Children: Affordable Childcare

Lord Kirkwood of Kirkhope Excerpts

Thursday 9th January 2014 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is, as always, a pleasure to follow the noble Baroness, Lady King of Bow, and her very powerful contribution. The vignette of the former Prime Minister playing with a train set in Downing Street goes a long way to explain a lot of the paralysis that occurred in the Labour Government. I also want to say to her that she is very welcome in bringing the younger members of her family into this House. If I knew more about it, I would do more to help her, but she sets a very good example and I hope that she will feel at home in blending her important work here with her important family duties. She has made an important speech and her personal experience illuminates the issues in this debate very well.

I am pleased to be sandwiched on these Benches between my noble friends Lady Tyler and Lady Walmsley, who both know a great deal more about this issue than I do. I can therefore indulge some of my more esoteric interests, which focus on the contribution that childcare can make to in-work poverty in this country. We are going to have to face up to in-work poverty much more squarely in the middle to longer term in this country and I am convinced that childcare can contribute to strengthening work incentives and getting families in a position to trade themselves out of the indebtedness and the poverty that we all see.

There have been some powerful speeches, one or two of which have mentioned issues relating to the long term as opposed to the short term. In the long term, if we do not have a qualified workforce coming through to generate wealth, then the dependency ratios that we face in this country will cost an enormous amount of public resource to deal with properly. If we do not increase the life chances of people at all levels of the current income distribution in our nation, we will be storing up enormous problems for ourselves in the long term.

Childcare increases, as I say, the opportunities to work; it increases the life chances of children and adds to their potential. I am not thinking of young people merely as economic units but, if they have better qualifications and a better start in life, they will carry more weight in generating the wealth that will, it is to be hoped, pay my pension in due course. I therefore declare an interest to that extent.

Childcare also reduces child poverty. However, the current Government have next to no chance of achieving the 2010-20 child poverty targets, and that is a matter of concern. I was interested to read the important work that has just been carried out by the Commission on Social Mobility and Child Poverty, to which I shall return in a moment. Mr Alan Milburn, the distinguished chair of that important organisation, pointed out in his recent report that two-thirds of children in poverty in 2010-11 lived in working homes. That is completely new. I have been interested in these issues for more than 30 years and we have never before been in a position where that is the case. It is not going to get better any time soon unless we address it with some urgency.

I pay tribute to the noble Baroness, Lady Massey, who is an acknowledged expert, and compliment her on the tone in which she introduced the debate, which was very useful. We are striking allegiances as we go along, which shows viability, and the way in which we approach these matters is important. My noble friends Lady Tyler and Lady Walmsley did an enormous amount of work in our Liberal Democrat working group, which produced a viable document. I hope that other colleagues across the party divide will take the time to look at it because I certainly found it valuable.

I wish to make a point about co-ordination, which perhaps will come more easily from me because I come from Scotland. We need to remember that tax rates are set, rather obviously, on a UK basis but that childcare policy is now largely—certainly in Scotland—a devolved matter. We need to be careful, therefore, that the context in which some of these policy changes are being made has been properly thought through. I should like an assurance from the Treasury Bench —I know my noble friend understands these issues perfectly well—that the necessary steps are being taken to make sure that there are no surprises in the different tax positions being taken at a national United Kingdom level and in the devolved legislatures. It is important to make sure that the interface is kept as efficient as it can be.

Turning to the short term, I was struck by the evidence that was submitted by the Commission on Social Mobility and Child Poverty in response to the Government’s current plans on childcare. I know that this is a cross-departmental issue and that the Treasury has an obvious interest in all of this, but I would really like, more than anything else, to take away from this debate an assurance from the Minister that that report, submitted by Mr Alan Milburn and his distinguished group of commissioners, will be absolutely and thoroughly studied. He has made a number of recommendations, two of which I think deserve particular attention. It would be possible to switch some of the resources— £750 million, £800 million, whatever was announced in the Budget earlier this year—to some of the lower echelons, particularly for low-income families who may be able to take advantage of universal credit, whenever that happens; I am not holding my breath for it to happen any time soon.

Mr Alan Milburn has suggested that rather than having a ceiling of £150, 000 you could make it £120,000, save some money and switch it into putting an 85% support level within universal credit. That makes perfect sense. It would cost no extra money at all—the money is already in the plan, and from a social justice point of view, that is an incontrovertible idea that needs to be addressed. If it is rejected, then I, for one, would like to hear the reasons why.

The second thing that Mr Milburn said, and I agree with him, is that within universal credit the current plans have got a split, a 70% or 80% cliff edge. He makes some valid criticisms which I absolutely associate myself with, and that deserves an answer as well. The right reverend Prelate the Bishop of Ripon and Leeds also made some important points, and Barnardos has made some valid criticisms, with options for change which are entirely reasonable and need to be studied to help us understand how we can deal with some of these issues going forward.

I remind the House that the current tax credit levels of childcare were originally set in 2005 at £175 for one child and £300 for more than one child. If the current plans hold, they will exist all the way through to 2016 at that level. The Commission on Social Mobility and Child Poverty estimates that by the time we get to 2016—there have been various estimates about the increases in childcare that have occurred and are obviously evident—childcare costs will increase by 80%. All the powerful points that have been made earlier by colleagues indicate that it will get worse between now and 2016 rather than better.

My final point, which I have mentioned glancingly, is that I am very concerned that universal credit will not now be available to low-income households until the end of the next Parliament. That might be a slightly pessimistic view but I am well known for my pessimism, especially when it comes to IT projects and central government. Will my noble friend go back to the department and say “Have we got some contingency planning for some of this?”. I agree with universal credit, I think the architecture is perfectly good and I have been a stout supporter of the principle. However, if we are really thinking of a 2017 introduction and a 2018 rollout for everybody, we really need to make contingency plans now to deal with this issue if that is what actually happens.

In the long term, we need to engender the concept that this should be a core public service available to everyone, and I agree with everything that has been said in that regard. In the short term, we need to seriously consider switching resources from some of the money that has already been allocated to support the needs of low-income families in work in the United Kingdom.