Childcare Payments Bill

Debate between Hywel Williams and Lucy Powell

Monday 14th July 2014 Commons Chamber

[Lucy Powell (Manchester Central) (Lab/Co-op)]

I am pleased to speak in the debate. The contrasting numbers of Members on the Government and Opposition Benches may reflect our relative ambitions in this place, with those on the Government Benches sporting their new haircuts and trying to get the party strapline in at every opportunity, while my hon. Friends are enjoying drinks with the Leader of the Opposition this evening. Although we have made much progress in this place towards being more family-friendly, perhaps a Monday evening late night debate on child care is not the best timing.

As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said earlier, we welcome any investment in child care. Families up and down the country are crying out for better access to child care and more affordable child care. For these reasons it is good that Ministers have finally realised, even if it is a little late in the day, the impact that child care affordability has on family lives. We on the Labour Benches believe that high-quality flexible child care is part of the solution to some of the key challenges facing our country. On the economy, our maternal employment rates, particularly for mothers with children aged between one and four, are poor compared with other OECD countries. Child care is a barrier to growing the economy and boosting maternal employment rates. It is unacceptable that in 2014 women still have to choose between looking after their children and having a career.

Over a third of mothers want to work but are unable to do so as a result of high child care costs. Two thirds of mothers would like to work more hours but are unable to do so because taking on more hours would mean higher child care bills. Improving child care will break down barriers for women and help our economy to grow. For families, this is not just about the number of women in work, as some Government Members have said. Child care can help us tackle gender inequality and the motherhood pay penalty. Although the gender pay gap is negligible for young professional women, for mothers the gap is stark.

Mums not only increasingly want to work, but they have to work. As we know, to lift families out of poverty, two incomes are often needed. The killer point for Members who have talked about more women in work under this Government is that figures show that the pay gap between what men earn and what women earn has increased in the past five years for the first time, and that, by contrast, over the 13 years of the Labour Government, the gender pay gap decreased significantly. This is the measure by which we should work out whether policy is effective.

We know that good quality child care is good for society as well. We know that the most disadvantaged children can start school 18 months behind their peers. Good quality child care can close the developmental gap and equip children with the skills and experiences they need to be successful at school. Quality child care can lay the foundations for our country’s future. It can be a key tool in our early intervention armoury and, as my hon. Friend the Member for Newcastle upon Tyne North said, in tackling child poverty. Although we welcome any investment in child care, I believe that in many ways the Bill is a missed opportunity and that it will do little to meet those big policy objectives.

Why is our child care system not working? The price paid by parents is high, yet for too many the quality of child care is patchy. The Government came to office believing that they could solve the problem simply by loosening ratios. That policy failed, and it would not have worked in any case. The Government have failed to address the fundamental problem with supply. We have seen a reduction of over 35,000 in early-years places since they took office. Government Members talk about the increase in reception places at school as though that somehow fills the gap, but they fail to recognise that at the same time the birth rate has increased dramatically, and we are now seeing huge pressure on school and early-years places as a result. The two-year-old offer shows that the system is not working, because a third of local authorities do not have enough places to meet the Government’s own offers.

I have had a number of exchanges in recent months with the hon. Member for Dover (Charlie Elphicke) on childminder numbers. We have seen a dramatic fall of 11% in childminder numbers since this Government took office. There are now 6,000 fewer childminders. It is wrong to say that Labour oversaw a big reduction in childminder numbers as a result of changes in regulation, because Ofsted registration meant that many providers fell out of the system. We heard earlier about comments made by Liz Bayram, who backs up that claim. The Government have done little to increase supply for working parents or parents of disabled children, as the hon. Member for South Swindon (Mr Buckland) mentioned. They have watered down the duty on local government to provide sufficient child care places, and they have also axed the duty on Sure Start centres to provide child care.

All that, taken together, has had a chronic impact on prices. That is why we have seen costs rocketing by 30% since 2010. The Family and Childcare Trust has shown that even part-time child care costs now outstrip the cost of the average mortgage. On top of that, Government policy has had a direct impact on the market. The no-notice changes to tax credits, for example, led to many parents immediately withdrawing their children from day care provision, which had an immediate effect on providers.

The Bill does nothing to address those fundamental issues in our child care market and, in some cases, it makes it worse. That is why Anand Shukla, chief executive of the Family and Childcare Trust, has said:

“Our childcare market is not fit for purpose. It is failing to fill gaps in provision, particularly for those parents who most need childcare; it is failing to drive up quality; and it is becoming more unaffordable for parents despite increased government funding.”

[Hywel Williams]

I am intrigued by what the hon. Lady is saying, because the Childcare Act 2006 obliged all Welsh and English local authorities to ensure that sufficient child care for working parents and those undertaking training or education with the intention of returning to work is available. What happened?

[Lucy Powell]

That is exactly part of the problem here: local authorities no longer have many of those duties, and they do not have the staff or resources to ensure that good local child care markets are acting in that way.

Let me turn to some of the specific measures set out in the Bill. The Government have no plan to control prices. This scheme, on its own, will do nothing to reduce costs, and it could even increase them. It poses a greater risk of price inflation, which is not a good or efficient use of public funding. The Institute for Public Policy Research has show that by 2018 parents will be spending more of their disposable income on child care, even with the tax-free scheme in place. Therefore, although we do not oppose the idea of tax relief for child care, we are critical that the Government have no plans to control costs and use the extra funding to lever in greater quality. Policy evidence is moving much more towards supply-side solutions, such as Labour’s proposals to extend free child care places. Indeed, under previous demand-side schemes there has been price inflation. Have Ministers assessed how the scheme will impact on the child care market and what impact it will have on price inflation?

There will be no help until after the election. The Bill does nothing for families struggling with the costs of child care now. Ministers have cut support for families in this Parliament as child care costs have risen and wages have stagnated. When the policy is introduced, the child care subsidy—that is what it is—will not make up for how much more families are having to pay for child care under this Government, or how much they have lost, as my hon. Friend the Member for Newcastle upon Tyne North so clearly set out.

For clarification, the offer for 15 hours of free child care was actually a Labour Government policy, and the idea of the two-year-old offer, which many Government Members mentioned—it is a good policy that I agree with—was actually put forward by the Deputy Prime Minister. He implemented it in the face of opposition from his colleague who claims to be the Minister for child care in the Department for Education.

Also, the numbers simply do not add up. The Government’s presentation of the scheme suggests that families are going to receive £2,000 per child. That is untrue, and only 100,000 of the 1.9 million families eligible for the scheme—one in 20—will receive the full amount. The Government’s own impact assessment shows that most families will gain by £600 a year, which is well below the £2,000 per child that Ministers have been promising.

Many of the scheme’s benefits will go to the very highest earners—those earning up to £150,000 a year—rather than middle and lower-income families, who have been hit hardest. Only 100,000 of the richest families will benefit from the increase from £1,200 to £2,000 a year per child, which is around 5% of eligible families. The extra money for universal credit, although welcome, has to be found within the existing budget, so where will Ministers find it, and will they clarify today when families receiving universal credit will get the extra support for child care? The Minister said earlier that it will be in 2016. Is that a cast-iron guarantee to which we can hold the Government?

The complex relationship between the scheme and universal credit could leave many families far more confused about whether they are better off in work or out of work and on the borderline between moving to and from each scheme. Will the Minister tell us today how parents will know whether they are better off on universal credit or under tax-free child care? How will the Government support parents moving in and out of both schemes.

The scheme is also quite bureaucratic, with heavy running costs, and a number of questions remain about that. Further clarification from the Government about some of the IT that will underpin the scheme would be welcome. Serious questions remain about deliverability. The Minister said earlier that the scheme is on time, but according to the Government’s own timetable, published last autumn, they are now six months behind because they have had to re-consult on some of the scheme’s specifics. That is because Ministers failed to include key details in the first consultation. Can parents be assured that the scheme will be introduced on time?

As I have said, the Government have no bigger vision for child care. The Bill alone, although welcome, does nothing to address some of the fundamental problems in our country’s child care system. I suggest that the Government develop a much bigger vision for child care, as we did when we were in government—we had the child care plan in 1998, the 10-year child care strategy in 2004 and then the Childcare Bill in 2006—and as we are doing now.

I also suggest that, in order to address the supply-side issue, the Government consider enhancing the role of local authorities in provision; ensuring that Sure Start centres expand to include child care provision, rather than being closed; taking action to ensure that prices do not simply increase and that there is more supply-side support; recognising that deregulation is simply not the answer, because we cannot pretend that we can solve the problem on the cheap; making improvements in quality; taking action on supply and on quality staffing and teachers; adopting Labour’s plans to extend free child care from 15 to 25 hours a week; and giving parents a guarantee of wrap-around care before and after school.