Childcare Bill [HL]

Lord Browne of Belmont Excerpts

Tuesday 16th June 2015 Lords Chamber

[Lord Browne of Belmont (DUP)]

My Lords, I broadly welcome this Bill and the commitment that the Government have made to provide free childcare for children under compulsory school age. This commitment should go some way to help families.

In expressing general support for the Bill, I want to ask the Minister what parallel provisions will be made for one-earner couple families with pre-school age children. One-earner families face a number of challenges when compared with other families. In the first instance, they bear a higher proportion of the tax burden in the United Kingdom than is the case across the OECD countries on average. International comparisons based on 2012 figures reveal that, on the OECD average wage of £35,883, the tax burden for a single parent with two children is 34% higher than the OECD average; similarly, the tax burden for one-earner married couples with two children is more likely to be 45% higher. How is this fair?

In the second instance, the way in which the Government have sought to help families, through raising the personal allowance, is not in the best interests of one-earner families. Although policies that raise the personal allowance are good for both single people and two-earner families, personal allowance increases only perpetuate the difficulties that one-earner families with children face. This is primarily because one-earner families are unable to take advantage of two personal allowances. For instance, how is it fair that a couple family with two children and a household income of £40,000 that comes from one income pays far more tax than the couple family next door with two children and an identical household income of £40,000 through two incomes of £20,000 each?

In the third instance, life has also become more difficult for one-earner couple families through the introduction of the higher income child benefit charge. This charge means that, once the main breadwinner’s income is above £50,000, the family’s child benefit entitlement will be eroded, and then removed entirely once that income reaches £60,000. This is despite the fact that some families in the poorer 50% of the population will be caught by this charge. For example, the one-earner couple family with four children on a household income of £50,000 will be in only the fourth decile of income distribution. By contrast, the household income next door can rise to nearly £100,000, if both parents work and earn just under £50,000 each, and they will keep all their child benefit. The family that gets to keep all its child benefit will be very much in the top half of income distribution. Again, how is this fair?

In this context, I have to say that the provision of yet another innovation that will further assist two-earner families, and by definition thereby leave one-earner families in a poorer position, is seen by many as compounding an existing injustice. Indeed, it has been suggested by some that there is a concerted effort to try to convert all one-earner couple families into two-earner families without regard for those who want the freedom to be one-earner couple families, certainly before their children are in school.

The charity Mothers at Home Matter has said that,

“many parents would prefer to care for their children themselves if they could afford it and this vital element appears absent in all the debates on ‘affordable childcare’… the government, in supporting double earning families with tax allowances and subsidised childcare while at the same time disadvantaging single earner families is urging women to choose their career above their family”.

The early years report from the Centre for Social Justice notes that the Government’s narrow focus on subsidising formal childcare, without parallel policies that increase choice for those parents who want to spend more time with their children or use other forms of care, means that choice is increased only for some and many parents feel even more pressurised to return to work.

The social policy charity CARE, meanwhile, has said:

“The message communicated by this lopsided policy is that a child’s time with their parents is irrelevant to their well-being and healthy development. Our relational experiences in childhood dramatically impact on how we behave towards one another in all aspects of life. It is the quality of relationships that ultimately define our society. Thus young infants require secure attachment, physical contact and physical affection”.

It is important for taxation policy to recognise that not all stay-at-home parents remain at home because circumstances mean that they cannot access the employment market when they would otherwise like to. While it is true that this may be the case for some, it is not so for all families. Some families choose to have one parent staying at home looking after the children because this arrangement works for them. This choice must not be taken away from them. Many families suggest that they would like to retain this option or, in other cases, access it for the first time. In a 2010 survey conducted by the parent organisation Netmums, it was revealed that they would like better support to stay at home with their children when they are small. Of the 5,900 members who completed the poll, 57% of mums would like to see this.

Families also choose to have one parent staying at home with the children because they feel that it is better for the children. Research by Sigman examined the mental health of teenagers who attended day-care centres when they were children, and of those who received care at home. The research showed that at the age of 15, centre-based day-care children were more prone to stress. Similarly, research carried out by Stein and others associated poor child behaviour with low maternal care giving, more time spent in day-care centres and more time with child minders.

Mindful of this and the need to keep the rights of the child pre-eminent, I was particularly disturbed to note that on page 6 of the report of the House of Lords Committee on Affordable Childcare it states:

“Many of our witnesses acknowledged the trade-offs inherent in a policy which seeks on the one hand to promote child development, and on the other hand to facilitate parental employment. For example, cheap, low-quality childcare might help parents to work, but it would not meet the Government’s child development objectives. There is therefore an inherent tension which must be managed; hard choices have to be made. No evidence was presented to us to suggest that the Government formally recognised the need for such trade-offs”.

Whatever one makes of the childcare argument—I recognise that there is also research which shows that children do just as well in professional, centre-based care, although this tends to be intensive and expensive—we should not try to press one-income families into becoming two-income families if that is not their choice.

It is important at this stage to recognise that the way in which we now recognise marriage in our income tax system—a hugely important provision on which I warmly congratulate the Government—has helped many one-earner families. While this provision is welcome, it is limited, in that at its current level it does very little to address the substantive disproportionate tax burden on such families. I ask the Minister to assure the House that it is not the Government’s intention to compound the way that one-earner families are currently disadvantaged by introducing a Bill with no parallel provisions to help them.

I was extremely encouraged to see that the Prime Minister committed to increasing the transferable allowance in an interview with the Telegraph on 28 March. I hope that this proposed increase will constitute an important component of the Government’s efforts to support one-earner families going forward. I look forward to the Minister’s response.