Front-loaded Child Benefit Bill [HL]

Lord Farmer Excerpts

2nd reading
Friday 8th July 2022 Lords Chamber

Moved by

[Lord Farmer]

That the Bill be now read a second time.

[Lord Farmer (Con)]

My Lords, the Bill enables the Government to give flexibility to parents in how they receive child benefit. A key effect would be to increase parental choice in how they care for their children in the early years. State support for childcare is of increasing political importance in many developed countries, but only 41% of nought to two year-olds in England are in paid childcare. This is partly because there is limited state help for infant childcare costs, despite this being a particularly expensive stage of life. As well as childcare for those who want to return to work, a new baby can cost a lot to feed and house, and their arrival often requires moving into larger accommodation for all their equipment and for extra bedrooms. More generally, the multiplicity of different childcare support schemes is confusing and off-putting, as some benefit claimants are paid in arrears.

The Government announced that they are making childcare more affordable to ease the cost of living. However, once again it is the Ford-ist approach: “You can have any colour as long as it’s black”—or, “We’ll offer all sorts of help with childcare as long as you pay someone else to do it”. During the first years of infancy, many parents prefer care to be carried out by themselves or, if available, by grandparents or other extended family members who have a very tangible stake in their future. Biological theory refers to kin altruism: humans are inclined to behave more altruistically toward kin than toward unrelated individuals. That inclination is very important when deciding who will care for one’s precious child. Public awareness has grown of how formative the early years are for emotional, physical and particularly neurological development. Some 80% of a child’s brain develops in their first three years, during which adult-infant interaction strongly influences brain architecture and long-term chemical balance.

Key systems for stress response, emotional regulation and the ability to demonstrate kindness and empathy are very immature at birth. An infant’s development in these areas is dramatically affected by their relational experiences because the brain is a social organ. When infants consistently receive kindness through attuned and kind looks and words, their brain’s prosocial systems develop in response. In the absence of sufficiently calming, soothing and emotion-regulating interactions with parents and other key adults, an infant’s stress response can become hypersensitive. They can grow up unable to handle stress well, hypervigilant and more prone to anxiety, depression and anger, both in childhood and later life—hence many parents want to be there in their children’s early years. Some 39% of children under two are looked after by their parents. However, this requires a considerable and increasingly insurmountable sacrifice of income.

My Bill would enable the Treasury to give parents the option to have their child benefit front-loaded, putting more money into their pockets at this frighteningly expensive life stage. Clause 1 would amend the Child Benefit (Rates) Regulations 2006 to allow the recipient of child benefit the choice of receiving it on a sliding scale, getting more in their child’s early years and less as they get older. The total amount of child benefit paid over childhood would be the same as if paid at the current flat rate. Clause 2 provides for the Bill to extend across the UK, as child benefit is reserved to the UK Government. Having this option could help to facilitate parents’ preference not to work outside the home for a short time, or indeed help to pay for childcare. They would then receive less child benefit when their children are older. Receiving the same flat rate of child benefit throughout childhood no longer fits the financial realities of many families.

It was 77 years ago, in 1945, that the UK Government passed the original Family Allowances Act to support families and reduce family poverty, with a weekly sum of five shillings for the second child onwards. This was extended in 1956 to all school-age children. In 1977, the Government reformed family allowances to introduce child benefit, which is payable to mothers from their first child onwards to alleviate child-related costs. Children aged nought to 16 are eligible, as are 17 to 19 year-olds in approved education or training. The weekly allowance is now £21.80 for the oldest child in a family and £14.45 for younger children.

Child benefit’s iconic and attractive features have been retained over the years. For example, it can be paid into the mother’s purse instead of the father’s wallet, it follows the child, and its relative simplicity has significant administrative advantages. However, it was designed for a completely different age—albeit during similarly parlous times for national and family finances—and needs further reform. Patterns of work and childcare are now far more varied. Both parents typically work through necessity, if not choice, and the primary carer is often the father.

The quantum leaps we have made in digital delivery of state support mean that this benefit can and must be delivered in a more sophisticated way so that this significant spend supports families more flexibly. Some 12.5 million children in 7.2 million families were supported by child benefit in 2020-21, at a cost of £11.25 billion. Over the same period, UK expenditure on foreign aid was £11.5 billion and investment in environmental protection was £12.5 billion, and the health and social care levy is worth about £11.4 billion. Expenditure on all these budget items follows significant debate and has an appropriately granular approach, but the Government are legally bound to dispense child benefit in a one-size-fits-all way. This deliberately simple Bill merely provides the legislative lever around which the Government of the day can build detailed policy—for example, how that sliding scale of child benefit can operate across a child’s life. In 2009, Policy Exchange recommended paying half the child’s total entitlement to child benefit during their first three years and the other half over the remainder of childhood. In 2005, the noble Lord, Lord Field, argued that a quarter of the lifetime entitlement should be paid during the first two years of a child’s life.

The diverging up-front costs of different options mean that these decisions are for HM Treasury, as there would be an initial budget shock during the phase-in stage of this reform. New cohorts of children would receive the higher payment, with no immediate compensating savings elsewhere. However, this would also help parents with high childcare costs in the first two years. Any future Government will undoubtedly come under pressure to do more in this area. Importantly, in the long run this proposal is cost-neutral, because over their first 18 years a child would receive the same total amount of child benefit as they would through a flat rate. The Bill also does not tie the Government’s hands in decisions around eligibility. They might want to make higher rates of child benefit in the early years conditional on, for example, attending parenting education and/or objective indicators such as school attendance of previous children or professionally recorded signs of neglect. The Social Justice Policy Group also recommended this reform in 2007. Its polling found that 85% of people agreed or strongly agreed that parents receiving money from the state to bring up their children should be willing to attend parenting classes if necessary.

For this to become law, a government Minister will need to steer it through the Commons, with additional clauses concerning secondary legislation and statutory guidance where policy detail would lie. This legislative shell would effectively need to become a handout Bill in the other place. I urge the Government to do this to help facilitate choices on early years that are beyond many parents’ reach, to work for the hours they want—be they many, few or none—but without further complicating childcare support or “paying parents to stay at home”. With the exception of higher-rate taxpayers and those subject to the benefit cap, child benefit has always been freely given. This Bill enables that freedom to be extended. I beg to move.

--- Later in debate ---

[Lord Farmer (Con)]

My Lords, I thank all noble Lords for their contributions, albeit they have been somewhat critical. My noble friend the Minister was certainly negative.

I will respond first to the noble Lord, Lord Kennedy, on his point about the later years being more expensive. This Bill is actually about choice: the parents of a young child would have the choice whether to take more child benefit in the early years and less in the later years. My experience, and I think that of many other parents—I do not have the data here—is that, as children grow up, the parents work so their wages increase. They are probably both at work if they need to be.

One of my points was that the Bill would give an option for a parent—a kin, if you like—to look after the baby rather than pass it out to childcare, where that kin altruism is not so strong. As a child grows up to a teenager, not only might he be able to work in a shop to earn some pocket money but both parents and maybe grandparents would be in a better position. They would be earning more money and they would not have quite the same stresses that are prevalent in the first three years of life, with that tremendous stress that a new baby brings into the world with them.

It is a question of choice; my noble friend Lord Balfe made that point. You do not have to take it. You might want to take it to give up some of your childcare allowance in order to stay at home and look after the child. I will not go on about it because we have had a message from the Minister, but I will say to him that this is an enabling Bill. It is a lever and a gift to the Government. There is no flexibility on the statute book about child benefit at the moment. I made that point in my speech. It is a flat rate. At the moment, the Government cannot alter child benefit in any way. Fine, it is simple administratively, but times have changed, as I pointed out in my earlier words. Here is a lever that any Government, of either party, can use in future years when it is on the political radar screen that primary care in those early years is so important that parents need more money then rather than later.

It is a question of choice. All I am saying to the Government is that this is something that they do not even have to enable, but it would be on the statute book, which it is not at the moment. It is a lever that can be used by any future Government if they so require.

I thank noble Lords for the debate. I will not continue further. I beg to move.

Bill read a second time and committed to a Committee of the Whole House.