Finance (No.2) Bill

Catherine McKinnell Excerpts

Tuesday 8th April 2014 Commons Chamber

[The Temporary Chair (Mr David Amess)]

I have to report to the Committee that the tellers for the Noes in the Division on amendment 2 have reported to the Chair that they wrongly reported the number as 289 and not 288. I will call for the record to be corrected accordingly, showing 288 Noes.

New Clause 1

Childcare provision

‘(1) The Chancellor of the Exchequer must 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, with particular reference to—

(a) the cost of childcare for parents in work; and

(b) the cost of childcare, including the impact of changes in the tax and benefits system during this Parliament.

The Chancellor must publish the report of the review within six months of the passing of this Act and lay the report before the House.’.—(Catherine McKinnell.)

Brought up, and read the First time.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I beg to move, That the clause be now read a Second time.

It is a pleasure to serve under your chairmanship, Mr Amess. New clause 1 draws attention to the rising costs of child care for working parents since 2010, and seeks to commit the Government to addressing their failure in that regard. It also seeks to establish ways in which the tax and benefit systems could be used to make child care more affordable before April 2015, so that hard-working families experiencing a cost of living crisis can have the help that they need now, especially in the light of the challenges that they face as a result of changes made by this coalition Government.

The new clause gives us a welcome opportunity to explore one of the most pressing issues that face millions of parents throughout the country, and to address the fact that millions of families are facing a child care crunch. It is important to set the issue in context by revealing just what has happened to child care costs on this Government’s watch. The average bill for a part-time nursery place providing 25 hours a week has risen to £107, the highest level in history. The cost of nursery places has risen by 30% since 2010, five times faster than pay, and the average weekly cost of a full-time place has risen to £200 or more. That means that parents working part time on average wages would have to work from Monday until Thursday before they had even paid their weekly child care costs.

[Mr David Burrowes (Enfield, Southgate) (Con)]

The hon. Lady has given statistics showing what has happened since 2010. Did child care costs increase before 2010, and if so, what did the last Government do about it?

[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.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Government Members might like to know that Salford city council, owing to the budget cuts amounting to £100 million that have been forced on it, will have to cut eight Sure Start centres this year, leaving us with only four. Government Members must stop being in denial about this issue.

[Catherine McKinnell]

Yes, I agree that it is important that Government Members stop being in denial, because it will be a dreadful indictment of their being out of touch with reality if they fail to address this issue and instead stand by and watch our network of Sure Start centres disappear.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady agree that for many people with children if they did not have their grandparents or their aunties, the cost of child care would be too great for them to return to work? Does she feel that while the Government have made some concessions on child care, they have not given enough of an incentive for those people not to need to depend on their grandparents and aunts in order to be able to continue to work?

[Catherine McKinnell]

The hon. Gentleman raises an important point. There is a heroic army of grandparents out there providing that much-needed support within families to ensure that those really struggling with the cost of living crisis can still be in work, but unfortunately some people do not have that luxury. There are an awful lot of people who cannot rely on that support and who find the current cost of child care too prohibitive to go to work or find that, despite working all hours, they cannot put food on the table.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

While it is right to recognise that families will decide on the best ways of making arrangements and that grandparents and other family carers have an important role, do not children from the most disadvantaged backgrounds benefit the most from having access to formal child care, whether in a nursery or with a childminder? That gives them the best start in life and we need to do more to target families from the most disadvantaged backgrounds so that they can access child care.

[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.

[Lorely Burt (Solihull) (LD)]

Does the hon. Lady acknowledge that the Government announced in the Budget that the tax-free child care cost cap will be raised to £10,000, which will be worth up to £2,000 per child? I know that 6,000 families in Solihull will be grateful for that.

[Catherine McKinnell]

I appreciate the hon. Lady’s point, but that help for families will not arrive until 2015 and beyond, after the next election. Many families could do with some support over the next 18 months, not just beyond 2015. There are also serious concerns about whether parents will actually be better off when the Government’s policy is introduced. I will say more about that later.

I shall turn now to the second part of new clause 1, which focuses on the impact of the tax and benefit changes introduced in this Parliament. Just last week, the Opposition published an analysis of figures produced by the independent Institute for Fiscal Studies, along with analysis by the House of Commons Library, which showed that working families with children, and one-earner families in particular, had been the hardest hit by the changes introduced since 2010. Those changes, which were voted through by Government Members, mean that on average, households will be a staggering £974 a year worse off by the next general election. It is worth listing what those tax and benefit changes will mean for families with children. The constituents of Government Members will no doubt be paying close attention to their household budgets when it comes to casting their vote in May 2015.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Will the hon. Lady tell us whether that analysis includes fuel duty? Does she agree that if this Government had kept the Labour fuel duty escalator going, petrol would cost 90p a gallon more today, the equivalent of £450 a year for the average family?

[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.

[Andrea Leadsom]

Will the hon. Lady give way?

[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.

[Lorely Burt]

On the one hand, the hon. Lady seems to be bemoaning the soaring costs of child care, but on the other she is bemoaning the fact that parents do not have to pay the full £10,000 to get the maximum child care support.

[Catherine McKinnell]

A family’s child care requirements are a family’s child care requirements. If somebody has to go to work and they need child care, they need to invest in child care for however many hours they need it for. The Government’s child care proposal does nothing to address the supply side issues, which is why Labour proposes to increase the number of free hours available for three to four-year-olds to help increase the supply of child care, which we have seen diminish under this Government.

[Dr Thérèse Coffey]

We have had this debate before in Westminster Hall. Does the hon. Lady not recognise that the number of childminders fell under the previous Government? I realise that the point about quality has been made before; nevertheless, there were fewer childminders at the end of that Labour Government than at the start.

[Catherine McKinnell]

There are 3,000 fewer childminder places under this Government so I caution Government Members about trumpeting their success in this area, because it is far from a success for mums and dads who are struggling with soaring costs.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

The hon. Member for Suffolk Coastal (Dr Coffey) is right: we have discussed these matters at length before. Quality is important, and although the number of childminders has fallen in the past, if we want children to be properly looked after in a child care setting, we must ensure that setting is of the highest possible quality. Unfortunately, some childminders were not able to provide that high-quality care and did not want to continue. We are talking about the most vulnerable children who need high-quality care. Childminders who felt that they were not able to offer that any more and did not want to go through the Ofsted registration process might have been one reason behind that fall in numbers.

[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.

[Dr Thérèse Coffey]

I recognise the hon. Lady’s genuine concern about working parents and her ambition that the Government get on with increasing child care, but she must recognise that the number of hours of child care has increased under this Government. She should be gracious enough to accept that.

[Catherine McKinnell]

It is interesting that the hon. Lady mentions that, because I will quote directly on this issue a little further on in my submission.

We know that the Government are good at con tricks, giving with one hand but taking much, much more with the other. For example, they made a U-turn last month when they decided to support 85% of child care costs for all universal credit claimants. That was a welcome reversal after the coalition decided in 2011 to cut the support for child care through the working tax credit from 80% to 70%—a decision that led to an average loss of £570 a year for low-paid working parents. It is just another example of this Government taking with one hand and giving with the other.

As Alan Milburn, chairman of the Social Mobility and Child Poverty Commission, has said, low-income families will still lose out, despite this increase in support for those most in need. He told The Independent on Sunday:

“The Government has taken half a step forward. The announcement that 85% of childcare costs will be met under universal credit from 2016 will help work pay for low-income families. This is very welcome. The sting in the tail is that this £200 million expansion in childcare support will come from within the universal credit programme…That risks robbing Peter to pay Paul.”

Perhaps the Minister could also give a bit more detail on how she intends to pay for the increase in support. While she is at it, perhaps she could provide some clarity on when low-income families eligible for universal credit can expect to receive this support with their child care costs.

Under the original plans of the Secretary of State for Work and Pensions, most would have expected to receive the increased support when the tax free child care is introduced in 2015, but clearly that is not going to happen. Will the Minister clarify when the Government expect to introduce this support and whether it will be in the near future? Ultimately, as Opposition Members have made absolutely clear, parents facing a cost of living crisis will see through any child care con, because it does not make up for how much the families are now paying for child care under this coalition Government.

I come now to the first part of new clause 1 and the Opposition’s proposals for improving child care support, which we know will make a real difference to working parents. New clause 1 proposes that the Chancellor should undertake a review of the ways in which child care could be made more affordable before April 2015. We have done much of the work for him with our clear suggestions for supporting families on this pressing issue. We want to extend free child care for three to four-year-olds from 15 to 25 hours a week for working parents, which can be fully funded by increasing the bank levy. As with the 15-hour early-years entitlement, the new 25 hours would be for 38 weeks of the year, which would mean more than £1,500 of extra support per child each year. Perhaps most important, Labour’s plans will not demand that working parents spend £10,000 on child care in order to get the maximum promised help.

We also know that for school-age children, child care can become a logistical nightmare, with many parents increasingly struggling to find before and after-school child care, while the Government stick their fingers in their ears and hum. On the Government’s own record, 62% of parents of school-age children say that they need some form of before and after-school or holiday care in order to combine family life with work, but of those nearly three in 10 are unable to find it. To give parents of primary-age children peace of mind, the Opposition would set in law the guarantee that they could access wraparound child care from 8 am to 6 pm through their local school if they wanted it. This primary child care guarantee will benefit parents of primary-age children most, because those parents most need support. Of course, these plans will be in addition to all the support that parents will already receive, and they will not be contingent on spending thousands of pounds on child care in order to qualify.

At Prime Minister’s questions recently, following a Budget empty of any measures to address the problem now, I asked the Prime Minister to explain why his Government had failed to take the action to help parents with child care costs before the next general election. He answered:

“We are helping families with child care, not least by giving 15 hours…That is happening before the election; it has happened under this Government in this Parliament—15 hours of free nursery care for three-year-olds and four-year-olds…Opposition Members say it is not enough; it is more than Labour ever provided.”—[Official Report, 26 March 2014; Vol. 578, c. 344.]

That was not only a very complacent response but, unintentionally I am sure, misleading, and goes to show just how out of touch this Government are on this issue of child care.

The previous Labour Government introduced 12.5 hours of free nursery education for three to four-year-olds a decade ago, back in 2004, with the clear intention that that would be extended to 15 hours by 2010. Far from this being a coalition policy, the plan was inherited by the coalition from the previous Labour Government. As I set out, the future Labour Government will continue to build on this legacy, extend it to 25 hours a week for working parents, funded by an increase in the bank levy, and guarantee wraparound child care.

This was the Chancellor’s final opportunity to introduce policies that will really benefit parents before the general election, to give much needed support to working parents now, not in 18 months’ time. Parents have already seen their child care costs rise five times faster than their pay. They are already spending more on child care than on their mortgage. They have already seen the number of nursery places fall by thousands. They have already seen hundreds of Sure Start centres close, despite the Prime Minister’s promises to the contrary. Of course, most stay-at-home mums, as well as working parents, already see child care costs as one of the biggest barriers to their going back to work or increasing their working hours. A review of the issue is both due and urgent, and I commend new clause 1 to the Committee.

[Mr Burrowes]

It is a pleasure to take part in this debate. It is always interesting to hear the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). Essentially, she seeks to press a reset button in relation to a new Labour history—is it new Labour any more?—of child care. It seems that for Labour life started—or, it might say, ended—in 2010.

We did get to an element of truth at the end of the hon. Lady’s remarks when we heard reference to the previous Labour Government’s policies. When I came into Parliament in 2005, the Labour Government announced a new tax relief for child care benefits, which, as we heard, then went through various stages. In September 2009, the then Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), fronted the extension of free child care for two-year-olds. We inherited those two policies. In the coalition Government’s first Budget, we confirmed that the previous Government’s measures were being taken forward. Therefore, any reference to the costs in 2010 must be a reference to the legacy of the previous Labour Government. By any logic, this coalition Government merely extended the previous Government’s policy on tax relief and free child care for two-year-olds. It is inappropriate, and a partial view of history, not to refer to the legacy inherited from the previous Government.

--- Later in debate ---

[Nicky Morgan]

I believe that some of those policy issues will come out in the debates that we are going to have on tax-free child care. Rather than postponing our activities while we have yet another review, I want to get on and make progress. I want families to know that we are serious about listening and helping them with child care costs and the availability of places.

We have consulted widely on the detail of the scheme. More than 35,000 responses were received to last year’s consultation, and we have listened to that feedback. On 18 March this year, we published our response to the consultation on tax-free child care. This was welcomed by families and child care providers around the country, and as a result of the consultation, we are rolling out tax-free child care more quickly than had previously been announced. It will be launched in autumn 2015 and rolled out to all eligible families with children under 12 within the first year of the scheme’s operation. That is significantly faster than previously announced, as children under 12 would have gradually qualified for the scheme over a seven-year period.

The Government will also now provide 20% support on child care costs up to £10,000 per year for each child via a new simple online system. The cap had previously been set at £6,000. That means that families could receive up to £2,000 child care support per child—two-thirds more than originally planned.

We expect that tax-free child care will be open to at least twice as many families as the current employer-supported child care scheme. At the same time, we announced that all families eligible for universal credit will benefit from additional support at 85%, rather than just taxpayers as previously consulted on. We have also announced £50 million for an early-years pupil premium to help improve outcomes for the most disadvantaged three and four-year-olds in Government-funded early education. Taken together, the Government’s child care offer will provide flexible support for all eligible working families while maintaining free, universal early education support.

The Government are also taking wider steps to support hard-working families. The income tax personal allowance will rise to £10,000 in 2014-15, and in the Budget we announced a further increase to £10,500 in 2015-16. That is a tax cut for 25 million people. Since 2010, this Government will have taken 3.2 million people on low incomes out of paying income tax altogether. It is worth noting that of that 3.2 million, 56% are women, which is something to be recognised and welcomed.

The Government have also helped local authorities freeze council tax in every year of this Parliament, and we have taken action on fuel duty, saving a typical motorist £680 by 2015-16. The shadow Chief Secretary to the Treasury talked about the fuel duty cut being a theoretical cut. Perhaps he would like to chat to the shadow Economic Secretary who quoted from the Asda Index, which showed that families now have slightly more discretionary income to spend per week, and it attributed that to a fall in motoring costs—[Interruption.] I suggest that the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) read the press release, as it made encouraging reading.

The changes suggested in new clause 1 are unnecessary and would not help hard-working families with the cost of child care. The Government have already reviewed how best to improve child care through the Childcare Commission, which was launched in June 2012. We do not need another review. We need to take action now to support hard-working families, which is why we are supporting parents through tax-free child care and universal credit. More people than ever before will be eligible for that support. We have consulted widely on these changes, and our proposals have been welcomed by families and providers around the country. I therefore request that new clause 1, which was tabled by Opposition Members, be withdrawn.

[Catherine McKinnell]

This has been a well-considered and well-argued debate, but the essential facts remain. This Government have presided over soaring child care costs and have cut tax credits for thousands of families, meaning that even when their proposed long-grass support is eventually introduced, most families will still be worse off than they were in 2010. Parents and working families need help now, not in 18 months’ time, so I urge hon. Members on both sides of the Committee to back new clause 1, which would secure a review of action that the Government can take to provide the support that hard-pressed families up and down the country so desperately need today.

Question put, That the clause be read a Second time.