Childcare Payments Bill

Debate between Catherine McKinnell and Thérèse Coffey

Monday 14th July 2014 Commons Chamber

[Catherine McKinnell]

I thank my hon. Friend for that intervention, which brings us back to the issue of child poverty and the importance of child care in supporting families and particularly children in getting out of that situation. She raises an important point, and I shall be coming on to ask some questions about the Bill’s implementation in that regard. Contrary to the impression given by the Minister, there is still a lack of clarity about who will and will not benefit from the changes. I shall reflect only momentarily, Madam Deputy Speaker, on the wider point that my hon. Friend raises. Our very flexible labour market can make it difficult for many parents to manage their child care arrangements. We know that many women, for example, are subject to zero-hours contracts, which can make it very difficult to plan for child care and the costs and availability of child care, when they might not know what hours they will be working from one week to the next. I hope that the Minister will take all those issues into account, particularly in respect of supporting families, which could be dependent on the interaction between the implementation of this policy and universal credit.

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

The hon. Lady mentioned universal credit. Earlier, she was saying how difficult it was to plan for child care. Government Members were surprised that the Leader of the Opposition did not condemn last week’s strikes, because those are exactly the kind of issues that are a nightmare for parents.

[Catherine McKinnell]

I think that the hon. Lady is straying somewhat from the subject of the debate, but I also think that a number of the workers who were involved in Thursday’s strikes were among the very lowest paid, who we know need this child care support and who are struggling to make ends meet. That was one of the motivating factors in the action that they took last week. I therefore do not think that the hon. Lady’s point was entirely irrelevant, but let me now return to the issue that is under discussion, which is child poverty.

There is concern about the fact that much of the progress that has been made has been either halted or, even worse, reversed by the Government’s policies over the last four to five years. The Government are absolutely on track to miss spectacularly their statutory obligations in terms of eradicating child poverty. As their own child poverty adviser Alan Milburn said recently,

“The Government’s approach falls far short of what is needed to reduce, let alone end, child poverty in our country.”

Finance Bill

Debate between Catherine McKinnell and Thérèse Coffey

Wednesday 2nd July 2014 Commons Chamber

[Catherine McKinnell]

Well, it simply reinforces the impression—in fact, the reality—that the Government are perfectly well disposed to chopping and changing their policy and approach to the annual investment allowance. That is the point we are trying to make, and the point behind the new clause. The Government should stop and take a look. I have heard from businesses that they would rather have no investment allowance than have chopping and changing of the AIA, because that can be destabilising for investment decisions. They would rather have a more stable approach to policy making than that being displayed by the Government.

Returning to the history of the investment allowance, the previous Labour Government doubled it, recognising its importance to giving businesses confidence to invest for the future, and to be supported within the tax system to make such decisions. What happened after it was doubled? We know that, in his infinite wisdom, the Chancellor decided as part of his emergency Budget—or so he called it—in June 2010, to announce to great fanfare that the annual investment allowance would be cut. However, it would not just be cut. At a time when the economy was growing after the financial crisis, the Chancellor decided that the best way to secure the recovery and back British businesses and jobs was to slash the annual investment allowance to just £25,000 from April 2012, as in the Finance Act 2011. He sought to reassure us that the impact of that reduction from £100,000 to £25,000 would be limited because:

“Over 95% of businesses will continue to have all their qualifying plant and machinery expenditure fully covered by this relief.”—[Official Report, 22 June 2010; Vol. 512, c. 175.]

In other words, the Chancellor believed in June 2010 that only 5% of firms were receiving any benefit from the annual investment allowance. HMRC’s tax information note at the time stated:

“Over 95 per cent of businesses are expected to be unaffected as any qualifying capital expenditure will be fully covered by the new level of AIA (£25,000).”

It went on to clarify that

“between 100,000 and 200,000 businesses will have annual capital expenditure of over £25,000”.

Therefore, in the Chancellor’s terms, only 5% of businesses would have been affected by his decision to slash the allowance. In anyone else’s terms, however, that is somewhere between 100,000 and 200,000 firms. That is a significant number of businesses that are employing—or potentially employing—a significant number of people, while also indirectly supporting employment through their supply chains. That seems to ring true of the Government’s approach because when they speak about being pro-business, they seem to forget the many businesses out there that do not fit the Tory vision of what businesses are, and it seems that those 100,000 or 200,000 firms did not feature on the Chancellor’s radar.

Let us remind ourselves briefly of some of the views expressed at the time about the decision the Chancellor took. The independent Institute for Fiscal Studies commented that losers from the cut

“would be those firms with capital intensive operations—with long lasting equipment and machinery—that currently benefit most from the capital allowances. While this is likely to apply to more firms in the manufacturing and transport sectors, it may also be true for some capital intensive service sector firms.”

A senior economist at the manufacturers association, the Engineering Employers Federation, said that financing cuts to corporation tax by

“cuts to investment allowances will be a heavy price to pay, especially for smaller companies. It might be a positive signal for large companies, but not for their suppliers.”

In evidence to the Treasury Committee on the June 2010 Budget, John Whiting, then tax policy director at the Chartered Institute of Taxation and now director of the Office of Tax Simplification, expressed his concern that the measure would particularly hit medium-sized firms.

The June 2010 Budget cut the annual investment allowance to £25,000 from April 2012 on the grounds that, in the Chancellor’s view, only 5% of firms would be affected. We then had two autumn statements and two Budgets, at which we put these arguments to the Government, before the Chancellor announced in the autumn statement 2012, again to great fanfare, that he would “temporarily” increase the AIA—the one he had just cut to £25,000—to £250,000 from January 2013.

What happened to business investment between the June 2010 Budget and the 2012 autumn statement that drove the Chancellor to move from feeling perfectly comfortable in slashing the annual investment allowance, because more than 95% of businesses would be unaffected, to announcing in 2012 a significant increase in the AIA to £250,000? Let us cast our minds back to what the Chancellor said when he announced that decision in autumn 2012. He said he was increasing the annual investment allowance because:

“It is a huge boost to all those who run a business and who aspire to grow, expand and create jobs.”—[Official Report, 5 December 2012; Vol. 554, c. 881.]

What exactly does that say about the Chancellor’s cavalier approach back in 2010? Surely the complete opposite—[Interruption.] I see Government Members rolling their eyes, but unfortunately they need to face the truth.

[Dr Thérèse Coffey]

The hon. Lady is right—I should not roll my eyes; I should get up and engage in debate. We know about the note left by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne): “There is no money left”. Since then, the Office for National Statistics has confirmed that the recession was even deeper than expected. The Government made choices at the time, and there was a clear intention to start to reduce the rate of corporation tax in the grand fiscal regime. Nevertheless, there has certainly been a successful demonstration of industrial strategy, and many more millions of jobs are now being created. It is right that we put our backing behind reinvestment in capital allowances.

[Catherine McKinnell]

It is a little desperate to try to justify what is proven to have been a flawed decision-making process back in 2010. By the Chancellor’s own accounts, the measure was a huge blow to all those businesses that aspire to grow, invest for the long term and create jobs.

Finance (No. 2) Bill

Debate between Catherine McKinnell and Thérèse Coffey

Wednesday 9th April 2014 Commons Chamber

[Catherine McKinnell]

I thank the Deputy Speaker for his clarification. The link is clear. It is to do with the allocation of resources and the agreement that has been made. It also goes fundamentally to the heart of the Liberal Democrats and how they intend to vote on the matter. We believe they are likely to abstain on the measure, although we have not had that confirmed. We hope and assume that although they will abstain on the Government’s motion in relation to implementing the marriage tax allowance, they will support our call for a review. If the measure goes through, they would have as much of an interest as we would in ensuring that it is properly reviewed and monitored in the months to come, and that the Government take seriously the proposals for possible alternatives that benefit a larger number of families throughout the country.

The Opposition believe that the money allocated to the marriage tax allowance could be put to much better use elsewhere. That is why we have pressed the Chancellor to scrap it, and to use the money to give tax help to many more working people instead, including more married couples and more families.

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

I am interested that the Opposition want to give tax cuts to hard-working people, yet they voted against the Second Reading of the Bill, which provided a tax cut for 25 million people.

--- Later in debate ---

[Dr Thérèse Coffey]

Let us consider the following words:

“I believe in marriage, I believe marriage should be recognised in the tax system. I see this as yes, a start of something I would like to extend further”.

They are not mine; I plagiarised them from my right hon. Friend the Prime Minister. I am surprised that the hon. Member for Bishop Auckland (Helen Goodman), who is no longer in her place, was trying to suggest that the Prime Minister did not support this policy, because it was certainly in our manifesto and he is the person who said that from the Front Bench.

I am not married. Do I feel disadvantaged, as a consequence, that I will not benefit from this transferable tax allowance? No, I certainly do not. I will have a warm heart voting for clause 11 to stand part of the Bill, because I believe that marriage is an important institution at the heart of a strong society, as the Government are indicating, and it has been clear for some time that we wanted to bring forward proposals to recognise marriage in the tax system. We have been hearing about how, “You can only spend the money once”, but the Opposition have managed to spend their version of the bankers’ bonus tax about 11 times. So it is a bit extraordinary to hear some of these comments. As has been said, this is about choices. The choices this Government made in this Budget were to reduce income inequality to its lowest level in 28 years, whether through council tax cuts, or through freezing or cutting fuel duty, as we have done in previous Budgets. This Government are certainly helping families of all models in this Budget.

We debated child care yesterday, and it is right that we start supporting marriage. Some are saying, “Oh, 4 million married couples. You are not helping people.” But of course we are helping 8 million people as a result of this measure, and that is to be welcomed. My hon. Friends will note that the Labour party is committed to reversing this tax transfer. It will come in before the election, so Labour is automatically saying to 8 million people, “We will be putting up your taxes because of our dogma.”

I appreciate that the Front Benchers still need to speak in this debate, Mr Caton. What I want to put across strongly is that there is no arbitrary disadvantage, marriage is a good thing and we should support it. We do the same for people who save, by increasing the individual savings account limit. We do it for people who put into pensions, whom we support with tax relief. We do it for businesses that invest in their businesses, helping to create jobs. That is what we are doing and although only a token amount of money is involved here, it will be very welcome.

[Catherine McKinnell]

Will the hon. Lady give way?

[Dr Coffey]

I was about to sit down, but I would be delighted to give way.

[Catherine McKinnell]

The hon. Lady is making a powerful speech in favour of marriage, but does she not accept that the Government proposal does not recognise two thirds of marriages? Where both partners in the marriage are working to provide for their family, that marriage is not recognised as valid in terms of this policy.

[Dr Coffey]

I do not see that that is the case. Of course the Government recognise those couples who are married or who are in civil partnerships—

[Catherine McKinnell]

They do not.

[Dr Coffey]

They certainly do. This measure is a start. We do not have tons of money, and the fact that resources are scarce has been well pointed out. Nevertheless, we are doing things that reduce the income inequality for families across the country, using the long-term economic plan. It has meant that gilt rates have been able to stay relatively low, which means that mortgage rates have stayed low and that is probably doing more for people than anything else, along with our fuel duty freezes and indeed cuts in previous Budgets. Those kinds of things are helping families, be they married or not.

I appreciate that time is short and others are waiting to speak, Mr Caton. I just wish firmly to say that although I am a singleton—I thought I had met Mr Right 20 years ago, but it did not work out—I hope that every married couple benefiting from this will recognise that at least they can go and have a nice wedding anniversary with a little bit more cash from the Government.

Finance (No.2) Bill

Debate between Catherine McKinnell and Thérèse Coffey

Tuesday 8th April 2014 Commons Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Cost of Child Care

Debate between Catherine McKinnell and Thérèse Coffey

Wednesday 20th November 2013 Westminster Hall

[Dr Coffey]

I got that wrong—I apologise to the hon. Member for Houghton and Sunderland South (Bridget Phillipson), whom I congratulate on securing this debate. I appreciate that we had a debate yesterday on a similar topic, and I welcome this opportunity to contribute again on this important matter.

I thought that, rather than just reading out my entire transcript from yesterday’s Hansard, I would spend a bit more time saying a little more on the issue. The aspirations set out by the hon. Lady—affordability, availability and accessibility—are critical. As she said in the answer that she kindly provided me, the reason why so many child minders fell out of the system in the 13 years of Labour Governments was quality. She is absolutely right; we need to ensure that high quality—in fact, world-class quality—child care is widely available.

That is why I support what the Government are doing to try to raise the quality of child care. The issue is also about improving our young children’s access to education. As has been pointed out by many on both sides of the House, it is key that we do our best with our youngsters to ensure that they are able to access the opportunities available to everyone. That is also an important part of social mobility.

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

The figures on child minders have been cited on a number of occasions. Does the hon. Lady accept, as the Minister did yesterday, that the figures have declined in the three years under this Government? There are 2,423 fewer child minders in the system now than in 2010.

[Dr Coffey]

I understand that, but having 2,400 fewer since 2010 is a little different from having 53,000 fewer in 13 years. I am not going to go over again the ground that we have already discussed.

It is fair to say that there are an extra 800,000 nursery places through schools.

[Catherine McKinnell]

Is the hon. Lady suggesting that those additional places were created in the past three years?

[Dr Coffey]

My understanding is that the provision has grown in that time. I am sure that the hon. Lady will correct me if she thinks I am wrong. I meant “grown”, not “groan”, unlike the joke yesterday.

Returning to affordability, there is no doubt that the cost of child care has risen significantly. Some of that will have been due to supply and demand; there is no question about that, where demand exceeds supply. It is important to expand the number of child minders to help with that.

One of the things that the Government are doing right is allowing schools to shed some of the regulatory burden on the ability to provide a wider range of child care opportunities on site. Labour suggests that legislation is required to have a primary school guarantee, but I do not believe that. What is important is that a school should not have to register separately with Ofsted if it offers provision for under-four-year-olds or that it should not need such tight planning when it wishes to expand. The same should apply when existing nurseries of good and outstanding quality wish to expand.

We are changing things so that Ofsted-registered and good or outstanding nurseries will start to receive funding directly, cutting out the recycling of money through the local council. That is another good measure to accelerate the needed provision of high quality child care.

Another good thing—the Minister may talk at more length about some of these—would be to streamline qualifications for early years, instead of having a choice of about 400 potential qualifications. In that way, parents could readily and easily check the quality rather than have to do their own research. Having an accreditation with fewer qualifications is a streamlining simplification that will help not only providers of child care but parents to make an appropriate assessment of what the right thing is.

On the cost of child care, I think the Government accept that having some of the most expensive child care in Europe—we are second highest behind Switzerland —is not sustainable. We need to address that. Coming from a Conservative tradition, I would try to do that not just by constantly upping the subsidy, but by providing wider choice, which will bring down cost. However, I commend the tax-free child care scheme, which will be available to working families.

I am sure that Government Members would be delighted if we could persuade the Chancellor to bring that scheme forward by a year, but I accept the fiscal constraints under which the Government operate. In any case, I am pleased that the scheme will be forthcoming in April 2015. That is a real positive for working mothers and fathers.

Other useful measures that the Government are introducing include shared parental leave. I understand that our coalition partners are keen to extend that even further; that is a debate for another time. I am pleased that we are pressing forward with that important development, and I am sure that Opposition Members welcome it too.

The reason why I do not think we need legislation to implement the primary school guarantee is that we can just get on with the scheme if that is what primary schools wish to do. We may require a statutory duty to force that to happen, and we have to consider that, but I see leading schools providing it already.

One point that I made yesterday is key. Governing bodies should work with head teachers and parents to ensure that the school day is not artificially reduced simply to have as short a lunch time as legally possible, but to ensure that time spent at school is available for extra-curricular activities and to be mindful of the fact that parents are working.

On Sure Start, we can have the back-and-forth. I have not had time since yesterday’s debate to go into the full detail, constituency by constituency, on the back-and-forth about whether 500 or just 45 have closed. As I said yesterday, I am happy to rely on the Minister’s assurance.

We are talking about choices. Yesterday, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell)—I got that constituency right—talked about the level of cuts, an issue referred to today by the hon. Member for Houghton and Sunderland South. I have looked briefly at the website of the Department for Communities and Local Government. Using the spending power formula, which the Local Government Association recommended to the Government, I am able to say that spending in Newcastle upon Tyne has gone down by 1.4% this year; in Sunderland by 1.5%; and in Middlesbrough —I see that the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) is present—by 0.5%. I did not have time to look at Wolverhampton.

Those figures come from the spreadsheet that I have opened. Meanwhile, spending has decreased in Norfolk by 1.6% and in Suffolk by 2.1%. In spite of that, Suffolk county council is keeping open its Sure Start centres. Yes, the management of some centres has been merged. The two in Felixstowe are run by one lady, the magnificent Jennifer Clarke-Pearson, who is working hard with families in Felixstowe to make that happen.

As I reiterated yesterday, it is important that in this wider debate about public services, which my hon. Friend the Member for Norwich North (Chloe Smith) mentioned, we must ensure that front-line services are protected—as constituency champions, all hon. Members in this Chamber will continue to do that. However, we should not get hung up solely on bricks and mortar. We must focus on the outcomes.

[Dr Thérèse Coffey]

I am genuinely sorry to hear that; I am not being flippant. It is important that local councils continue to provide valuable services that are doing good for local families, but, again, sometimes the Whitehall solution does not always work in the constituency or council area. The Department for Education issued statutory guidance in April to try to encourage councils and children’s centres to refocus—not on universality, perhaps, but on the families that Sure Start was originally set up to help.

[Catherine McKinnell]

indicated dissent.

[Dr Coffey]

That is my understanding, although the hon. Lady shakes her head.

I praise the valuable work of Home-Start, locally—certainly in Suffolk. It is going into the homes of people that Sure Start is not attracting into its centres. If Sure Start is stage two for these families and parents, that is to be welcomed. Sure Start should be focusing on the needs of more vulnerable families and less wealthy families, rather than being a universal thing, when other providers can provide child care. We have heard that Sure Start centres provide only 1% of child care opportunities.

[Catherine McKinnell]

I am not sure which year the figures the hon. Lady cited relate to; I suspect it is the financial year 2013-14. The point that I was making yesterday—she mentioned the speech I made yesterday—is that councils have to look two, three or four years ahead, to work out how to manage their finances. The cuts that we are talking about have not yet come.

[Dr Coffey]

I accept that point. The hon. Lady is accurate in saying that I was referring to 2013-14.

More widely, I appreciate councils’ concerns. Our own councils are going through this challenge; it is not unique to councils in the north-east, Trafford or wherever else. It is happening across the country. However, we need to be mindful that reducing support to local councils is being made up for, in some part, by other opportunities for councils to raise money. That may not be popular; it is certainly not popular with one of my constituents, who complained that they were going to have to start paying council tax on a house that had lain empty for three years. Such policies are not always popular, but they are revenue opportunities, as is business rates retention, which I am sure the hon. Lady supports. That is to encourage new start-up companies in areas such as hers and to attract companies’ inward investment, through relocation to the north-east, for example.

I shall bring my remarks to a conclusion, because I appreciate that many hon. Members want to participate. All parties are united on affordability, availability, accessibility and quality, which the hon. Member for Houghton and Sunderland South mentioned accurately at the start, although we have different ways of achieving those things. But all our reforms are working and I hope that they will continue to blossom. I look forward to the Minister’s explaining in further detail why we in the Government are leading the child care revolution.

Age-related Tax Allowances

Debate between Catherine McKinnell and Thérèse Coffey

Monday 9th September 2013 Westminster Hall

[Catherine McKinnell]

I thank my hon. Friend. The point that he and I make is that the concern about the Government’s change is the lack of notice that many pensioners have had of it. It has not been introduced gradually to give pensioners a chance to readjust their savings plans or earnings plans; they have not been given time to adjust to the change. I will go on to say just what a shock it was to many pensioners, and to the Office of Tax Simplification itself, when the change came about, but it is worth reflecting first on the number of pensioners affected.

We are talking about 4.41 million people who are worse off in real terms, with an average loss of £83. Those are the Government’s own impact figures, but in addition The Daily Telegraph has estimated that many people could be £479 worse off as a consequence, or £511 if they are aged over 75. It could cost a couple nearly £1,000. Those are not insignificant numbers for pensioners who are watching their household bills rise month on month. They are now watching their income diminish as a result of these changes.

It is also helpful to consider region by region the number of constituents affected by the changes. Many MPs have been contacted by constituents who are most aggrieved by the changes and, in particular, by the lack of notice that they were given of them. We know from written answers that the Minister was unable to identify exactly how many people would be affected by the change in the age-related allowance—the granny tax, as it has been dubbed, or indeed the granddad tax, as my hon. Friend the Member for Luton North rightly pointed out. However, Her Majesty’s Revenue and Customs has been able to produce figures for the number of people over 65 paying income tax by region. The House of Commons Library sensibly suggested that that could be used as a proxy to estimate the number of people in each region affected by the freeze, so we know that 170,000 of those affected live in the north-east, 480,000 in the north-west, 340,000 in Yorkshire and Humber, 320,000 in the east midlands, 370,000 in the west midlands, 450,000 in the east of England, 410,000 in London, 710,000 in the south-east, 460,000 in the south-west, 240,000 in Wales, 370,000 in Scotland and 90,000 in Northern Ireland. Those figures are something for everyone to consider when we think about the number of constituents in our own areas who are affected and the sheer volume of engaged voters up and down the country who, as my hon. Friend pointed out, will not forget these changes quickly.

However, the critical group of people whom we should be seriously concerned about are those reaching their 65th birthday this year. I would be grateful if the Minister could update us on whether the Treasury has undertaken any research to try to understand the true impact of the changes on that group, because it is a group of approximately 360,000 people who will be roughly £322 a year worse off as a result of being excluded from the age-related allowance. For that group, the incredibly short notice of the change has been completely unacceptable. We are talking about people who are very close to retirement age and have little chance to change their plans.

As I mentioned, at the time of the 2011 autumn statement the Chancellor made this categorical commitment:

“To ensure employers and older people do not lose out, for the duration of this Parliament the annual increases in the employer NICs threshold, and the age related allowance and other thresholds for older people, will be over-indexed compared to the CPI, and will increase by the equivalent of the RPI.”

Let me repeat that:

“To ensure...older people do not lose out, for the duration of this Parliament the annual increases in the...age related allowance....will be over-indexed compared to the CPI, and will increase by the equivalent of the RPI.”

And when was that statement made? It was made just four months before Budget 2012, when the Chancellor decided not to “over-index” the age-related allowance and not even to increase it by the RPI, but to freeze it permanently for those born before 6 April 1948 and scrap it altogether for those born on or after that date.

It was dressed up as a “simplification” measure. It was justified on the back of the Office of Tax Simplification’s interim “Review of pensioners’ taxation”. What the Chancellor did not mention at all in the statement was that that review stated:

“We would stress...that the OTS has not reached any conclusions as to the best way forward with age-related allowances, nor have we formulated detailed recommendations”.

Indeed, in his evidence on the 2012 Budget to the Select Committee on the Treasury, the director of the Office of Tax Simplification, John Whiting, commented:

“I was surprised that it was taken forward so quickly...The context is that we undertook to do a two-stage review of pensioner taxation. The first would document the problems and codify all the problems...Stage two was to go ahead and look at them and try to work out what might be the best way forward.”

Of course, we know why the Chancellor did not want to wait for the final OTS report, through which he could have properly understood the impact of the changes on current pensioners and particularly on those who are turning 65 this year. He needed a soft target for a tax grab to help to fund his indefensible tax cut for millionaires. This is a measure dressed up as tax simplification that will actually increase revenue to the Government by £360 million in 2013-14. That will rise to £1.25 billion in 2016-17.

[Dr Thérèse Coffey]

rose—

[Kelvin Hopkins]

rose—

[Catherine McKinnell]

I will give way to the hon. Lady and then to my hon. Friend.

[Dr Coffey]

Of course, the hon. Lady will recognise that the Government believe that they will increase the amount of tax that they take from the richest in society by reducing the rate, as opposed to trying to suggest that it is being taken from some of the poorest in our society.

[Catherine McKinnell]

I will give way to my hon. Friend the Member for Luton North and then deal with both points.