Childcare Bill [Lords]

Debate between Chloe Smith and Baroness Chapman of Darlington

Monday 25th January 2016 Commons Chamber

[Jenny Chapman]

The Minister says that universal credit will help improve the system. I venture to suggest that it might well further complicate the situation.

The new clause is designed to ensure that these perceived and anticipated complications do not have unintended consequences. As I have said, I accept that they are unintended, but the Minister would be rather naive to think that these consequences could never occur.

[Chloe Smith (Norwich North) (Con)]

I am extremely grateful to the hon. Lady for giving way, but I struggle somewhat to understand how anything that she has spoken about will be achieved through new clause 1.

[Jenny Chapman]

Is the hon. Lady looking at the wrong piece of paper? I shall go on to explain what is in new clause 1, and if she listens carefully, she will understand what we are trying to get at.

The new analysis by the House of Commons Library reveals a black hole of £480 million in the funding of this childcare offer. That shortfall represents £470 per child each year for those taking up the full 30 hours of free childcare. Independent research undertaken by research company Ceeda, as commissioned by the Pre-School Learning Alliance, suggests that the Department’s funding review has underestimated the cost of delivering childcare. The researchers found that, if funded at the average rate of £4.83 an hour—£4.88 minus the early years pupil premium, which the Department claims is worth 5p an hour—announced by the Government on 25 November, nurseries and pre-schools would face an annual shortfall of £233.70 per child for three and four-year-olds taking up the existing 15-hour entitlement, and £467.40 for those taking up the full 30 hours.

What could be the consequence of that funding gap? Childcare providers will have some difficult choices to make. There is every possibility that in an attempt to make ends meet, the gap will be met through driving down quality, while some providers might leave the market altogether, resulting in less choice for parents and a lack of supply. The Pre-School Learning Alliance warns, rather ominously, that as the existing scheme is significantly underfunded, it is now “crunch time” for the sector. The sector is already in a precarious position, and the Minister needs to reflect on the fact that the Family and Childcare Trust reports that a quarter of local authorities have a shortage of places for children in their existing schemes. There are 40,000 fewer places now than there were in 2010. Given that the Government failed to build capacity in the sector, how are the extra hours going to happen and how does the Minister think providers are going to pay for it? New clause 1 flags up those issues for the Government and asks Ministers to monitor the effect of the new arrangements.