Cost of Child Care

Pat McFadden Excerpts

Wednesday 20th November 2013 Westminster Hall

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

It is a pleasure to serve under your chairmanship today, Mr Hood.

Like my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), I declare an interest. I have a four-year-old and a two-year-old. One is still going through the nursery system and one has recently done so. As well as declaring my interest, I also confess that before I had children I did not appreciate the importance of this issue to families or the costs or choices that people were forced into when trying to organise and pay for child care.

Before talking about costs, I want say something about the benefits. A good-quality nursery education can be hugely beneficial for young children. It can contribute enormously to their social confidence; it gives them their first friendships outside the immediate family; it helps them to learn the basic building blocks—colours, shapes and numbers—and it improves their speech. It is hugely beneficial. It enables them to be more confident, outgoing children. That is important, because we should all agree that we want children to get a good start in life. We know that it is in the early years, and the early months, of a child’s life that the first inequality often sets in. Good-quality early years care can be important in improving life chances and extending opportunity.

In a recent speech, the chair of Ofsted said that some children begin school 18 to 19 months behind in their development, compared with other children. Any society that cares about equality of opportunity or life chances should be concerned by that stark statistic. This is about cost, but it is also about quality and opportunity.

We cannot have a situation where some are effectively able to pull up the drawbridge on children who do not get good life chances, and allow these patterns of inequality to remain unaddressed. I do not seek to blame the present Government for that pattern. Inequality of opportunity is deep-seated and has existed for a long time. However, as my hon. Friend said, things are getting harder, with the closure of Sure Start centres and rising costs.

Let me turn to the costs and the choice faced by working families. We now have decent maternity provision in the UK. We used to be pretty much at the bottom of the European league. We are not at the top of the league, but we are in a respectable mid-table position. Mothers are entitled to 52 weeks leave, of which they will be paid for 39 weeks, although only the first six weeks is to be paid at the high rate of 90% of their salary. After that, mothers are dependent on contractual provision, which varies among employers. Fathers are now entitled to paternity leave for the first time, which is a welcome change introduced by the Government of whom I was a member. Before that, there was no recognition at all in the system of the role that dads might play around the time of birth or of the degree of support that they could offer to new mums.

The costs of child care really kick in when maternity leave comes to an end and mums want to go back to work. In London, a full-time nursery place can easily cost £1,300 to £1,400 a month. Let us pause and think about that. That is £15,000 a year, cash up front. There is a little bit of tax relief for this, but it is essentially cash up front. If people have two children in nursery, which is not uncommon, the cost may fall a little as the child turns two and three and the 15 free hours kick in, but a family could easily be looking at a cash figure of £25,000 a year for two children in nursery. That means that someone with two children would have to earn some £40,000, well above the national full-time average salary, just to pay for child care.

Outside London, the costs are lower, but still expensive. In my Wolverhampton constituency, a full-time nursery place costs about £600 to £700 a month or around £8,000 a year. It has to be remembered that that is £8,000 a year in a constituency where full-time average salaries are just over £20,000 a year. Even though child care is cheaper outside the capital, it is still a huge proportion of a full-time salary. No wonder that mums, particularly mums with two or more young children, are quickly forced into a choice between working and looking after the children. It is sometimes dads, but mostly it is mums who are taking longer parental leave and making that choice.

Some parents may want, and are able to afford, to stay at home, which is their choice, but most families need two salaries to survive. Facing such costs, mothers end up either working for very little—often because they fear that years out of the labour market will make it difficult for them to go back and that they will lose all sorts of opportunities—or being forced to give up their job simply because they cannot afford the child care. That is a huge waste of talent and experience. If capable people who are willing to work cannot do so because the costs of child care prove an insurmountable barrier, we have to care and do something about it because the country is losing out by forcing women into that choice.

This has gone on for far too long. I expect the Minister will stand up at the end of our debate and extol the importance of the 15-hour offer for three and four-year-olds and tell us how it has been extended to some two-year-olds. The offer was introduced by the previous Labour Government, and it makes a really big difference by giving important help to parents. Even I, as a member of that Government, do not pretend that the offer is the whole answer. The offer is often made in five chunks of three hours, which does not allow someone in a part-time job to rely solely on that child care; they still have to top up with other paid-for hours. What we need is child care built around the working day, which would be most valuable for working parents. The 15-hour offer is valuable and important, but I do not pretend that it is the full answer.

I am often struck by the comparison between how we fund early years and how we fund higher education. The time spent by children in nursery and by students doing a degree is pretty similar—typically three years in both cases. The costs are now similar. A full-time nursery place in Wolverhampton costs £8,000, and studying at university costs a similar amount. The difference is that the further south someone goes, even if they study at one of the best universities in the country, the cost of a nursery place becomes higher than the cost of a student place. For higher education students, there is a system of subsidised loans, with repayment terms contingent on earnings and forgiveness of the debt after a number of years if they do not earn enough. No such help exists for working parents, who are paying similar, and in some cases higher, costs. Working parents are expected to meet all those costs up front. They get almost no help other than a little bit of tax relief at the margins, which has a hugely damaging effect on the labour market and our economy.

There is an urgent need for more affordable places and for the same amount of national policy attention and energy to go into child care as has gone into higher education over the years. The truth is that child care has not received such attention and energy. When the costs of higher education go up, we often see students marching on the street. I confess that, when I was a student, I marched on the street for various causes. If the parents of one, two and three-year-olds were not so busy looking after their children and having to cope with the choices that we are talking about today, they would be marching on the street too.

Parents need our help. They need the same amount of policy attention as has gone into the costs at another point in young people’s lives. That is the priority that we should give to child care. Children need a good start in life, and parents need help. It is time that we made that a much higher priority.

--- Later in debate ---

[Catherine McKinnell]

I have a series of questions, so perhaps the Minister can answer them all.

Where have the missing 579 centres gone? There is an obligation on local authorities to keep the figures updated. According to the Government’s figures, in black and white, those centres have gone, and the Government’s denial that they ever existed is causing confusion. What assessment has the Minister made of the anticipated number of closures over the next two years? In Oxfordshire, for example, 37 may be closed, and in my local authority area the closure of a large number is being considered and all 20 are under review. Presumably such things are happening elsewhere in the country, and I wonder whether the Government have a handle on it.

[Mr McFadden]

Does my hon. Friend agree that the issue is not just the total number of Sure Starts? It is what they are doing. Many have stayed open but have had to cut back what they offer. The argument about numbers is important, but it is not the whole story. The diminished offer from some Sure Starts that have managed to stay open is part of it.

[Catherine McKinnell]

Perhaps the Minister can respond not only to my questions but to the issue outlined by my right hon. Friend.