Levelling-up and Regeneration Bill

Lord Young of Cookham Excerpts

Wednesday 3rd May 2023 Lords Chamber

[Lord Russell of Liverpool (CB)]

My Lords, I rise to move Amendment 290 in my name and those of the noble Baronesses, Lady Royall and Lady Tyler, and the noble Lord, Lord Young. I thank all those who have supported this amendment, in particular the large number of Conservative noble Baronesses I have managed to nobble—it was 16 at the last count, I think —all of whom have indicated their strong support, in principle, for it. I will not bore your Lordships or broadcast my ignorance by opining on the 24 other amendments in this rather large group; I am confident that others will make their own cases at an appropriate, or even inappropriate, point.

We are all aware of the challenges facing parents of young children in the country today. Childcare is too expensive and often extremely hard to access. Even if one is able to afford it, often it is not there. I think we would all agree that, when a parent will lose money if they go back to work because the childcare that they can access is more expensive that what they can earn back in the workplace, the system is not working as it should.

Over the past seven years, the children’s charity Coram—I declare my interest as a governor—has done some research and indicated that prices have risen by 40%, far outstripping inflation and wage growth. However, these price rises have been driven in part by the growing scarcity of childcare services. The Government’s own data shows the systematic underfunding over several years of the so-called free hours, giving nurseries a rather invidious choice between closing down and pushing prices up for the hours that they charge for. The end result is that 5,000 providers closed their doors for good last year. In more than half of local authorities, there is not enough childcare provision for very young children. This is letting families across the country down and is holding back our economy as new parents are forced to give up careers.

Against this backdrop, the Chancellor has announced an extremely welcome massive expansion of government-funded childcare over the next three years. This will see hundreds of thousands of children receive some childcare for free but, potentially, increasing demand for already scarce nursery places. The Government have recognised that this cannot happen overnight but they have not—so far, at least—put in place funding specifically to increase the number and capacity of nurseries. This amendment is by no means the complete solution to the problem but we suggest that it should be part of the picture as we work out just how we are going to deliver on the promises that the Chancellor has made.

It is a long-established principle that, when developers build new homes at scale in what is termed a “major project”, they must contribute towards the extra public service capacity that these developments take up. Whether they are schools, GP surgeries or public transport links, these contributions help to ensure that a major development is acceptable and additive to local communities. Unfortunately, one area where this simply is not happening is the provision of childcare services and facilities. Over the past five years, around £35 billion has been raised from developers to fund affordable housing and community infrastructure. About a third of that has been spent on infrastructure such as repairing roads and extending or building new schools. However, of that £35 billion, the total amount that has been spent on childcare provision is £22 million, which is not very impressive. That is equivalent to £1 for every £1,667 raised from developers—a slight imbalance, perhaps.

There are some areas that have done well. In East Sussex, over £900,000 has been spent on expanding two nurseries. On the Isle of Wight, £200,000 has been spent on extending a family centre. In Knowsley, in Liverpool, almost £2 million has been spent on two new nurseries. However, these represent a disappointingly small set of areas. In responding to a freedom of information request to identify what they had or had not done, more than 90% of local authorities indicated that they had not spent a single penny of developer contributions on childcare or early years support. Since the guidance on both the community infrastructure levy and Section 106 contributions does not mention early years settings at all, this should not come as a great surprise.

Amendment 290 would not force local authorities to spend their money differently. All it would do is make it crystal clear and explicit to them that they can do so and that, in doing so, they will potentially help the Government to deliver on their commitments and policies. Local authorities have focused primarily on schools, not early years provision. While early years provision is meant to be understood as being implicitly included in the schools category, it is mostly not being included or considered at all. On Report in the other place, the Minister, Lucy Frazer, said that

“it is crucial that children get the support, care and education they deserve. It must be the case that nurseries and pre-schools fall within the definition of ‘schools and other educational facilities’”.—[Official Report, Commons, 13/12/22; col. 962.]

However, the clear evidence from the freedom of information data is that, 90% of the time, that simply is not happening. I am sure that this is not wilful or intentional neglect; I just think that local authorities do not regard early years provision as a priority to be fully considered. All our amendment asks the Government to do is to make it explicit, rather than implicit, that the need for childcare services should be taken into account. It asks the local authority

“to publish a statement explaining why … they did or did not”

allocate funding or support to childcare services.

At Second Reading, I mentioned that I had undertaken some research on behalf of the Minister to find, given her distinguished 10-year tenure as the leader of Wiltshire Council, a term in Wiltshire dialect that would clarify the intent of this amendment. The noun that I found was “jiffling”, which, in everyday English, means “confusion”. I hope the Minister will agree that, of the myriad amendments that she has dealt with so far and will deal with in future, this is one of the more straightforward, more diplomatic and least contentious ones. It is also fully aligned with the direction and intent of government policy and its purpose, which is simply to eliminate the possibility of any jiffling when local authorities evaluate the potential need for childcare services when reviewing any major project. I beg to move.

[Lord Young of Cookham (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Russell, and add a brief footnote to the speech he made on Amendment 290, to which I have added my name. As he said, the amendment makes it explicit that the infrastructure levy can be used to make childcare accessible and affordable.

I will make four brief points. First, in standing back and looking at total expenditure on all ages of children under 18, I believe we spend too low a percentage on under-fives and too great a percentage on older age groups, in terms of outcome both for society as a whole and for the individual child. I believe that a pound’s worth of investment spent earlier yields a greater return than if spent later. This is not the time to defend that assertion, but it is relevant to the debate.

Secondly, I therefore welcome the priority the Government have recently given to childcare, with £204 million of additional funding this year increasing to £288 million by 2024-25, on top of the £4.1 billion previously announced, together with earlier announcements about family hubs.

Thirdly, in expanding free entitlement, if that additional funding is inadequate, there is a risk that, as the noble Lord just said, providers continue to remove themselves from the market or reduce the quality of care provided. If the latter happens, it would place the priority of providing employment opportunities for parents above the purpose of child development. Increasing the demand for childcare places by making it cheaper without increasing funding for staff salaries may make it harder to find a nursery space in the first place. At the moment, it is not at all clear where the extra places will come from. Sam Freedman, an author and political columnist, posted the following on Twitter:

“we haven’t been given a figure for the new hourly rate but based on the overall cost for 3+4 year olds (£288m for 2024/5) it looks way too low. We proposed adding in £2bn to make it sustainable”.

Fourthly, the current business model for much of childcare relies on cross-subsidy from the better-off parents who can afford the extra hours to make good the gap in statutory funding. I was rereading the report of the Lords Select Committee on Affordable Childcare, published in February 2015, which said this about cross-subsidy:

“There is evidence that the funding shortfall in the rates offered to”


private, voluntary or independent

“providers for delivery of the free early education entitlement is met in some settings by cross-subsidisation from some fee-paying parents. This means that parents are subsidising themselves, or other parents, in order to benefit from the Government’s flagship early education policy”.

At the moment, of course, nurseries subsidise the too-low, free, hourly rate by charging more for one and two year-olds, hence the high prices. But, if one and two year-olds get free hours, as proposed, you cannot get the cross-subsidy. As free entitlement is expanded to more of the market and more of the week, it undermines the current business model for those who are providing childcare. If we want to achieve the Government’s policy on childcare and levelling up, we need to ensure that extra resources are available. That is what this amendment does.

[Baroness Tyler of Enfield (LD)]

My Lords, I will speak to Amendment 290, in the name of the noble Lord, Lord Russell, and to which my name is attached. I pay tribute to the noble Lord’s leadership on this issue and apologise to the Committee, as I was unable to speak at Second Reading. I will just make a few additional points to those already made by the noble Lords, Lord Russell and Lord Young. As a member of the Lords Select Committee on Affordable Childcare, to which the noble Lord, Lord Young, just referred, I very much want to underline the points he made about cross- subsidisation.

This amendment, which makes it explicit that childcare services are considered a proper use of developer contributions by local authorities, is incredibly important. We need to see it written down. At the moment, there is nothing in legislation or guidance, and this would be only an option for local authorities—not something they are required to do. As the noble Lord, Lord Russell, said, it is hardly a surprise that so few local authorities are spending any of their developer contributions on childcare services. To reiterate his point, in the last five years, only 22 local authorities have spent anything on them.