Front-loaded Child Benefit Bill [HL]

Baroness Berridge Excerpts

2nd reading
Friday 8th July 2022 Lords Chamber

[Baroness Berridge (Con)]

My Lords, I begin by thanking my noble friend Lord Farmer for introducing the Bill, which is yet another example of his friendly pressure on Her Majesty’s Government on behalf of some of the poorest in our society. He is resurrecting in the Bill a matter that has never been fully looked at, and I hope my noble friend the Minister will commit to sending it out for proper consultation.

The Bill is not suggesting that children in their teenage years do not cost as much or maybe more than children in their early years. Although in countries such as Denmark and Norway, child benefit decreases with the age of the child, in others such as the Netherlands it increases. What is different, as other noble Lords have said, is that in the early years transitions are needed, maybe to larger housing, with the attendant costs, and the purchasing of various essential items, but most obviously much more intensive childcare if a parent or parents want or need to continue working. Also, we increasingly know how important the early years are for cognitive, behavioural and emotional development. I believe that giving parents the option to take a greater proportion of child benefit in the early years is an idea worth exploring.

One can think of many examples where such an option would be helpful to parents. If one child becomes ill and requires frequent hospital visits or stays, there can be increased costs, not only for such visits; if you have other children, you will therefore have increased childcare costs. Of course, there are other benefits, such as carers allowance, but they may not cover all the extra expenditure.

In addition, such flexibility—I argue for great flexibility—might help sort out the vexed issue of parents going on to universal credit or who are on universal credit when their first child is born. Both universal credit and the childcare element, where you can reclaim 85% of the costs, are paid in arrears. However, a universal credit advance is available if the claimant cannot wait the five weeks until their first payment. That advance is repayable over 12 months. As far as I am aware, there is no corresponding advance to cover the upfront costs of childcare. The charity Save the Children says that 90% of childcare providers require payment in advance, and 78% of low-income families with children in England have no savings. Also, one must remember that 2.3 million UC claimants are in work.

The UC childcare payment can be £1,108 if you have two or more children. It is not a surprise, then, that there is evidence that families are going into debt to cover these upfront childcare costs and in reality, if there is a delay in payment, they may have to cover more than one month. While to some this might seem a small level of borrowing, in these circumstances it might be from unorthodox sources with higher rates of interest, and for low-income families on universal credit it is easy to see how this can lead to a debt spiral. Obviously, I am arguing for great flexibility to be able to use quite a large proportion of child benefit in these circumstances. However, could not allowing some front-loading of child benefit in specific circumstances, such as claiming UC, be helpful? A consultation could consider ideas such as this.

Of course, there could be unintended consequences to such a policy. Would it lead, as the noble Lord, Lord Kennedy, suggested, to parents not having enough money for their children in their teenage years? I believe there should be a floor regarding the proportion that can be front-loaded. Also, according to the House of Lords Library, no other country has provided such flexibility in child benefit payments, so we would be the first.

I hope my noble friend can say that Her Majesty’s Government will be able to consult on this matter in the autumn, when matters have settled down.