Childcare Bill [HL]

Baroness Pinnock Excerpts

Wednesday 14th October 2015 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)]

My Lords, it might first be of benefit to the House if I make a few points. I would like to thank noble Lords for their support during the passage of the Bill so far. I would particularly like to thank noble Lords whom I have met since Committee. I have found these conversations extremely helpful and I hope they have, too.

The Government are committed to supporting working families. That is what the Bill is about. It enshrines that commitment in law, with a new duty on the Secretary of State to secure 30 hours’ childcare for working parents of three and four year-olds. As the Secretary of State set out last week, the Department for Education’s focus should not be stakeholders or vested interests; our focus is unashamedly on children and their parents. The Bill makes that clear.

I have listened carefully and with great interest to the concerns noble Lords have raised throughout the passage of the Bill. As the noble Baroness said, I undertook in Committee to confirm a number of details ahead of Report. I hope that the package of support published earlier this month, the policy statement and the government amendments I have tabled, deliver on those commitments. I have had feedback from noble Lords across the House that this was helpful. I have listened to the debate on ensuring that Parliament has the opportunity to provide appropriate scrutiny on the detail of secondary legislation. We listened and tabled amendments in response.

Subject to the debate today, the first set of regulations made under the Bill will be subject to affirmative procedure. The amendment in question was informed by the first report of the Delegated Powers Committee and I thank the committee for meeting again on Monday to consider our proposed changes to the Bill. I am pleased that it welcomes the Government’s efforts to respond to early criticisms. The noble Baroness rather overstated the case by saying these were scathing, though I note that there are areas where the committee would like us to be clearer in our intentions. I will address these points at the appropriate time during today’s debate.

Noble Lords raised concerns about the detail and breadth of the Bill. We listened to and consulted parents and providers over the summer. On 2 October, we published a policy statement setting out the key milestones up to implementation in 2017, the delivery model and details of who will be eligible for the extended entitlements. Our amendments reflect those new details.

In Committee, noble Lords also understandably asked for reassurance on the quality of the childcare that children will receive under the Bill, and in our policy statement we have made clear that the quality of early education and childcare and the welfare of children remain paramount. I believe that the further things that I will say today in response to amendments on, for example, staff to child ratios, will provide even more reassurance.

Turning particularly to matters relating to this group of amendments, in Committee many noble Lords raised a number of questions about the funding review, which is the most comprehensive national review of the funding of childcare ever conducted. I will respond fully to the debate on this shortly. However, I take this opportunity to make clear that we have listened. In response, we published the terms of reference for the funding review, the findings of the first part of the review and the call for evidence, which received more than 2,000 responses. Yesterday, I was pleased to host a very informative meeting for Peers to meet the Minister for Childcare and Education and the department’s chief analyst. I would be very happy to host another such meeting following the spending review. We have no interest whatever in producing a funding regime which does not work for providers. We have substantially increased the amount of childcare over the last five years successfully, and we are confident that we will do so this time.

This Government are spending considerably more than any other on childcare, and we want to give more working parents choice and flexibility about the childcare they access. We have already heard from working parents, employers, representatives from the childcare sector and unions, and received nearly 20,000 responses to our public survey over the summer, which showed that parents strongly welcomed the new entitlement. Further support for the entitlement has been demonstrated by the poll of parents carried out by Netmums, which showed that the Government’s offer of more childcare is wanted, needed and eagerly anticipated. The survey also suggests that the reform will encourage more parents to work more hours.

I urge the House not to seek to delay this entitlement for working parents. Parents are demanding of us, and in response we should move quickly to put the new entitlement in place. During the election, we committed to 30 hours of free childcare, and we were the only party to commit to a review of childcare funding. We are now challenged on moving too quickly with some aspects and too slowly with others. Providers are keen for legislation. More than 1,000 providers have already come forward to ask to be involved in early implementation.

As many will understand, it is important that we give providers, local authorities and parents time to prepare for this substantial change. We want to move the Bill forward and take the next steps with regulations, consultation and, very importantly, early information. As the shadow Secretary of State for Education said recently, we now need those policies to be turned into reality. I completely agree.

[Baroness Pinnock (LD)]

My Lords, I thank the Minister for the statement he has just made, for the policy statement which he provided us with over the summer and for the briefing yesterday, which demonstrated that detailed work is being undertaken to understand the different business models of providing for childcare.

However, one element fundamental to ensuring that 15 hours of free extra childcare per week can be delivered at high quality is funding. In Committee, we were assured that that information would be available prior to Report to enable a full understanding of the Government’s commitment in terms of the amount of funding. At that stage, the Minister gave a commitment that the Government would announce by Report the findings from their call for evidence as part of the funding review, so that we could have details of the delivery model based on the principles laid out. Unfortunately, that is not available.

Waiting for that information will not cause a delay. The background analysis of the information has been carried out. We heard about it yesterday, and very good it is too. But the figures have not been put into the crunching machine, so we do not know how much will be available to fund this important element of improved childcare—increased hours—that we all welcome. I do not see how, as Members of this House, the role of which is to scrutinise legislation to try to improve it, we can fulfil our responsibilities unless we have that information. We support the Bill, but the funding is fundamental.

All through the progress of the Bill, on all sides of the House, we have made the point about the lack of information—both on the regulations and on the amount of funding that would be available. We have tabled an amendment about cross-subsidisation, which has already been raised in relation to funding. I will speak more about it when we come to the amendment.

The only commitment we have from the Government, as expressed in their policy statement, is that there will be an increase in the hourly funding rate for childcare. What we do not know is how much that will be. It could be 5p an hour. It could be £5 an hour; I hope it is but we do not know. Without knowing, I do not see how the other elements of the Bill can stand up to scrutiny. How can we assure ourselves of the quality of childcare that will be provided if the amount of funding that is available is not declared? How can we be sure that training for staff in childcare can be made available if the funding is not there? How can we be sure that the number of places will be available if the amount of funding does not support an increase in the number of places that will be required? It is fundamental to the success of this Bill—and we all want it to be a success. I urged the Minister to tell us how much money will be available. Unfortunately his hands are tied, and I appreciate that. That is why we ought to delay discussing this Bill, until we know how much will be available, because everything else depends on it.

At the moment, it is the equivalent of being told that we can buy a car when we do not know whether we can afford a second-hand Mini or a brand new BMW. Young children need and deserve better than that.

[Baroness Andrews (Lab)]

My Lords, I listened very closely to what the Minister said about the progress that has been made since Committee. Clearly there has been some progress, but I want to press him on certain points and to reiterate the points of colleagues across the House. The Select Committee said that it was surprised and disappointed at the Government’s response. It was surprised because it is unusual—very unusual indeed—for a government department not to respond more positively to a report of the committee. I will come back to that in more detail. Certainly I am less surprised than the committee, but I am equally disappointed. I understood, like many of us across the House, that what we were to expect, before the start of Report, was a full analysis of the impact that these changes would make, based on the information obtained about the costs borne by the sector and the distribution of those costs, so that the House, to quote the noble Lord, will,

“be able to say a lot more about the delivery model”—[Official Report, 1 July 2015; col. 2093.]

Frankly, that promise has not been fulfilled. We do not know more about the delivery model, we cannot comment on it and we cannot make more sense of it.

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[Lord Touhig (Lab)]

My Lords, Amendment 2 continues the debate we have just had over the funding review and what it means for the delivery of the additional entitlement. It seeks to end the ambiguity in the Bill as to whether responsibility for delivering the additional 15-hour entitlement will be the duty of the Secretary of State—as currently worded in the Bill—or of local authorities. We were unable to secure a firm answer at Committee; in fact, the Minister stated:

“The Government think that it is right for the primary legislation to put the duty to secure the extra 15 hours on the Secretary of State in the first instance, to demonstrate to parents the importance we attach to providing free childcare provision and to give them confidence that the Government will deliver on their manifesto commitment”.—[Official Report, 1/7/15; col. 2114.]

We tabled Amendment 2 to gain further clarity. However, the Government have since tabled Amendment 18, which confirms that the duty falls on local authorities. If this is the case, local councils must be given the appropriate level of support to fulfil their duty. The Government have said:

“We will … look at how we can support local authorities in drawing up agreements between themselves and childcare providers (perhaps by publishing a national model agreement). In addition, we are considering what can be done to smooth out issues around payment arrangements between local authorities and providers.

A full economic impact assessment and new burdens assessment will be carried out in due course”.

The Local Government Association has said that the duty will create further cost pressures on local government and will involve the risks associated with placing additional costs on an already underfunded system. Will the Minister provide an update on what is being done to ensure that local councils will not be out of pocket as a result of being responsible for delivering the entire 30-hour package of free childcare? Again, without seeing the detail of the funding review it is impossible to see how councils fit into the delivery model. I noted from the summary of evidence submitted to the funding review that only 3% of local authorities responded. The Government have committed to an uplift in the average rate that providers receive for the entitlement. The current proposal is for this to be delivered by councils through the dedicated schools grant. The Department for Education has confirmed that decisions about the size of this rate uplift and the consequent additional funding will be made at the forthcoming spending review, which the Minister referred to in the earlier debate.

On 15 June the Government announced that they are conducting a review of the cost of providing childcare. This follows warnings from providers across the spectrum that the current system is underfunded. I know that the Minister does not agree with that, but it is what the sector tells us. It is vital the Government ensure that the funding rate covers the cost of delivering 30 hours of free childcare to a standard likely to improve children’s outcomes and deliver broader policy objectives on employment progression and social mobility—a point well made in the earlier debate.

An initial look at the government amendments in the group might suggest a concession, as expressed in Amendment 12, but, having removed subsections (4) to (7) with Amendment 12, in Amendment 18 the Government seek to recover ground by giving the Secretary of State a power, as opposed to a duty, to make regulations on how local authorities should discharge their duties. The Government could have made Amendment 18 more palatable if they had used “must” rather than “may”. The “may” in line 2 gives the Secretary of State discretion as to whether to make regulations, although it is difficult to see how the scheme can operate without the use of regulation-making powers.

So it goes on. I am sure many noble Lords will have seen the eighth report of the Delegated Powers and Regulatory Reform Committee published yesterday, already referred to by my noble friend Lady Jones of Whitchurch. It says,

“we are surprised and disappointed that many of our recommendations have not been acted upon. It appears to us that the amendments add very little of substance to the face of the Bill: for the most part they adjust the existing delegated powers by removing some, varying others and adding more, while re-parading many in a new clause”.

It sounds a bit like moving the deckchairs on the “Titanic”. The report also says:

“Although the changes to some delegated powers may give the House a clearer idea of how the powers could be exercised, it remains unclear how they will be exercised”.

What an indictment of a very important Bill which is welcomed all around the House.

Amendments 14 and 16 remove from the Bill the ability of the Secretary of State to criminalise parents. In new subsection (2)(h) proposed in Amendment 18, the Government use their proposed new clause to replace the power in what was Clause 1(5)(k) to create criminal offences. I agree with the eighth report of the Delegated Powers and Regulatory Reform Committee that this is welcome and that the new power is focused only on unauthorised disclosure of official information. But the committee points out that the power is not insignificant,

“as it would enable the creation of an offence sufficiently serious to be punishable by imprisonment for up to two years”.

On Monday, the Times revealed that Facebook, a company worth billions, paid just £4,000 in taxes to the British Crown last year—around £1,000 less than the average British worker pays in taxes and national insurance. It is tax avoiders such as this that should be criminalised, not working parents, who might get a criminal record and face a jail sentence, perhaps for completing a form incorrectly when seeking free childcare.

We will come to the issue of affirmative versus negative procedures for the making of regulations later in the debate, but I believe that this is a matter that we will have to look at in much more detail. In fact, the Delegated Powers and Regulatory Reform Committee said yesterday in paragraph 10 of its report:

“We draw subsection (2)(h) to the attention of the House, so that it may consider whether the requirement for affirmative procedure only on first exercise of the power affords an adequate level of Parliamentary scrutiny for regulations which create, or alter the statutory ingredients of, criminal offences”.

I hope that the Minister will note those wise words.

Also in this group is Amendment 20A, which will be spoken to by the Liberal Democrats. We strongly support it because we believe that parents on low levels of income and those with multiple jobs need the kind of flexibility that it will engender. I do not wish in any way to take away from the comments that representatives of the Liberal Democrats will make, but I want to make clear that that amendment certainly has the strong support of this side of the House. With those few words, I beg to move.

[Baroness Pinnock]

My Lords, for greater clarity in the debate we withdrew our Amendment 15 and retabled it as an amendment to the new clause in government Amendment 18. Our amendment relates particularly to subsection (2)(b) of the new clause, which is about making,

“provision about how much childcare is to be so made available for each child, and about the times at which, and periods over which, that childcare is to be made available”.

Over the course of the debate on this Bill—on Second Reading, in Committee and again today—we have consistently argued for greater flexibility in the periods of time over which the 15 hours’ additional free childcare can be offered. We have done so for a number of reasons.

Many parents, particularly women, take on two or three jobs in a week to try to make ends meet. In my role as a local councillor I had the difficult task of trying to find new accommodation for a grandmother so that she could move from her council housing to a flat nearer her daughter as the daughter got up at five o’clock in the morning to take on a cleaning job at six and at that time no other childcare was available. I know at first hand what it means for many mothers who are trying to do, for instance, a cleaning job before the school day, something for school-lunch duties in the middle of the day and then another cleaning job at the end of the day. With this Bill we have an enormous opportunity to support those mothers and help them continue in work. That is why I have made what I hope is a strong case for defining more explicitly the flexibility that we are asking for in the Bill, rather than leaving it to vague definitions.

Not only is there the difficulty in the working week for the parents I have described; for all parents school holidays can be a nightmare. This is not just because the children are at home but because these parents are trying to juggle finding childcare for their children at home in the holidays while continuing in their work. Many parents find relatives, but not all are able to find them. The definitions of flexibility that we are proposing to include in the Bill would enable that to happen and would be of great advantage to many parents. Questions from those in the sector have indicated that one facet of the Bill they would particularly like to see is what they call a stretch of the hours over a longer period, not only during a week but also over the school holidays. That would be a tremendous help to many working families. I hope that we will not lose that opportunity.

I shall listen carefully to what the Minister says when he responds to the proposals that we have made. I feel strongly, as do my colleagues, that the Bill should contain a clear definition. It currently does not. If it is not included in the Bill today, we will have to think again about how we can move forward to ensure that it does.

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[Baroness Jones of Whitchurch]

My Lords, I rise to speak to Amendment 9. Our amendment builds on the Minister’s own previous admission that a more detailed criterion was needed and his pledge to consider the issues again, taking into account what he described as our helpful contributions at Committee stage.

In this spirit, we are again trying to be helpful. Although the Government have made some concessions, we do not believe they have gone far enough, or are clear enough about which parents would qualify for the free hours. Again, we share the concerns of the most recent report of the Delegated Powers and Regulatory Reform Committee, which criticises the Government for relying on the detail of the eligibility criteria being spelled out in regulation rather than on the face of the Bill. It went as far as to say it was “mystified” by this omission.

This is particularly important given that the Government seem to be rushing this Bill through because they want to send an early message to parents that the new entitlement is on its way. However, unless parents are clear on whether or not they will qualify, I rather think that that message will be lost on them. Of course, the current 15 hours of free entitlement applies to all parents, but the additional hours envisaged in this Bill will apply only to parents working a minimum of eight hours a week. I have to say that I do not think that that will go down well among parents with different circumstances sharing the facilities in nurseries. For example, nursery providers and parents will find themselves grappling with definitions and calculations. Some weeks parents will qualify, and other weeks they will not.

As the noble Lord, Lord True, pointed out in Committee:

“At the moment we have a beautifully simple system”.—[Official Report, 1/7/15; col. GC 2099.]

It is easy to administer, and there is a strong case for maintaining the additional free hours as a universal benefit.

However, if we accept the Government’s focus on just helping working parents with the cost of childcare, helping them return to work or to work more hours, then it is important that those new eligibility rules deliver that objective. That is what our amendment seeks to do. The first part of our amendment reflects the Government’s plan that there should be a minimum eight hours worked each week. The second part of our amendment identifies the exceptions to this rule for parents who are in the job market, training for work or unable to work through no fault of their own.

I submit that the categories we have identified are the very people whom the Government are most likely to help back into work by providing additional free childcare. These are the hard-working parents on the bottom rung of the jobs ladder, who will genuinely struggle with childcare costs. If the Government want to encourage work and extend working hours, these are the very people we need to help. Putting an artificial bar of a minimum of eight hours a week does not really address those concerns.

When the Minister addressed these issues in Committee he argued that there were some discretionary payments that might help parents who study or who were carers. The Minister has repeated those assurances today. However, that is very different from an automatic entitlement to free childcare and, as I have said, there is a strong case for keeping it simple. The Minister also made it clear that parents on flexible contracts, zero-hours contracts or who lose their job unexpectedly should not be disadvantaged. We welcome this commitment and our amendment seeks to enshrine it on the face of the Bill. Our amendment would provide a simple entitlement to categories of parents for whom the Minister has already expressed some sympathy. On that basis, I hope that the Government will feel able to support our amendment.

[Baroness Pinnock]

Throughout the debate, we have grappled with eligibility criteria. I recognise the fact that the Minister has listened and defined much more clearly the working parents who will qualify under the scheme. However, as the noble Baroness, Lady Jones, has just described, it will be a very complex scheme, as set out in the Bill.

I want to speak to Amendment 10, which we tabled, by first of all thanking the noble Baroness, Lady Evans, for reminding everybody that it was a Liberal Democrat initiative to ensure that 40% of two year-olds from the most deprived and disadvantaged families were for the first time given 20 hours of free childcare a week.

What concerns us here is the huge gap in childcare provision for the majority of parents and their children between the end of paternity or maternity leave and access to free childcare at age three. We want to keep reminding the House and the Government that this gap must be bridged. Despite what the Minister said, it will cost most parents who are in work around £400 a week, which is a significant sum of money, for their one and two year-olds to access full-time childcare. This is somewhat addressed by the tax-free childcare allowance of £1,000-plus a year, but that comes nowhere near addressing the substance of the bills that parents face.

The other issue that I want addressed and have consistently raised is that people who are out of work for more than a year find it increasingly difficult to get back into work. If we can reduce those barriers by providing free childcare, we will be helping them, their families and the state in the long term. That is why I continually raise this point whenever we debate childcare. For those reasons, I want to stress this amendment today. I know that it will not be supported across the House, but I want to keep reminding people about this issue. I shall keep coming back to it, because it is very important for many parents—and for social mobility, which the noble Earl, Lord Listowel, for instance, is concerned about. I hope that in the longer term the Minister will be able to address this gap in childcare provision.

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Moved by

[Baroness Pinnock]

20A: After Clause 1, line 44, at end insert—
“( ) Regulations as described in subsection (2)(b) must ensure that the times at which childcare is to be made available provide sufficient flexibility—
(a) for parents who work outside the hours of 9am to 5pm, Monday to Friday; and(b) to ensure that childcare is available during school holidays within the local authority area of the relevant childcare provider.”

[Baroness Pinnock]

I thank the Minister for his very general but principled commitment to greater flexibility and for his willingness to explore the possibilities. However, at this stage I would have hoped for a much clearer definition of expectations in the flexibility that we are going to allow when providing childcare. For those reasons, I would like to test the opinion of the House.

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Moved by

[Baroness Pinnock]

24: After Clause 1, insert the following new Clause—
“Funding of childcare
For the purposes of discharging the duty imposed by section 1, the Secretary of State must ensure that—(a) the level of payment made to any childcare provider by the Secretary of State for the provision of childcare is paid at a rate which ensures that the provider does not have to subsidise the cost of providing free of charge childcare by placing additional charges on other childcare which they provide; and(b) particular provision is made for children living in deprived areas.”

[Baroness Pinnock]

In moving Amendment 24, I will speak also to Amendment 25. I have three things to say, as there are three areas that these amendments cover.

First, we know that capital funding is a big issue for the National Association of Head Teachers in particular. The association is concerned that, with growing numbers in the primary phase and the early years phase per se, there will be inadequate buildings expansion to address the additional 15 hours’ free childcare. Local government associations are also pressing the Government to commit to a capital fund for the expansion of buildings to ensure that the childcare can be accommodated. That is one reason why we tabled the amendment: to ensure that the Minister considers this issue when he makes these decisions.

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[Baroness Evans of Bowes Park]

My Lords, I would like to speak to Amendments 24 and 25, tabled by the noble Baronesses, Lady Pinnock and Lady Tyler, to which the noble Baroness, Lady Jones, has just referred, and to which the noble Baronesses, Lady Andrews and Lady Howarth, referred earlier in relation to cross-subsidy.

On Amendment 24, I thank the noble Baronesses for highlighting the need for the rate paid to be sufficient for providers delivering the extended entitlement, and for bringing to my attention the need to secure provision for children in deprived areas. I understand the concerns they are seeking to address through these amendments, and the Minister mentioned earlier that we share the aim of getting the funding for the entitlement right. We are clear that this funding must be sufficient to ensure that providers are funded adequately to be able to deliver the additional requirements set out in the Bill.

We have listened to providers’ concerns that increasing government-funded hours will limit their ability to cross-subsidise from parent-funded hours and that delivering at current rates may not be sustainable. That is why the Prime Minister has committed to increase the average hourly funded rate paid to providers. As was mentioned earlier, we are the only party to have made this commitment. We have already committed £840 million of new funding to deliver the extended entitlement, and that is before we deliver on our pledge to increase the hourly funding rate.

My noble friend Lord Nash has spoken at length about the review of the cost of providing childcare, the purpose of which is to provide a robust analytical underpinning for a funding rate that is fair and sustainable for providers and delivers value for money to the taxpayer. I confirm that the review will include in its consideration the needs of children in deprived areas. I also assure noble Lords that the Government understand the importance of early years education for children from disadvantaged households.

We know that high-quality early education can lead to higher attainment later but there is a persistent gap between children eligible for free school meals and their peers in the proportion achieving a good level of development in the early years foundation stage profile. This is why we introduced the early years pupil premium in April this year, which provides extra funding to early years settings for each three or four year-old child from a disadvantaged household. We have estimated that there will be around 170,000 children eligible for this extra support in 2015-16. We expect to receive the first data on take-up of the early years pupil premium by the end of this year and will consider these very carefully and take them into account when we develop future policy.

Turning to Amendment 25, the Government aim to deliver a quality free childcare entitlement, with capacity created cost-effectively without driving up costs to parents. The majority of working families with three and four year-olds already use more than 15 hours of childcare. This means that many children will already be in a childcare place and will not require a new one. Rather, the new extended entitlement will pay for the additional hours parents are already purchasing from an early years setting themselves, helping working families with the cost of childcare.

There is natural growth in the childcare system but we can, and should, encourage new providers to enter the market or existing providers to expand. Collaborative arrangements across different types of providers and increased flexibility for providers are important elements of this. That is why, for example, under the Small Business, Enterprise and Employment Act, childminders will be able to provide childcare on non-domestic premises.

The Government have already made a £100 million investment of capital in early years to support the expansion of provision for two year-olds. We believe there is existing capacity in the system to help deliver the new entitlement, and we are continuing to talk to local authorities to increase our understanding and evidence of where this is. The Government are committed to funding the extension of the entitlement at a level that ensures choice and flexibility for parents, is sustainable for providers, and is fair to the taxpayer. Decisions on the level of funding, including any capital, will be made in the forthcoming spending review. I therefore urge the noble Baroness to withdraw her amendment.

[Baroness Pinnock]

I thank the Minister for her commitment to the capital element and to focusing on areas of deprivation and disadvantaged families in future deliberations. With that in mind, I beg leave to withdraw the amendment.

Amendment 24 withdrawn.