of all colours to lift the unfair obligation to buy an annuity on reaching retirement age. I am delighted about the news, which will really change the fate of future pensioners.
The annual ISA cap has been lifted to £15,000, but much more important is the allowing of investors to choose whether they want to invest in cash or stocks to meet their savings needs. These things are incredibly important. When it was introduced, quantitative easing was essential to try to prevent further harm to our economy. However, there can be no doubt that the historically low interest rates that have resulted from the QE programme have very badly harmed savers and pensioners—those on fixed incomes. The structural change that the Chancellor has made is really important and will be welcomed not just in my constituency but across the UK.
I have paid tribute to Dr Ros Altmann, who I feel sure is a woman of absolutely high enough calibre to be considered for the next post available on the Monetary Policy Committee, the Financial Conduct Authority or the Financial Policy Committee. I defy any Member to disabuse me of that notion. I also welcome the appointment, announced yesterday, of Dr Shafik to the Monetary Policy Committee.
Andrea Leadsom
Absolutely on merit, as is the case for all high-calibre women. The Governor of the Bank of England is showing real foresight in recognising that he needs committees of a diverse range of talents—not just the white middle-class theoretical economists whom he has tended to inherit from the previous Governor. The appointment is incredibly important. Dr Shafik will be leading the Bank’s review of its market intelligence following the fixing of foreign exchange rates. The Treasury Committee will follow that with great interest. Sadly, there may be many more fines as a result of the appalling behaviour that we continue to see among the banks. Those fines will be put to good use.
I want to use the last few moments of my contribution to talk about a real game-changer for the banks. I commend to all Members something in page 84 of the Red Book. It is perhaps the most ground-breaking, profound proposal of the Government’s in this Budget:
“The government has today announced that it will switch on the Market Investigation Reference powers of the Payment Systems Regulator a year ahead of schedule.”
That means that there will be a regulator of payment systems. Until now, there has been a small group of powerful banks that are, yes, too big to fail, as we have discovered only recently to our enormous cost. They have also been determined to put up barriers to prevent the entry of second-tier, smaller banks and shut out new competitors. A regulator of payment systems will surely reduce those barriers and enable the new banking competition that Members across the House want.
Specifically, the really important measure in the Budget is the requirement on the payments regulator to review the effectiveness of the current account switching service and look at instant account portability before the next Budget. If someone wants to switch bank account now, they have to move their account number, cheque book, bank cards and so on. People get to keep their mobile phone numbers when changing mobile phone provider; it would be so much easier for people if they got to keep their bank account numbers when switching bank accounts. It would also be so much easier for new challenger banks to persuade us to switch—“Just give us a try. If you don’t like us, you can go back to your old bank tomorrow.”
People could literally switch bank once a week or fortnight. That would significantly encourage new competition, but most importantly it would persuade the big banks that they needed to enter into customer retention strategies, which they have not had to do for years. Such a change would significantly improve the fate of small and medium-sized enterprises, which desperately need to be able to access new sources of financing. It would also mean that the Bank of England could easily step in to move accounts from a failed bank to a survivor bank, thereby ensuring that the awful situation of people queuing down the street to take their money out, as happened with Northern Rock, would never happen again.
In summary, this is a resolutely resilient Budget which I believe contains some seriously game-changing proposals that will have a significantly positive impact on the future of our economy for many years to come.
Fairness and Inequality
Andrea Leadsom Excerpts(10 years, 3 months ago)
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Andrea Leadsom (South Northamptonshire) (Con)
While Opposition Members would like to absolve Gordon Brown of any guilt over the collapse of the banking system, only this morning in the Treasury Committee we were looking still at the debacle of the Co-operative bank—
Mr Deputy Speaker
Order. When I say “Order” I expect the hon. Lady to sit down. The intervention is becoming a ramble, but more importantly we are talking about a Member of Parliament, not by name I hope.
Financial Services (Banking Reform) Bill
Andrea Leadsom Excerpts(10 years, 5 months ago)
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Andrea Leadsom (South Northamptonshire) (Con)
I rise to congratulate the Minister on the excellent introduction of an independent payments regulator. I am amazed that this absolute game changer has not received more press attention, because our banking system still, on today of all days, faces the threat of being undermined in the eyes of consumers by its appalling behaviour. Today, Lloyds bank has been fined £28 million for its appalling treatment of retail customers—that is the biggest fine for retail misconduct ever. I stress that the reason for that, as the investigations by the Treasury Committee and the Parliamentary Commission on Banking Standards showed, is a profound lack of competition in the UK banking sector. Even worse, we even have the last great remaining closed shop, because the Payments Council regulates the banks, yet the banks own the Payments Council, and the banks both clear through and own the payments infrastructure. So there is no incentive to innovate and no self-regulation, and there is a deliberate suppression of competition. What the Minister has done by introducing an independent payments regulator is open that can of worms. The regulator will be a real game changer for the competitive outlook in the UK in future, and I wish to explain why that is.
The proposal is for the payments regulator to look at access to the payments system. As we know, the big clearing banks access the payments system directly, but challenger banks such as Virgin Money, Metro Bank and Aldermore have to go through an agency clearer. If its systems break down, those banks cannot serve their customers. Not only that, but because these banks have to go through the clearer to access the payments system, they get charged up to 10 times or 20 times as much as the clearers have to pay for one payments transaction. It is an absolute closed shop and it is appalling.
The payments regulator’s first job will be to examine access to the payments infrastructure and to say to the big banks, “You have to give direct access to every player.” The big banks argue, “You can’t do that because we all mutually underwrite one another’s payments.” As with any other clearing system, however, it is perfectly possible to leave a deposit up front and then to be called for more margin should you be running out of money, so the reason given for not allowing other banks direct access to the payments system is a completely spurious one. That will be item No. 1, and dealing with it will, in itself, create a completely different playing field for all those who want to come into the banking sector.
Ian Swales
The hon. Lady is making a powerful point. Does she agree that a parallel situation would be having the big six electricity companies owning the grid and not allowing any other supplier on to it?
Andrea Leadsom
Yes, my hon. Friend is absolutely right. There are huge parallels between the banking closed shop and the energy closed shop. That is something I have been picking up, and I was recently in the media with him addressing this very subject.
Giving direct access to the payments infrastructure to all banks will reduce the barriers to entry, so I want further to congratulate the Minister on accepting the Treasury Committee’s recommendation that the PRA should have a specific competition objective. That is key, because the barriers to entry do not just relate to access to the payments system; there are regulatory barriers to entry. In other words, “If you are small, you cannot become a bank. Until you become a bank, you cannot become big. Therefore, you cannot ever become a bank.” We have created an environment where there are massive barriers to entry, so the payments system changes will really start to unravel that closed shop.
Importantly, I wish to put in one plea for full bank account portability. I know that the Minister has absolutely agreed that one of the first jobs of the new payments regulator will be to undertake a full cost-benefit analysis of account number portability. That would mean that if I want to switch banks in future, instead of waiting for even seven days, having to change all my direct debits, standing orders and bank account details, and having to be issued with new credit cards and cheque books and so on, I would simply be able to have my bank account details re-pointed at a new bank and so everything would remain the same. It would be instantaneous account switching.
When we move our mobile phone account number now, we can take our phone number with us. In a world where we had full number portability, we would also be able to take our bank account details with us. That would be a radical game changer for competition. New entrants could come in and attract new business on the promise that if a consumer does not like them they can always move somewhere else tomorrow. Banks would lie awake at night wondering how to retain their customers through excellent customer services rather than what next they can fleece them with, which happens all too often now.
Competition is not the only issue. There are two other items I wish to mention. The first is about resolution. We have put in all this effort to try to ensure that, in future, a bank cannot fail. We have increased capital requirements and changed the regulatory structure, which is all to the good. None the less, we know that in future, as sure as eggs are eggs, a bank will fail. What bank number portability will do is to give an instant means of resolution to avoid ever seeing again queues of people down a street trying to get their money out of a bank that they are concerned about.
If we in the UK become the first country to introduce full bank account number portability, we will be leading the world. By creating a shared infrastructure for payments, we will create a massive business opportunity for UK plc. I congratulate my hon. Friend, the Minister, but urge him to go even further and to support, when the time comes, the prospect of full account number portability.
Paul Blomfield (Sheffield Central) (Lab)
Like my hon. Friend the Member for Makerfield (Yvonne Fovargue), I rise to speak on amendment 155. The Minister has acknowledged that data collection is at the heart of effective regulation. Like many Members on both sides of the House, I welcome the Government’s conversion to capping the total cost of credit, but we need to recognise that it is not a silver bullet.
When I was fortunate enough to have the opportunity, through the private Member’s Bill ballot system, to prepare the High Cost Credit Bill back in July, I brought together Members from both sides of the House—I am pleased to see that one of them, the hon. Member for East Hampshire (Damian Hinds), is in his place—and all the major consumer voice and debt advice organisations, such as Which?, Citizens Advice, StepChange and the Centre for Responsible Credit, to try to develop a holistic approach to the regulation of payday lenders, with appropriate interventions at every stage of the relationship that lenders have with their borrowers from advertising right through to debt collection. At many points in that relationship, the issue of real-time data collection is absolutely vital to tackle multiple lending. We know that multiple lending is the source of many of the problems that people face. Unable to repay one loan, they are forced to resort to taking out additional loans, moving from a single unaffordable debt to multiple loans, creating completely unmanageable debt.
As my hon. Friend the Member for Makerfield has pointed out, the current reporting framework for credit reference agencies of 30 to 60 days simply cannot protect people from the problems that result from multiple lending. Only real-time data collection can effectively do that.
Secondly, we have the impact on the market. As part of the debate on payday lending, many people have argued that we cannot solve the problems by regulation alone and that we need a wider range of more affordable products. That is absolutely right, and real-time data are key to that too, because they will enable lenders to assess risk.
At a recent hearing of the Business, Innovation and Skills Committee, one of the lenders selected by the Consumer Finance Association as a representative of the industry said:
“We do not know in real-time what loans the customer has with other lenders.”
He said that they would
“love to know that information.”
It is impossible for lenders properly to evaluate risk, set interest at manageable levels and develop new products. As other Members have said, the opportunity that real-time data would provide for new entrants to the market is also crucial.
Above all, real-time data are essential to ensuring affordability, which is at the heart of the measures needed to protect people. The industry works in a distorted market. We know that: success is measured by the time it takes to get money into somebody’s bank account, not by the ability to repay. It sounds perverse that many lenders are not primarily concerned about ability to repay. As the OFT has highlighted, up to 50% of payday lending revenue comes from 28% of loans—those that are unaffordable—so providing real-time data is at the core of shifting the business model for payday lending from speed of lending to affordability and is the key to protecting people from spiralling and unaffordable debt.
I mentioned the recent Select Committee inquiry, which will report soon. My hunch is that it will say something along the lines of the report we published two years ago—that real-time data collection is critical to transforming the payday lending industry. We have heard from a number of Members that debt advice agencies are clear that we need real-time data collection and sections of the industry also want it. As the shadow Minister, my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), has pointed out, the industry has been slow to respond. It has been considering the issue for two years and has failed to find a solution that all participants will buy into. As the industry has failed to produce an initiative, it is our responsibility to step in and secure real-time data collection.
I would cite in support of that assertion the response of the Financial Services Consumer Panel to the Financial Conduct Authority’s consultation on its proposals on payday lending. As Members will know, the Financial Services Consumer Panel is the statutory body that monitors how far the FCA fulfils its statutory objectives for consumers. It is a critical voice in this debate. The panel has said that
“better creditworthiness assessments must be underpinned by real-time data sharing capabilities.”
On affordability, it has stated:
“In order for this information to be available we believe the establishment of real-time data sharing is vital.”
It has also stated:
“In addition to limiting rollovers, the Panel also feels that real-time data sharing is essential in ensuring people do not end up with excessive numbers of loans at the same time.”
It goes on:
“The speed at which loans are granted is often cited as the reason for”
unaffordability and rollovers, and:
“Real-time data sharing would overcome this and should be something the FCA encourages…There are examples of other jurisdictions, such as Florida…where this has been achieved.”
Indeed, the Minister cited Florida as an example earlier.
The panel comes to the conclusion that it strongly calls for the establishment of real-time data sharing and I hope that the Government will listen to that.
Oral Answers to Questions
Andrea Leadsom Excerpts(10 years, 5 months ago)
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Nicky Morgan
That is a very interesting question. The hon. Gentleman will know that the OBR last week said that the only thing that would raise wages was increased productivity in the economy. That means more people creating more jobs and more growth in our economy. I would have thought the hon. Gentleman welcomed the fact that 2.7 million people have been taken out of income tax completely as a result of our changes and 25 million people are paying less income tax.
Andrea Leadsom (South Northamptonshire) (Con)
Does my hon. Friend agree that Opposition Members seem to misunderstand the fact that rises in the personal tax-free allowance are putting money back into the hands of the lowest earners? Does she agree further that the best way to raise people’s living standards is by creating new jobs and new growth in our economy?
Nicky Morgan
My hon. Friend is, of course, right. The fall in living standards is a consequence of the economic crisis left to us, and the best way to deal with living standards is to deal with that economic crisis so that families can find work in a growing economy.
Autumn Statement
Andrea Leadsom Excerpts(10 years, 5 months ago)
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Mr Osborne
The central point that Scotland might want to focus on today is that the oil forecasts are independently produced by the Office for Budget Responsibility, so either the SNP believes that Robert Chote has somehow fiddled the numbers to stack the campaign against independence, or the truth is that it is making a false promise to the Scottish people. The SNP is not being straight with people about the public finance position of an independent Scotland, and it is Scottish people who would pay the price if there was such an outcome, but I think that they are beginning to have serious doubts about the claims that the SNP is making.
Andrea Leadsom (South Northamptonshire) (Con)
I congratulate my right hon. Friend, particularly on removing the jobs tax on young people. Will he confirm that one of the aims of his Budgets has been to ensure that the young people of today do not end up paying for the mess left by Labour?
Mr Osborne
I absolutely agree with my hon. Friend, and I thank her for what she said. A central part of my Budgets has been to say to the next generation, “We are going to make sure you have the opportunities to succeed. If you have no skills, we will help you to get those skills. If you want vocational work and training, you will get that through apprenticeships. If you want to go on to higher education, you will get support from the lifting of the cap on student numbers, which is a huge reform”—and, as she mentioned, to say—“If you want to get into work, we will help you by abolishing the jobs tax on young people.” Dealing with the debts and deficits is also, of course, a huge part of saying to the next generation, “We will not leave you with the problems we weren’t prepared to tackle ourselves.”
National Infrastructure Plan
Andrea Leadsom Excerpts(10 years, 5 months ago)
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Danny Alexander
I am rather surprised not to hear the representative of the Green party welcome our commitments to making onshore wind more cost-effective and the big commitment to offshore wind set out in the national infrastructure plan. We must ensure that we have balance in our energy mix, and having nuclear power stations alongside renewable energy is the right mix. The Government are committed to that and I intend to ensure that we see it through.
Andrea Leadsom (South Northamptonshire) (Con)
I welcome today’s announcement on the national infrastructure plan. However, with regard HS2, it was made very clear at the beginning that no individual should be left out of pocket for the sake of a national infrastructure project, so will my right hon. Friend look again at the response that I received from the Department for Transport to a parliamentary question, stating that there would be no support for those families and communities who wished to petition on the hybrid Bill and no financial compensation? In fact, to be able to petition they need to figure it out for themselves, from reams of paperwork, and pay a £20 fee for the privilege.
Danny Alexander
I have not seen the correspondence, but if my hon. Friend would like to pass it to me, I will gladly look at it. I have to say, however, that it sounds as through what the Department has recommended is in line with normal practice, and I would not necessarily want to recommend any changes.
Women and the Cost of Living
Andrea Leadsom Excerpts(10 years, 5 months ago)
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Andrea Leadsom (South Northamptonshire) (Con)
Is the hon. Lady as delighted as I am that this Government have introduced shared parental leave and time off for dads to support their wives? Does she agree with me that what this Government are doing to support the early years is absolutely commendable and that all parties should get behind it?
Gloria De Piero
We in government extended maternity leave and introduced paternity leave.
The Government are turning back the clock on women’s equality. Progress on the wage gap has stalled, and women’s financial independence is being undermined. Let us look at the Government’s proposal for a married couple’s tax allowance. It is less than £4 and it will not benefit most married couples. For five out of six couples, it will represent a transfer from the purse to the wallet. It is money to the married man on his third wife, while the single mum, left behind to bring up the kids, will not get anything at all. This Government are taking a lot away from the purse to put a little bit back in the wallet.
This matters not simply for women’s lives and women’s equality, given that increasing women’s employment helped the last Labour Government to lift more than a million children out of poverty. All this progress is now at risk, and progress on child poverty has stalled. I look at my own constituency and see that use of food banks has gone through the roof.
Gloria De Piero
I would like to make some progress, if I may.
One food bank, provided by the Eastwood volunteer bureau, is reporting a 400% increase in use, but it is not only former coalmining areas such as mine that are struggling; this is happening up and down the country. Only yesterday, in reading the Witney Gazette, I learned that another food bank was opening in the town of Carterton, just a few miles from where the Prime Minister lives. The Tory mayor of Carterton recognised the problem straight away—utility bills had gone up and the cost of food had continued to rise.
Gloria De Piero
I thank my hon. Friend for drawing attention to that survey. I shall make sure that I look into its findings.
Many families must decide not when mum will go back to work after maternity leave, but whether it makes financial sense for her to do so at all. According to a survey by Asda, 70% of stay-at-home mums said that in the current climate they would be worse off if they worked, because of the cost of child care. The Government’s response has been to take £7 billion away from families with children, and to remove the ring fence from Sure Start, breakfast clubs and after-school clubs.
The day before the election, the Prime Minister looked down the barrel of a camera and told women throughout the country that he backed Sure Start. Let me repeat his words in full.
“Yes, we back Sure Start. It’s a disgrace that Gordon Brown has been trying to frighten people about this. He’s the Prime Minister of this country but he’s been scaring people about something that really matters.”
What about the Deputy Prime Minister? What did he say on the day before the election?
“Sure Start is one of the best things the last government has done and I want all these centres to stay open.”
Gloria De Piero
The hon. Lady has already intervened, and I want to allow others to speak.
Since the election there are 578 fewer Sure Start centres and 35,000 fewer child care places, and the number of breakfast and after-school clubs has been cut in more than a third of local authority areas. As for the women who have found work, it is the sort of work that leaves many families struggling to pay the bills. A record number of women are in part-time, temporary and low-wage jobs. One in four earns less than the living wage, as opposed to one in six men. The Government are wasting women’s talent, and costing the economy too. Where is their commitment to make work pay? On our first day in office, the next Labour Government will offer employers throughout Britain a “make work pay” contract to help them to pay the living wage.
Andrea Leadsom (South Northamptonshire) (Con)
It is regrettable that Labour likes to portray women as always victims. It is important that this Government see women for what they are—people with all sorts of different ambitions, different needs, different aspirations and so on. It is impossible to define what women want, other than to say that they want to be able to choose and not to be punished for their own choices. Choosing to stay at home and raise children; to work part time and use informal child care; to use nurseries or childminders; to have a stunning career running a FTSE 100 company, or as a pop star or a brain surgeon; to retire early or volunteer for a charity; to care for elderly relatives or disabled children; to be a teacher or, yes, even a politician—what women want is utterly varied, and I am proud of the way that this Government have made efforts to create choice and opportunity for women.
We all know that times have never been tougher economically. Austerity has limited our ability just to keep spending, but it has not stopped the Government’s desire to reform, and to support women in their own choices. There is no escape from the appalling mess that Britain was in in 2010, but the Government have been committed to raising the tax-free allowance for the lowest paid to £10,000 per annum by 2014. In spite of being almost half the work force, women are by far the lowest earners, so keeping more of their income is vital for them. Freezing fuel duty and council tax has helped all families through these tough times. But above all, dealing with the deficit has been and should be the key goal.
Stephen Metcalfe
My hon. Friend talks about the deficit. Does she think it is responsible for a Government not to tackle that and to pass it on to our children and grandchildren so that they have to deal with the problem?
Andrea Leadsom
My hon. Friend is quite right, and I was coming on to say that our deficit is not some airy-fairy statistic; it is the debt that is growing from it that is the biggest threat to our children and grandchildren. If we do not sort it out in our lifetime, it will wreck their future. That matters not just to loving mums, but to loving dads and loving grandparents. The Opposition must stop making light of it. It is real; it is there; it has to be dealt with.
Unemployment rose by 29% for women under Labour. Now there are more women in employment than ever before. The unemployment rate for women has fallen to 7%. At all levels we are helping women to build and develop successful businesses. The Women’s Business Council, set up in 2012, is taking many different actions, including providing business grants and mentors to female entrepreneurs. We are promoting business to girls in school and providing student enterprise loans. In the boardroom, under this Government female representation has risen from 12.2% to 17.3% in three years. We have a long way to go, but it is real progress in what women want.
Women and men are working parents. We have just had a debate on child care, and our policies to support the cost of child care through tax breaks, as well as a raft of measures to encourage new childminders to professionalise the nursery work force and to give parents the confidence that they are getting quality child care as well as helping with the cost of it, are vital.
Pat Glass (North West Durham) (Lab)
Is the hon. Lady aware that the Education Committee’s recent report found that since 2010 more than 30% of child care centres in this country no longer have children in them?
Andrea Leadsom
I was not in the Education Committee, but I am absolutely passionate about child care for the very young and the support that we provide to them. As chair of the all-party group on Sure Start children centres, I can tell the hon. Lady that in our year-long inquiry into best practice in Sure Start centres, there was no evidence of wholesale closures. In fact, there is a real focus on improving the outcomes for families and children. I assure her of that. I urge her to read our report.
I also urge all parties to get behind the 1001 critical days manifesto, which looks at what more we can do to support the earliest relationships in families. It is through creating those secure early bonds that we go on to help families to build and develop the emotional resilience that they need to be secure and happy adults. That does not affect only women, but with one in 10 women suffering post-natal depression, and with so much family breakdown as a result of poor early relationships, I urge all colleagues to get behind our manifesto, which was launched by me, the right hon. Member for Birkenhead (Mr Field), the hon. Member for Brighton, Pavilion (Caroline Lucas) and the right hon. Member for Sutton and Cheam (Paul Burstow). It is a truly cross-party manifesto, and I urge all hon. Members to look at it. We should all call for support in the earliest years. That would really support women.
However, women are not just parents and they are not just in business; they are also carers pretty much all the time. Most of the caring in this country falls to women. Women look after the elderly, the young and the disabled. They are also very often the volunteers. They do the brilliant work in food banks and in all the charities. I chair the charities PIP UK, the Parent Infant Partnerships UK; NorPIP, the Northamptonshire Parent Infant Partnership; and OxPIP, the Oxford Parent Infant Project. They provide help for post-natally depressed women, and in those charities it is largely women who volunteer. So many women come to my surgeries to talk about their caring responsibilities. Our policy to combine health and social care for the elderly is incredibly welcome to many as it means that their elderly relatives will have a greater chance of longer independent living, and our policy to introduce personal independence payments for disabled adults and children is welcome to many families who recognise the independence it gives them in making those choices.
Above all, our education reforms will give children a real chance in life. Between 2000 and 2009, under Labour, England fell from seventh place to 25th in international school performance in reading, from eighth to 28th in maths and from fourth to 16th in science. Those things—the future of our children—matter desperately to women and men, but very much to women. It is a priority for our Government, as are our 250,000 new apprenticeships and our superb new university technical colleges, ensuring that children are supported in their future choices.
Then, of course, there are women as pensioners. Our pensions system is complicated and serves women badly. On average, women get £40 less in state pension than men and are much more likely to live in poverty, so they welcome our new single-tier pension. It will disproportionately benefit women, ensuring that those who took time out to raise a family do not suffer in their retirement as a result.
In conclusion, women have so much to offer and so many needs. I want to highlight a few other things the Government are doing for women, such as our determination to tackle female genital mutilation, to build and support rape crisis centres, to support refuges for victims of domestic violence and to tackle human trafficking. All these, and many more, deeply held aspirations and needs of women are being addressed and sorted by this Government. I am incredibly proud of our focus on being the future for women in our society. I hope that the Opposition will come to recognise that it is this Government who are helping women to achieve their dreams and that, in order to achieve the equality we are all striving for, they have to stop seeing women as victims.
Oral Answers to Questions
Andrea Leadsom Excerpts(10 years, 6 months ago)
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Andrea Leadsom (South Northamptonshire) (Con)
On the subject of the cost of living, does my hon. Friend think it astonishing that Opposition Members do not understand that this Government have done so much to keep council taxes down? If we were still subject to their policies, the average council tax cost would be £210 a year higher.