Childcare Bill [Lords]

Debate between Lucy Powell and Lady Hermon

Monday 25th January 2016 Commons Chamber

[Lucy Powell]

I rise to support the Bill on Third Reading.

I welcome my hon. Friend the Member for Darlington (Jenny Chapman) to her new role as our early years spokesperson. She is a passionate campaigner for social mobility, and she has done a brilliant job today on Report, raising several important issues. Of course, I also pay tribute to her predecessor, my hon. Friend the Member for North West Durham (Pat Glass). She did a fantastic job on the Bill in Committee and she will be missed by our team, but she goes on to fight a great cause for this country.

Opposition Members have long campaigned for and supported more investment in childcare. Childcare is an investment in our economic success. More childcare means more opportunities for families and it may begin to reduce the growing gender pay gap. Better childcare can also do a great deal to give all children a better start in life. Far too many women are still priced out of work by the high cost of childcare, particularly those on low and middle incomes. Childcare can help women into work and enable them to work more hours. That is why in government Labour introduced the original 12.5 hours free childcare for all three and four-year-olds. We created the Sure Start centres, massively extended maternity leave, introduced paternity leave and developed the first, and only, 10-year childcare strategy.

Our introduction of free early years education was designed to help to support child development and enable children with disadvantages to attend a high-quality early years setting in an attempt to close the school-readiness gap that is so present by the age of five.

Aside from our specific concerns about the deliverability of the scheme, which I will come on to, there is a larger problem with the Government’s approach to childcare: the widening attainment gap between children on free school meals and their peers. The Government seem focused only on the maternal employment needs of childcare—important as they are—while having no vision or action plan for narrowing that gap. My hon. Friend the Member for Darlington made a powerful case, based on the recommendations of the Social Mobility and Child Poverty Commission, for a comprehensive and joined-up approach to early years to address this issue.

It is the job of the Opposition to scrutinise the Government’s plans and try to make them better, but the Government have not really listened to many of the points we raised in both Houses. I will give it one last go and set out the measures by which we will judge the success or otherwise of the scheme. The detail of the policy and the Government’s legislative approach have not been the best. Ministers have failed to give us, parents or the House confidence that their plan to extend free hours is deliverable, affordable and sustainable. Even now, so many months since it was announced, we are none the wiser on how the extra hours and the necessary expansion of places will be found, funded and facilitated.

A key concern about the policy is whether it is adequately funded. There are three key funding issues: whether the overall budget is sufficient; whether the new hourly rate is sustainable; and the scaling back of the eligibility criteria. Before the general election, the Early Years Minister said that Labour’s plans to extend free childcare from the current 15 hours to 25 hours would cost an additional £1.5 billion, yet the pledge of 30 hours in the Conservative party manifesto was costed at just £350 million. That was then revised to £650 million, once Ministers returned to the Department. That still leaves a massive funding shortfall, which the Institute for Public Policy Research identified as £1 billion. This gives a whole new meaning to back-of-the-fag-packet policy making and I hope Ministers will be able to provide us with some reassurance on that. An extra £300 million was allocated in the autumn statement to increase by 30 pence the hourly rate paid to providers, less than half of which will go on the new offer. I welcome that, yet even with that review, independent analysis for the Pre-School Learning Alliance shows there is still a £450 million shortfall, over the course of this Parliament, for providers in meeting this offer. I will say more on the consequences of that in a moment.

It seems to me that the Government made all those figures add up by slashing eligibility. We now know that one in three families who were promised more childcare at the election will not get it. Ministers had said that all families in work would gain an extra 15 hours of childcare if they had three and four-year-olds. Their original press release said that this would mean 630,000 three and four-year-olds. That figure has now been slashed to 390,000. Of course, parents earning over £100,000 a year do not need extra help with childcare and we agree it is right to reduce eligibility at the top end. However, the Government have now taken their offer away from many low-paid families at the bottom end of pay scale.

The new offer is intended to support parents returning to work or support them to work more hours. Both parents, or a lone parent, need to work the equivalent of 16 hours a week at the minimum wage to qualify. Those in low-income jobs are more likely to lose out under these eligibility rules. For many parents on the edge of the labour market, short hours, part-time work and zero-hours work are often the first and best route back to work. The Government have cut those parents out and damaged the scheme as a work incentive for them. For example, an investment banker or a lawyer would earn eligibility for the extra hours by working one day a week—or one hour a week, in some cases—whereas someone on the national minimum wage would have to work for 16 hours.

There is an inherent unfairness here. Strivers will be working longer to get free childcare than people higher up the income scale. That is not something that Government Members should be proud of. The cost of childcare is a big barrier to parents; we know this for a fact. A low-income second earner would have to find an extra eight hours of work to gain from this new benefit. The policy will hit women particularly hard. Gingerbread says that 20,000 lone parents will now lose out.

Another key issue with the Bill is the lack of capacity in the system, and key question marks remain about the sustainability of the scheme. These could lead to a shrinkage in the market and we have not received sufficient reassurance on that. Some 40,000 early years childcare places have disappeared on the Government’s watch. To deliver this offer is not as simple as saying that eligible three and four-year-olds will just stay in the same setting for an additional 15 hours in the afternoon. In many cases, the afternoon sessions are full of children who are eligible for the 15-hour offer only. We have seen the problems Ministers have had in expanding provision for two-year-olds, particularly in schools where space is at a premium. With three and four-year-olds, the problems will be greater. Facilities will need kitchens to serve lunch, and some settings currently providing 15 hours will not be able to expand because they are sessional and taken up by other community groups at other times. This is not just about money, albeit the £50 million is welcome; it is about logistics and practicalities.

There are issues, too, in the private and voluntary sector. Many say that offering 30 hours to parents would leave their businesses on the brink of collapse. Currently, many providers are only able to offer the 15 hours free childcare by cross-subsidising with full-paying parents. This is why so many providers say that doubling the free offer to 30 hours a week would make their businesses unsustainable. The Government face a big task in convincing parents that providers will actually offer the extra 15 hours without caveats and in real terms. The overall impact of this market intervention without a proper strategy could lead to an exacerbation of trends that we have already seen over this Parliament and the last—a reduction in childcare places and an increase in cost to parents. For parents not in receipt of free hours, the mix of complicated cross-subsidy and price inflation will mean that the cost of childcare could rocket further. What plan do Ministers have to ensure that that does not happen? We still need reassurance on that.

As my hon. Friend the Member for Darlington so eloquently said on Report, the Government seem to have no strategy for raising quality in childcare, or for reducing the stark gaps in development that exist by the age of five. Indeed, with the decimation of early intervention, early years support services and the virtual disappearance of Sure Start children’s centres from our communities, and with family support services impossible to access, the Prime Minister’s latest speech, in a long line of speeches, on the importance of family frankly rings hollow.

The Government urgently need to turn their rhetoric into reality. Not only are they not doing enough; it is quite possible, for the reasons outlined this evening, that only focusing on maternal employment drivers could damage the objectives of raising quality and of encouraging disadvantaged families to access high-quality early education. I ask the Secretary of State once again to bring forward a comprehensive long-term strategy for reducing early years inequalities and thereby give a step change to social mobility.

In conclusion, as I have made clear, we support the Bill. We want parents of three and four-year-olds to have an additional 15 hours of free childcare, and for this to be a real offer that helps parents to find and afford childcare, so that they can do well for themselves and their families. I worry, however, that the Government will turn a deaf ear to constructive concerns. I fear Ministers are going in the wrong direction if they continue to ignore the problems this policy could have for the childcare market, and for families if they fail to act. We need a bigger vision for childcare: a system that delivers flexibility, price and stability for parents, while providing the best start for children and closing the developmental gap that already exists in pre-school.

Childcare is too important to get wrong—[Interruption.] Would the Minister like to make an intervention? No, he is just chuntering from a sedentary position. As he admits in private, he is concerned about the developmental gap but he has no strategy to deal with it. Childcare is too important to get wrong, yet the Government’s piecemeal approach endangers the market and the efficacy of the system. We stand willing to work with the Government to secure a winning approach for parents. We will support the Bill in that spirit, and we will keep a watchful eye on delivery as the scheme progresses.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.

[Lady Hermon (North Down) (Ind)]

On a point of order, Mr Deputy Speaker. I might have misunderstood, but when last autumn we discussed the new certification process for English votes for English laws, it was my understanding that it would be used only rarely. Since the House returned from the Christmas recess, however, we have used it on the Housing and Planning Bill, on a statutory instrument last week and on the Childcare Bill this evening. Have you, or has the Speaker’s Office, had any indication of whether this dreadful procedure will become routine, or will it be used only on rare occasions—all the rare occasions having occurred this month?