Childcare Payments Bill

Charlie Elphicke Excerpts

Monday 14th July 2014 Commons Chamber

[Nicky Morgan]

My hon. Friend is entirely right. I will move on to talk about the importance of the scheme for the self-employed and for those setting up or growing their own businesses. I am very pleased that he has raised that at this stage in the debate.

[Charlie Elphicke (Dover) (Con)]

This measure will be welcomed by my constituents in Dover and Deal who work hard but do not get paid a lot of money. How many working families with children will benefit from this important measure?

[Nicky Morgan]

I am grateful to my hon. Friend for that question. Some 1.9 million working families will have access to the scheme. Of those, 1.25 million will have qualifying child care costs and will benefit under the scheme. As I will explain, more families will benefit under this new scheme than currently benefit from employer-supported child care vouchers.

Of course, for some families there is no choice about who should look after the children, because the parent or parents have to go to work, and must therefore arrange child care. It is worth reminding Members that the research shows that this issue has had, and continues to have, a disproportionate impact on women. The Women’s Business Council, which has done an excellent job in its first year in drawing attention to the barriers women face and suggesting changes to help remove them, has frequently pointed to the way in which child care costs can have an undue impact on women’s careers. Recent survey data from the Department for Education show that more than half of mothers in the United Kingdom who are not in paid work would prefer to be in paid work if they could arrange reliable, convenient, affordable and good-quality child care.

We need to think about what is at stake, not just for the mothers whose careers are held back, and not just for the many fathers who are primary carers and experience the same problems, but for our economy. If we can equalise the labour force participation rates of men and women, the United Kingdom can further increase growth by 0.5% per year. That will be a huge change which could make a real difference to our families and our economy.

Hon. Members will know that the Government have already taken action on this matter. We have funded 15 hours a week of free child care for all three and four-year-olds, which is available to all families, including those where a parent is not working. We have funded 15 hours a week of free child care for the 20% of two-year-olds who are most disadvantaged. From this September, we are extending that offer to about 40% of two-year-olds.

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

I want to begin by saying that the Opposition welcome any new investment in child care and any extra support for the millions of hard-pressed people—parents and families—up and down the country who are battling to juggle their work and family lives. We are the party that, in government, set the precedent for investing in early years and supporting the families that needed help the most and, as a result, tackling disadvantage and improving the life chances of children. Of course, those are aims and priorities that all political parties now accept, thanks to the progress that was made in that area under the last Labour Government. Welcome though any support is, however, the Bill still falls far short of the mark when it comes to making up the ground that has been lost under this Conservative-led Government in regard to meeting and furthering those goals.

Since 2010, all parents have seen reduced support, fewer child care places and spiralling child care costs. We know that families up and down the country are struggling with this. Investing in early years and focusing support on those families that needed help the most are among the greatest legacies of the last Labour Government, and those principles are now universally accepted by all parties of government. Under Labour, parents benefited from a range of policies and investments that helped more parents, but particularly single mothers, into work and lifted more children out of poverty. As a result, more children were given a better start in life.

[Charlie Elphicke]

Does the hon. Lady accept that, according to the measure adopted by the previous Labour Government, child poverty actually rose under that Administration, and that it has fallen under this Government?

[Catherine McKinnell]

No, I do not accept that. It is tempting for Government Members to quibble about measures and markers, and I know that a lot of time has been spent arguing about how to measure child poverty instead of recognising the desperate increase in it. The Institute for Fiscal Studies has projected that there will be 1 million more children in poverty by 2015 than there were in 2010. Government Members need to be careful when obsessing and arguing about those measurements while ignoring the reality, which is that hundreds of thousands more children are now living in homes that their parents cannot afford to heat, and struggling in households where their parents cannot afford to put food on the table and are using food banks.

When we look back on Labour’s record in government, we are proud of the introduction of the Sure Start local programmes and the subsequent huge expansion of Sure Start centres up and down the country. We are proud of the free part-time nursery education that we introduced for all three and four-year-olds. We are proud of the more affordable and higher-quality child care that we brought in through the employer-supported child care voucher scheme, and of the child care tax credits and the introduction of the early years curriculum. We are also proud of the increased financial support for families with children, including the introduction of tax credits and the increases in child benefit and maternity pay and grants. Those policies and changes were aimed at giving every child the best possible start in life but, perhaps more importantly, they lifted 1 million children out of relative poverty and more than 2 million children out of absolute poverty.

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[Catherine McKinnell]

I do not recognise what the hon. Lady is saying. If she is saying that that is happening in her area, I would be interested to see the data to back that up. We know that 35,000 fewer child care places are available and that prices are rising. Parents out there are struggling with the cost of child care—indeed, the Government accept that it is a challenge for many households up and down the country—and I think that they would find it deeply disconcerting to hear an hon. Member suggest that prices are falling and that everything is fine. Government Members seem to be very detached from the reality that families are facing up and down the country.

[Charlie Elphicke]

Will the hon. Lady tell the House how the number of childminders changed under the previous Government? Does she accept some responsibility for what amounted to a war on childminders by the Labour party?

[Catherine McKinnell]

Perhaps the hon. Gentleman is reading that argument from a Whip’s handout, although I know it is one that Government Members like to quote. The Professional Association for Childcare and Early Years, which I would trust more than I would trust the hon. Gentleman on this subject, has commented specifically on that issue, stating that that statistic has often been quoted in the past few months but it is not one that it recognises. The association does not recognise the statistics that the Government are trying to use to establish the case that Labour let the country down on child care. The reality and experience of households and families up and down the country is that Labour has a proud record of supporting families with children to get into work and with the costs associated with child care, and of ensuring there are enough child care places—certainly not the reduction of 35,000 places that we have seen since the Government took office.

[Charlie Elphicke]

rose—

[Catherine McKinnell]

Does the hon. Gentleman wish to come back and dispute again what the Professional Association for Childcare and Early Years says?

[Charlie Elphicke]

For clarity, I did not speak from some handout. I have been concerned about this issue for a long time, and I garnered research from the House of Commons Library which sets out the official statistics on numbers of childminders. Those numbers were massively reduced under the previous Government, which caused a lot of difficulties for families that I represent in Dover and Deal who are hard pressed and find it hard to afford more expensive child care options.

[Catherine McKinnell]

Perhaps the hon. Gentleman will look again at his House of Commons Library note and explain in his contribution why we have seen 3,000 fewer childminder places since the Government took office. Overall, there is a worrying trend of reducing child care places and rising child care prices, and he will understand that basic economics mean that households up and down the country are struggling to deal with the cost of child care. Many households—particularly women—are making the choice to stay at home because it is simply unaffordable to go out to work.

The Minister spoke passionately about the increasing number of women in work, but she will acknowledge that there is a lot more work to do on that and we still fall behind on maternal employment in OECD comparisons. We need to make progress on that so that parents who want to work can do so and so that child care is affordable.

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[Catherine McKinnell]

The hon. Gentleman raises a very important point. We need reassurance from the Government that they have considered the data from experiences in other parts of the globe. Examples show that dealing only with the demand side, supporting parents with child care costs, simply increases the price of child care for families rather than bringing it down. Ultimately, that costs parents and the Government more, because they end up forking out more for a smaller number of child care places.

There seems to be a huge debate about the figures, but official figures show 35,000 fewer child care places across the country. In my region of the north-east alone, we have lost more than 5,000 places. Even the coalition’s flagship offer for two-year-olds, which is due to be extended in October, has floundered, with the child care Minister, the hon. Member for South West Norfolk (Elizabeth Truss), admitting last November that 38,000 of the 20% most disadvantaged two-year-olds—38,000 out of 130,000—did not have the places to which they were entitled. In May 2014, she updated the House on progress, with 10% of the most disadvantaged two-year-olds still without places. Perhaps most worrying of all is that there are 536 fewer Sure Start children’s centres than there were in 2010—an average loss of three a week. That is the figure we have, but the Minister removed the online database last autumn. Perhaps she will comment on this. I would have thought that, given her professed interest in supporting families and dealing with these issues, there would be a desire to continue to monitor the number of child care and Sure Start places available. It is alarming that we can no longer keep track of the figures on the Government website.

In addition to all that, parents have seen the Conservative Government give a £3 billion tax cut to the top 1% of earners, more than three quarters of whom are men. At the same time, parents have seen cuts of £15 billion. Support to families to balance their work and family life, such as tax credits, child benefit, maternity grant allowances and statutory maternity pay, has been reduced. The reductions to tax credits alone have meant that some families have lost up to £1,560 a year, while the House of Commons Library estimates that families with newborn children could be up to £1,725 worse off over the initial two years.

New analysis of the households below average income statistics published earlier this month shows that under this Government it is families with children who have seen the biggest falls in their income, relative to those without children. Since 2009-10, a couple with two children aged five and 14 are on average £2,132 a year worse off in real terms. In contrast, a couple with no children are £1,404 a year worse off. A single person with two children aged five and 14 is on average £1,664 worse off, compared with a single person with no children, who is £936 a year worse off. We know that everybody is worse off, but families with children in particular are bearing the brunt. These figures only reflect tax and benefit changes, and the impact of wages falling relative to prices has left working people on average £600 a year worse off since 2010.

Even more worrying is that new research published last week by the Resolution Foundation suggests that the official statistics may well have underestimated the fall in living standards, because they take no account of the wages of the self-employed. The fall in wages could be between 20% and 30% greater than originally thought. As we know, this could prove particularly relevant to women’s experiences, because according to the Office for National Statistics, women have made up more than half of the growth in the number of self-employed since 2008.

We must not forget that the true impact of this coalition Government’s failure is felt not just by parents, but by their children. The latest HBAI figures show that the progress Labour made in lifting more than 1 million children out of poverty has ground to a halt. Equally worrying, the number of children living in what is deemed to be material deprivation is on the rise, with 300,000 more children living in families that cannot afford to keep their house warm, 400,000 more children living in families that cannot afford to make savings of £10 a month, and half a million or more families unable to afford to replace broken electrical goods. Worst of all, a forecast by the Institute for Fiscal Studies indicates that while Ministers and, clearly, their Back Benchers squabble over how to adequately define child poverty, which seems to be a distraction from their failure to deal with it, almost 1 million more children will be living in poverty in 2020.

[Charlie Elphicke]

The hon. Lady challenged me on my figures. In a House of Commons Library note, taken from the Department for Education and Skills statistical volume, there were 365,000 childminder places in 1997, but by 2010 that number had fallen to 280,000. Does she recognise that that is a really poor record on child care with childminders?

[Catherine McKinnell]

The hon. Gentleman seems to have gone off the subject of child poverty, which is what we were dealing with. Going back to childminders, there was some movement in respect of the database of those registered when the Ofsted registration system came into place. If he is suggesting that he does not support Ofsted registration, I would be interested to hear more of his views.

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[Catherine McKinnell]

The Government need to reassure us over NS&I’s ability to provide this contract and to tell us whether services will be provided by Atos, especially as Atos’s delivery of universal credit and personal independence payments has been such a shambles. With just a year to go, it is important that Ministers get a grip and make some decisions. As with universal credit, any further delays in implementation will only hurt hard-pressed families who are already struggling with the cost of child care bills.

Let me turn briefly to our proposals for investing in child care which, on top of what the Government are providing today, would deliver a real difference to hard-pressed families who are struggling with the child care crunch. We have said that we will build on previous efforts and extend free child care for three and four-year-olds from 15 to 25 hours a week for working parents. We will give parents peace of mind by setting down in law a guarantee that they can access wrap-around child care—from 8 am to 6 pm— through their local school, if and when they want it.

As with the 15-hour early years entitlement, introduced under the previous Labour Government, the new 25-hour offer would be for 38 weeks of the year, which would mean more than £1,500 of extra support per child per year. It would not demand that working parents spend more and more of their own money on child care in order to receive some cash back from the Government, as this Bill will demand of them. Regardless of what working parents of three and four-years-olds choose to spend on child care, they will be entitled to 25 hours a week for 38 weeks of the year.

We know that having school-age children can be a logistical nightmare for many parents, and that too many of them find it increasingly difficult to find after-school and before-school child care. According to a Department for Education survey last year, 62% of parents of school-age children said that they needed some form of before-and-after school care or holiday care to combine family and work, but of these, nearly three out of 10 of them were unable to find it. That is why Labour will introduce a primary child care guarantee to benefit parents of primary age children, because that is when families most require child care support.

[Charlie Elphicke]

rose—

[Catherine McKinnell]

I will not give way, as I must make progress.

In conclusion, while we welcome any extra investment in child care, the Bill does not make up for how much more families are paying for child care under this Tory-led Government, and it confirms that no help will arrive for parents facing a child care crunch for at least another 14 months. Families have already seen their child care costs rise five times faster than pay. Many already spend more on their child care than on their mortgage. Parents have seen the number of child care places fall by the thousands, and, despite the Prime Minister’s promises to the contrary, too many communities have seen their local Sure Start children’s centres close.

Most stay-at-home mums, as well as working parents, have already said that child care costs are the biggest barriers to their either going back to work or increasing their hours. Working parents and families need help now, not in 14 months’ time. But equally importantly, Ministers need to come clean over who will benefit from this scheme and by how much, so that parents can make an informed decision about which form of support will be most appropriate for them.

We will support the Bill’s Second Reading as we welcome the additional support for families because we know how much they are struggling, but we will scrutinise every detail to get the answers to the questions that we put today, as there are many areas in which the Government are not being up front. Critically, this Bill falls far short of what is needed to make up for the last four years of spiralling costs, falling child care places and cuts to vital support for families. Parents deserve better than that, which is why the next Labour Government will extend free child care for all three and four-year-olds as well as introducing a primary child care guarantee to give parents peace of mind.

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[Chloe Smith (Norwich North) (Con)]

Mr Deputy Speaker, I am sure it took you many minutes to work out who the next speaker would be in this balanced debate that demonstrates that it is the Conservatives who are on the side of carers and hard-working families.

Child care is an important issue for the many working families I represent. I have been talking to lots of mums and dads, nurseries and pre-schools in Norwich, and I have already had the privilege of raising in Westminster Hall and this Chamber points they made about quality and affordability of child care. Too many people are prevented from being able to earn to support their family or to fulfil their career ambitions by the high cost of child care. As we all know, even part-time nursery places can cost thousands of pounds a year—indeed, child care costs have now overtaken mortgage interest payments to become the most significant monthly outgoing for many British families.

[Charlie Elphicke]

I was wondering whether my hon. Friend has noticed the complete absence of any Back Benchers on the Labour side of the Chamber? Increasingly it seems that the Conservative party is not only the party of the workers, but the party of child care as well.

[Chloe Smith]

My hon. Friend puts it extremely well, and perhaps makes my next point for me, which is that the previous Government failed to deal with the problem of child care costs, and it is the present Government, in particular the Minister for Women, my right hon. Friend the Member for Loughborough (Nicky Morgan), who are doing so.

The Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), who is responsible for child care, has rightly said in the past that a changing economy means that parents need affordable and available child care more than ever, and a changing world means that children need a rigorous, rounded education more than ever. We have before us an opportunity to do both things at once. The context is the tax and benefit changes that came into being this financial year. The biggest reforms in a generation, they will create more jobs—indeed, they have already done so—and they are getting more people off welfare and into work. Child care follows from that, so let us see it in perspective. It is only by sticking to those kind of economic actions—a long-term economic plan, in fact—that we will build a more resilient economy and a more financially secure future for hard-working people and their families.

The cost of living cannot be seen in isolation. The British people cannot be flannelled with phony figures. There can be no economic or household security without the honesty and courage to control the public finances. Labour’s old way has failed—Labour Members would argue with that, if they were here to do so. More public spending led to more welfare bills and more government jobs that the country could not afford. They propose in this debate to use a levy they have already spent 10 times over. Why can they not afford parents the respect of some honesty? This Government, on the other hand, are backing businesses by cutting their taxes, so they can create jobs; cutting tax for individuals, so that their job pays; and controlling welfare, so that getting a job pays more. Universal credit is of course crucial and will be one of the most important reforms this Government make. By replacing working tax credit, it should help my female constituent who wrote to me last week to say:

“When I did work we were over the threshold for working tax credits by around £300 yet I would have to pay £12,000 in childcare cost to continue working.”

Let us look at some other current figures. I am drawing now on the Mumdex—the helpful piece of work that Asda does every month. The latest report shows a rise in spending power for the eighth consecutive month, leaving families £4 a month better off than last year. The main cause is a slowdown in essential item inflation, particularly food, clothes and mortgage interest payments—another sign of a sounder economy. Petrol costs fell again, which eased the pressure on household finances—indeed, under this Government, fuel duty is now more than 13p a litre lower than it would have been without our action, so that the average family saves £7 every time they fill up the tank.

Such results in family finances can only come about with control of the public finances, which has entailed serious decisions by the Government about what to spend hard-earned taxes on. Voters have serious decisions to make as well, as the Conservatives appreciate. As a previous Conservative election poster said,

“Don’t just hope for a better life. Vote for one.”

I am delighted that the Chancellor has put public money towards the tax-free child care scheme that we are discussing. It stands to ease costs for families even more, and here are five good reasons why I support it. First, it will be bigger and faster than first outlined, opening sooner and benefiting in its first year 1.9 million working families with children under 12. That is good progress already in the work that has to be done to bring the scheme forward. Secondly, it will be simple, flexible and easily accessible online. Thirdly, for the first time self-employed parents and those working for the great majority of employers who do not offer the existing employer-supported child care scheme will be able to take part.

Fourthly, the scheme will also help those working part time and on the minimum wage because of the low minimum earnings threshold of £50 a week. Fifthly, as my hon. Friend the Member for South Swindon (Mr Buckland) said, it offers more help for parents of disabled children by recognising that assistance ought to continue until the child is aged 17, rather than 12. I know from experience in my constituency how welcome that will be.

This all means that all working families where the parents earn at least £50 a week will have access to Government support for child care costs unless one of the parents earns more than £150,000 or receives support from tax credits, universal credit or ESC. All told, this gives families greater stability and more flexibility to make their own choices about their family picture. A male constituent told me:

“I’m now on £10K a year, at 39 years of age. My wife, an amazing mother, has to stay at home to look after two of our children, as we cannot afford the child care or would be worse off if my wife went to work.”

The personal allowance will rise in April next year to £10,500. My constituent then may be one of the 400 people in Norwich North who will be taken out of tax entirely by the actions of this Government. He will certainly be one of the more than 38,000 people in my constituency who will benefit from our tax changes. Universal credit will address the abhorrent benefits trap, which is reflected in the quote that I just gave. My constituent and his wife may also benefit from the scheme before us today. I welcome the targeted provision of taxpayer-funded child care for families on the lowest incomes.

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[Charlie Elphicke (Dover) (Con)]

May I strike a blow for working fathers, who are also parents, in a joint working household, which is the norm in this country? Sharing the child care responsibility and engaging in that work-life balance—that juggle—is increasingly the norm. I welcome the Bill. Tax-free child care will help all working parents, including fathers like me, with child care costs so that they can go out to work and provide greater security for their families.

That matters because it is important that we help all hard-working people who go out, work hard and do the right thing. Providing 20% support for child care costs up to £10,000 is important to help to make that happen. It is a key part of our long-term economic plan. I welcome the fact that the hon. Members for Foyle (Mark Durkan), for South Down (Ms Ritchie) and for Arfon (Hywel Williams) were here today, whereas no Labour Back Benchers whatsoever were present. That says that the Conservative party is not just the party of the workers, but the party of child care, and the party that is modern, forward-looking and concerned about the kind of future we can build for this country and the hard-working families who do so much to make this country great.