Childcare Payments Bill

Lucy Powell Excerpts

Monday 14th July 2014 Commons Chamber

[Lucy Powell (Manchester Central) (Lab/Co-op)]

I am pleased to speak in the debate. The contrasting numbers of Members on the Government and Opposition Benches may reflect our relative ambitions in this place, with those on the Government Benches sporting their new haircuts and trying to get the party strapline in at every opportunity, while my hon. Friends are enjoying drinks with the Leader of the Opposition this evening. Although we have made much progress in this place towards being more family-friendly, perhaps a Monday evening late night debate on child care is not the best timing.

As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said earlier, we welcome any investment in child care. Families up and down the country are crying out for better access to child care and more affordable child care. For these reasons it is good that Ministers have finally realised, even if it is a little late in the day, the impact that child care affordability has on family lives. We on the Labour Benches believe that high-quality flexible child care is part of the solution to some of the key challenges facing our country. On the economy, our maternal employment rates, particularly for mothers with children aged between one and four, are poor compared with other OECD countries. Child care is a barrier to growing the economy and boosting maternal employment rates. It is unacceptable that in 2014 women still have to choose between looking after their children and having a career.

Over a third of mothers want to work but are unable to do so as a result of high child care costs. Two thirds of mothers would like to work more hours but are unable to do so because taking on more hours would mean higher child care bills. Improving child care will break down barriers for women and help our economy to grow. For families, this is not just about the number of women in work, as some Government Members have said. Child care can help us tackle gender inequality and the motherhood pay penalty. Although the gender pay gap is negligible for young professional women, for mothers the gap is stark.

Mums not only increasingly want to work, but they have to work. As we know, to lift families out of poverty, two incomes are often needed. The killer point for Members who have talked about more women in work under this Government is that figures show that the pay gap between what men earn and what women earn has increased in the past five years for the first time, and that, by contrast, over the 13 years of the Labour Government, the gender pay gap decreased significantly. This is the measure by which we should work out whether policy is effective.

We know that good quality child care is good for society as well. We know that the most disadvantaged children can start school 18 months behind their peers. Good quality child care can close the developmental gap and equip children with the skills and experiences they need to be successful at school. Quality child care can lay the foundations for our country’s future. It can be a key tool in our early intervention armoury and, as my hon. Friend the Member for Newcastle upon Tyne North said, in tackling child poverty. Although we welcome any investment in child care, I believe that in many ways the Bill is a missed opportunity and that it will do little to meet those big policy objectives.

Why is our child care system not working? The price paid by parents is high, yet for too many the quality of child care is patchy. The Government came to office believing that they could solve the problem simply by loosening ratios. That policy failed, and it would not have worked in any case. The Government have failed to address the fundamental problem with supply. We have seen a reduction of over 35,000 in early-years places since they took office. Government Members talk about the increase in reception places at school as though that somehow fills the gap, but they fail to recognise that at the same time the birth rate has increased dramatically, and we are now seeing huge pressure on school and early-years places as a result. The two-year-old offer shows that the system is not working, because a third of local authorities do not have enough places to meet the Government’s own offers.

I have had a number of exchanges in recent months with the hon. Member for Dover (Charlie Elphicke) on childminder numbers. We have seen a dramatic fall of 11% in childminder numbers since this Government took office. There are now 6,000 fewer childminders. It is wrong to say that Labour oversaw a big reduction in childminder numbers as a result of changes in regulation, because Ofsted registration meant that many providers fell out of the system. We heard earlier about comments made by Liz Bayram, who backs up that claim. The Government have done little to increase supply for working parents or parents of disabled children, as the hon. Member for South Swindon (Mr Buckland) mentioned. They have watered down the duty on local government to provide sufficient child care places, and they have also axed the duty on Sure Start centres to provide child care.

All that, taken together, has had a chronic impact on prices. That is why we have seen costs rocketing by 30% since 2010. The Family and Childcare Trust has shown that even part-time child care costs now outstrip the cost of the average mortgage. On top of that, Government policy has had a direct impact on the market. The no-notice changes to tax credits, for example, led to many parents immediately withdrawing their children from day care provision, which had an immediate effect on providers.

The Bill does nothing to address those fundamental issues in our child care market and, in some cases, it makes it worse. That is why Anand Shukla, chief executive of the Family and Childcare Trust, has said:

“Our childcare market is not fit for purpose. It is failing to fill gaps in provision, particularly for those parents who most need childcare; it is failing to drive up quality; and it is becoming more unaffordable for parents despite increased government funding.”

[Hywel Williams]

I am intrigued by what the hon. Lady is saying, because the Childcare Act 2006 obliged all Welsh and English local authorities to ensure that sufficient child care for working parents and those undertaking training or education with the intention of returning to work is available. What happened?

[Lucy Powell]

That is exactly part of the problem here: local authorities no longer have many of those duties, and they do not have the staff or resources to ensure that good local child care markets are acting in that way.

Let me turn to some of the specific measures set out in the Bill. The Government have no plan to control prices. This scheme, on its own, will do nothing to reduce costs, and it could even increase them. It poses a greater risk of price inflation, which is not a good or efficient use of public funding. The Institute for Public Policy Research has show that by 2018 parents will be spending more of their disposable income on child care, even with the tax-free scheme in place. Therefore, although we do not oppose the idea of tax relief for child care, we are critical that the Government have no plans to control costs and use the extra funding to lever in greater quality. Policy evidence is moving much more towards supply-side solutions, such as Labour’s proposals to extend free child care places. Indeed, under previous demand-side schemes there has been price inflation. Have Ministers assessed how the scheme will impact on the child care market and what impact it will have on price inflation?

There will be no help until after the election. The Bill does nothing for families struggling with the costs of child care now. Ministers have cut support for families in this Parliament as child care costs have risen and wages have stagnated. When the policy is introduced, the child care subsidy—that is what it is—will not make up for how much more families are having to pay for child care under this Government, or how much they have lost, as my hon. Friend the Member for Newcastle upon Tyne North so clearly set out.

For clarification, the offer for 15 hours of free child care was actually a Labour Government policy, and the idea of the two-year-old offer, which many Government Members mentioned—it is a good policy that I agree with—was actually put forward by the Deputy Prime Minister. He implemented it in the face of opposition from his colleague who claims to be the Minister for child care in the Department for Education.

Also, the numbers simply do not add up. The Government’s presentation of the scheme suggests that families are going to receive £2,000 per child. That is untrue, and only 100,000 of the 1.9 million families eligible for the scheme—one in 20—will receive the full amount. The Government’s own impact assessment shows that most families will gain by £600 a year, which is well below the £2,000 per child that Ministers have been promising.

Many of the scheme’s benefits will go to the very highest earners—those earning up to £150,000 a year—rather than middle and lower-income families, who have been hit hardest. Only 100,000 of the richest families will benefit from the increase from £1,200 to £2,000 a year per child, which is around 5% of eligible families. The extra money for universal credit, although welcome, has to be found within the existing budget, so where will Ministers find it, and will they clarify today when families receiving universal credit will get the extra support for child care? The Minister said earlier that it will be in 2016. Is that a cast-iron guarantee to which we can hold the Government?

The complex relationship between the scheme and universal credit could leave many families far more confused about whether they are better off in work or out of work and on the borderline between moving to and from each scheme. Will the Minister tell us today how parents will know whether they are better off on universal credit or under tax-free child care? How will the Government support parents moving in and out of both schemes.

The scheme is also quite bureaucratic, with heavy running costs, and a number of questions remain about that. Further clarification from the Government about some of the IT that will underpin the scheme would be welcome. Serious questions remain about deliverability. The Minister said earlier that the scheme is on time, but according to the Government’s own timetable, published last autumn, they are now six months behind because they have had to re-consult on some of the scheme’s specifics. That is because Ministers failed to include key details in the first consultation. Can parents be assured that the scheme will be introduced on time?

As I have said, the Government have no bigger vision for child care. The Bill alone, although welcome, does nothing to address some of the fundamental problems in our country’s child care system. I suggest that the Government develop a much bigger vision for child care, as we did when we were in government—we had the child care plan in 1998, the 10-year child care strategy in 2004 and then the Childcare Bill in 2006—and as we are doing now.

I also suggest that, in order to address the supply-side issue, the Government consider enhancing the role of local authorities in provision; ensuring that Sure Start centres expand to include child care provision, rather than being closed; taking action to ensure that prices do not simply increase and that there is more supply-side support; recognising that deregulation is simply not the answer, because we cannot pretend that we can solve the problem on the cheap; making improvements in quality; taking action on supply and on quality staffing and teachers; adopting Labour’s plans to extend free child care from 15 to 25 hours a week; and giving parents a guarantee of wrap-around care before and after school.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

I thank all hon. Members who have spoken in the debate. Given the incredibly valuable contribution that this Bill makes to supporting working families, it is a great shame that no Opposition Back Benchers wanted to celebrate its arrival. It is fairly safe to say that the vast majority of Members who spoke agree that more needs to be done to support families with child care costs. It is also safe to say that the majority recognise not only the impact that an improvement in this area could have on millions of households but the impact it could have on the wider economy. We largely agree that more should be done to help more people, particularly more women, back into work. However, some Members described their concerns about the specifics of the scheme or the way in which it will be implemented, so I will do my best to respond to as many of those concerns as I can.

For most of us, having a baby is the most rewarding and challenging thing we ever do. It is incredibly hard to juggle home, children and a job, but whatever families choose to do, we recognise that they are best placed to make that choice. With three kids of my own, and having worked only part-time when they were small, I know I sometimes went to work for a rest, so I take my hat off to all the heroines, and some heroes, who choose to stay at home. This Government support you and salute you. Through this Bill, we want to provide more support for working families. That is why we are introducing tax-free child care to help families with the costs so that they can go out and work if they choose to or need to. They are the right people to make that decision, and we support them in that choice.

Some hon. Members implied that we may have over-consulted, but given the number of people this change will affect, and to help to ensure that the scheme works as well as possible, we have consulted very widely on its design over the past year and listened to the feedback we have received. We are considering the responses to our most recent consultation, which closed on 27 June, alongside those we received on the first one, and we will publish our response in due course. Whatever that response says, though, we are confident that the Bill has the necessary flexibility to allow for the delivery of child care accounts through the private sector or the public sector, and through a single provider or multiple providers.

The hon. Member for Manchester Central (Lucy Powell) made various points about who will benefit from the scheme. First, to qualify for tax-free child care, parents need earn only a little over £50 a week, so this is a boost to all families, whatever their earnings. Secondly, the overall system of child care support remains firmly focused on those on lower incomes. In just two months’ time, the Government will introduce a system that entitles 40% of two-year-olds from the lowest-income families to 15 hours of free education every week. In the Budget, we announced that all families eligible for universal credit will benefit from additional support, up to 85% of costs. We need to recognise that many families—not just the poorest but those across all income groups—are seriously struggling with the high costs of child care. While of course we want to focus our help on those with the lowest incomes, those in higher earnings brackets also warrant some support.

The Government recognise that child care costs have risen significantly over the past 20 years and are a huge issue for all working families. During the last eight years of the previous Government, child care costs increased by 50%, but they are now beginning to stabilise. Figures from the National Day Nurseries Association show that the average fee increase across all nurseries in the past year was just 1.5%, which is below inflation. Nevertheless, child care costs remain a massive problem for many parents who find that their income is eaten up by them. We need to extend free entitlement. That is why we are also increasing the supply of child care places and, ultimately, why we are introducing this Bill.

Government Members made some very good points. My hon. Friend the Member for Witham (Priti Patel) expressed her support for this much needed Bill. She said that flexibility in child care arrangements is absolutely vital to families, that child care costs are very high, that Labour’s economic legacy has significantly hurt families, and that it is important that we now provide support for those families in dealing with the costs of child care. My hon. Friend the Member for South Swindon (Mr Buckland), who speaks with such passion on this subject, welcomed the Government’s support for families with disabled children, who will benefit from this support up to the age of 17.

My hon. Friend the Member for Suffolk Coastal (Dr Coffey) welcomed the fact that more women are in work than ever before. She said that mothers often know best what is needed for child care; of course, we all recognise that. She talked about how to deal with the pipeline of talent and the barriers to working that women face. She highlighted support for carers and those on parental leave and welcomed the Bill’s offer of much more support to working women, in particular.

My hon. Friend the Member for Norwich North (Chloe Smith) explained that there is no household security without controlling public spending. She said that the measures in this Bill, while providing support for families, also ensure that we do not, as Labour Members suggest, just throw unfunded money at a project that could deliver more child care, but at an unknown cost to the public purse.

The hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Manchester Central asked how many families will be better off and by how much. I assure them that well over 1 million families will be better off, by an average of £600 a year. It is important to note that the Government support provided through this Bill will be 20p in the pound up to a maximum of £2,000 per child per year. The amount of benefit depends on how much families are spending on child care.

Labour Members claimed that there are fewer child care places than there were at the time of the election, but that is simply not the case. In fact, as my hon. Friend the Member for Truro and Falmouth (Sarah Newton) pointed out, the latest figures show that there are about 100,000 more child care places than there were in 2009, and that represents a 5% increase. However, the Government are not complacent. We are working further to increase child care supply by providing start-up grants for new child care businesses, making good and outstanding childminders automatically eligible for early education funding, increasing the child care available in schools, introducing new childminder agencies, and creating simpler regulations allowing nurseries to expand more easily.

Labour Members questioned why parents cannot use the new scheme at the same time as tax credits and universal credit. Families in receipt of tax credits already receive more generous support with child care costs, and this is being extended in universal credit, where support towards the costs of child care will be available regardless of the number of hours worked and will provide support of up to 85% of the costs from April 2016.

The hon. Member for Manchester Central asked about parents who work on zero-hours contracts. The contractual position of parents will not determine whether they are eligible for the new scheme. The Government want to support all working families with their child care costs. Parents on zero-hours contracts will be eligible for the new scheme in the same way as anyone else, provided they meet the eligibility criteria, including the rules on qualifying employment. As I said, parents have to expect to earn a little over £50 a week, on average, during a quarter.

The hon. Lady asked about Sure Start. I would have hoped that Labour Members were delighted that 3,000 children’s centres are open and record numbers of parents and children are using them—over 1 million. It is up to local authorities to decide how to organise and commission services for children’s centres in their areas. Labour Members will know that I am passionate about children’s centres, as I know they are. However, I am extremely concerned when they talk about centres closing when they know full well that, in many cases, organisations have streamlined their administration by putting a number of centres under a hub system. In fact, only 1% of children’s centres have closed.

The hon. Lady asked how the Government will provide advice to enable parents to make calculations and choose between universal credit and tax-free child care. We recognise the importance of providing information and support to help parents make an informed choice about which scheme to access. Therefore, alongside wider guidance and information, we will provide support and online tools for parents choosing from tax credits, universal credit and the scheme under discussion.

The hon. Lady also asked what we are doing to improve the supply side. As I said earlier, we are taking a number of measures, including introducing new childminder agencies, which will help—

[Lucy Powell]

What will that do?

[Andrea Leadsom]

The idea is to promote more support for childminders. The hon. Lady will recognise that, under the previous Government, many childminders fell off the radar, because, as surveys showed, they felt under-supported, over-regulated and overburdened. The idea of childminder agencies is to provide the support, training and guidance that will enable them to go into business, and to support those that are good and outstanding to expand more rapidly.

As a result of the changes under discussion, more working families than ever before will be eligible for support with their child care costs. The Bill will introduce a less complex, more generous system of support, which should result in more parents being able to enter the work force with the confidence that quality, affordable child care is available for their children. The proposals have been welcomed by families and child care providers across the country and by many businesses that realise how important support for families can be in helping them to attract and retain good staff.

In short, this Bill will support the future of our economy and the well-being of our children. As such, I commend it wholeheartedly to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Childcare Payments Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Childcare Payments Bill:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 28 October 2014.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Mr Gyimah.)

Question agreed to.

Childcare Payments Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Childcare Payments Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Mr Gyimah.)

Question agreed to.

Childcare Payments Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Childcare Payments Bill, it is expedient to authorise the restriction of relief from income tax in respect of the provision for an employee of childcare, or vouchers for obtaining childcare, under a scheme operated by or on behalf of the employer.—(Mr Gyimah.)

Question agreed to.



Business of the House (Data Retention and Investigatory Powers)

Ordered,

That, in respect of the Data Retention and Investigatory Powers Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—(Tom Brake.)