Childcare Payments Bill

Lord Davies of Oldham Excerpts

Tuesday 9th December 2014 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, the House faces considerable difficulties in tackling this Bill. As it is defined as a money Bill, the Minister has to reply not only to the general arguments—and I congratulate all three noble Lords who have spoken thus far on identifying clear issues to which the Minister should respond—but, as far as possible, to issues of detail, because this is our only chance of dealing with this Bill. The Minister will recognise that there are a whole plethora of issues which, had we more time and the opportunity to be in Committee, we would have enjoyed discussing. As it is a money Bill, we are operating under some constraint and therefore the Minister will forgive me if I both seek to cover the general principles but now and again lapse into a degree of detail to which I shall expect him to respond.

The Opposition of course welcome the Bill. There is no way in which we would oppose a Bill that gives additional help to parents with childcare costs, particularly in the circumstances that the noble Baroness, Lady Eaton, identified: children have grown up in units that differ a great deal from the standard parental position. We are concerned about children and to whom the support is to be directed. The parents will take responsibility for it, but we are concerned about children as regards the Bill.

The great difficulty is that childcare costs have soared in recent years. There has been very little additional help for parents over these past few years, while costs have gone up so sharply. That is why we in the Labour Party are concerned to put a rather different perspective on how to identify in the Bill support for children and their parents. We very much seek to meet the point that the noble Earl, Lord Listowel, identified—he spoke about the need for extra help for the parents and carers of disabled children. We want to increase the age to which they are entitled from the Government’s position of 17 to 18. We think that disabled children involve extra costs. Therefore, the Government should have provided some recognition of such extra costs in the Bill.

We have some real concerns about the Bill. Commentators have indicated that it is regressive in its impact. The majority of support in top-up payments will go to those with above-average incomes. Support for those in very real need will form only a small fraction of the allocation in the Bill. Those who can afford to spend more will get more from this scheme. We do not think that that can be readily justified.

We are also concerned about the scheme’s complexity. We recognise that parental circumstances can change rapidly due to the very volatile state of employment in the economy. We know that a very high percentage of jobs are insecure and have limited hours—certainly no guaranteed hours with zero-hours contracts. This means that parents have real difficulties as regards making judgments on income. There is a big complicating factor in this. The Government intend to bring in broader income support. It is not at all clear whether parents will be in an intelligent position to judge whether they might get better returns from this scheme or under universal credit. The Government have indicated that some help will be given but, given the obvious complexities of the introduction of universal credit—it has been predicated and worked on for long enough, yet we still do not have it in full—the Bill has to be put against that difficult background.

We also consider the Bill to be late. The Government seek to bring in an improvement that will not come into play until 2015, but childcare costs have risen five times faster than pay since 2010. The impact on families of the failure of the Government to act in the past is quite clear. We intend to expand free childcare for three and four year-olds from the 15 hours that the Government have indicated to 25 hours per week for working parents, as well as guaranteed wraparound childcare access through their local school. The supply side measures will be in addition to the support provided for in the Bill, and we intend to increase the levy on banks to ensure that we have the resources for these.

There are quite difficult decisions about this Bill which, had we been in Committee, we would have gone into in some detail. The Government intend that NS&I will provide the childcare accounts. NS&I, of course, subcontracts a great deal of its work to Atos. We are not at all clear that that gives a great deal of security to such an important resource allocation as this involves, given the past record of that company. As I said, the interaction between the two schemes—universal credit, when it is finally rolled out, and this scheme—is far from clear in government thinking. The Government have to realise that what may work for certain families, with full control of modern technology, high levels of education and an ability to respond to the system, does not apply to those very large numbers of parents and carers of children who will need very great guidance to ensure that they get the best deal out of this scheme or universal credit, when it comes in. It means added bureaucracy for parents and a difficult route to follow.

We also are concerned about costs. This, of course, is a demand-led system. It gives extra resources to those who demand the childcare. The Minister spends enough time in the Treasury on the economics to know that if one increases demand for a product, often the consequence is that the price goes up. That certainly happened in the Australian circumstance of a scheme not dissimilar to this one. So what do the Government do about a situation where already severely increased costs over the past five years get a stimulus from being increased again by what is in fact a government subsidy for a demand-led system?

Far from opposing the Bill, we are giving it our full support in its passage. That does not alter the fact that we want to identify these issues clearly on the only occasion we can debate the Bill in this House. The Minister has some very serious issues to confront and to answer, and I look forward to his response.