Free Childcare

Robert Goodwill Excerpts

Thursday 12th October 2017 Westminster Hall

[Ruth George]

I accept that a study was done in 2015. That was before we knew the outcome of business rate increases and before we had seen the impact on the sector of the national living wage policy and of auto-enrolment. All those things significantly increased the cost of nursery provision and were not known at the time the study was done, so it is erroneous to use those figures for funding projections up to 2020.

[The Minister for Children and Families (Mr Robert Goodwill)]

I thank the hon. Lady for giving way. The review of childcare costs was described as “thorough and wide-ranging” by the National Audit Office, so we believe we can base our costings on those figures. Does she disagree with the National Audit Office’s judgment?

[Ruth George]

In 2015, when those figures were done, they may well have been up to standard, but they do not represent the increase in costs that nurseries have seen in the past two years and certainly will see even more with the increase in auto-enrolment costs and the increase in the national living wage that will be ongoing up until 2020. They figures are utterly at odds with all the evidence that comes from local authorities and from the childcare provision sector, who have given ample evidence about their costs and the amount that they have to pay for the provision. In fact, a provider from the Minister’s own constituency wrote to tell him:

“I ask myself do I really want to continue working as a childcare provider when my wage will now match that of a supermarket worker without the responsibilities of a childcare provider, the paper work, Ofsted and book work. I am sad it had come to this.”

The fact that the Minister claimed he had not heard a peep from providers about their problems, either in the pilot areas, or with the full roll-out, has annoyed many of them. Hundreds of providers have peeped to the “Champagne Nurseries on Lemonade Funding” Facebook group to say that they certainly have peeped.

[Mr Goodwill]

May I suggest the hon. Lady looks at the record of what I actually said? I was listing the pilot areas and referring to Members of Parliament in the House and the fact they had not raised those issues with me during the period of the trial.

[Ruth George]

I am afraid I have copies of the emails from the providers in York and Scarborough that were sent during the pilot. They wrote to the Minister about their concerns to do with the pilot that they were participating in, so there seems to be a discrepancy there.

Despite numerous concerns being raised from the pilot areas, national organisations, local authorities and the sector itself, the Government have pressed ahead with the roll-out. My parliamentary questions in July asking for figures on the number of parents registered and on those who had successfully obtained a place went unanswered. Local authorities were forbidden from giving the figures for their own areas, even in response to freedom of information requests, so we had a total lack of information on what was happening up until September, except for reports from parents that they were struggling to register on the website. We heard from nurseries that they were unable to provide the 30 hours and from parents that they therefore could not find places.

In September, in response to an urgent question from my hon. Friend the Member for Batley and Spen (Tracy Brabin), we were told that 152,000 parents had secured a place, 71% of those who had registered. Despite the contrast with the 600,000 places that were promised originally by David Cameron when this vote-winning policy was announced, we were told that this was a great success. But that great success story still involved nearly a third of parents who had registered not having secured a place at the start of term in September. Some 64,000 children missed out on the important start-of- term activities where children learn to settle into their nursery or childcare place. When they start late, they always feel as if they are catching up, as routines are already established and friendships made. I hope the Minister will now update us on how many of those 64,000 children have now secured their place, albeit late.

Nurseries are struggling. They have seen huge increases in costs in recent years, as I mentioned earlier in response to Government Members. Until June I was on the board of a non-profit-making childcare provider, so I have seen the costs for myself. I set up the pension scheme that sees employers making contributions for their full-time staff. Those contributions are just 1% at the moment, but they will increase to 2% and then 3%, on top of wages. As a trade unionist, I also advised on a wages policy to properly reward all the staff and give incentives for attaining extra qualifications as well as making sure we always paid at least the national living wage.

Paying better wages is an excellent policy, but it needs to be funded, and the funding calculations simply do not take into account the fundamental cost and the increases for every childcare provider. That goes alongside the business rates, where most nurseries have seen a huge hike. It is no wonder the National Day Nurseries Association, from its survey in September, said that the 30-hours policy was in chaos. It said more than half of nurseries had had serious worries about having to increase fees for paid-for hours to unacceptable levels, and even about staying in business at all.

Nearly 300 nursery managers and owners completed the survey, which found that four fifths of those offering 30 hours were having to make additional charges for food and special sessions such as language or sports classes, or trips out. More than half of the respondents said parents understood additional services and were happy to pay, but a quarter said they were finding parents did not want to pay.

--- Later in debate ---

[Stephen Lloyd (Eastbourne) (LD)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate the hon. Member for High Peak (Ruth George) on her heartfelt speech, which was also accurate in highlighting some of the challenges that this project faces.

I put my cards on the table: I think this is a great project. It is something myself and other parties were excited about when it launched, because it is something that myself and my party have been advocating for a long time. I was consequently disappointed that the Government are trying to introduce what is essentially a Rolls-Royce programme, but not with Rolls-Royce-adequate funding. My fear is that, if we do not get this tremendous programme right—it is supported across the piece and across the political parties—for the sake of essentially 42p to 48p per child per hour, the programme could crash.

If the programme crashes, it could be a long time before it is picked up again, not because of a lack of will among the other parties—I know Labour has been pushing for this programme for a long time—but because the industry will be so badly fractured and morale so damaged that I am not sure it will be ready to pick itself up.

I believe that that is quite possible. Recent research shows that 56% of nurseries think they could be out of business in the next 18 months. Let us say, for the sake of argument, that a quarter are affected. If 12%, 15% or 18% of a sector closes its doors and drops out of business, that is a car crash. That is a matter of tremendous urgency, and I urge the Minister to get behind it and to talk to his colleague the Chancellor in the Treasury.

I know the Minister from my previous time in the House, and I have a lot of respect for him. I know that he is passionate about this issue. Although I am sure he will deny it, when he stands up at the end of the debate and says that everything is fine, it is all going to be cushty and nobody is complaining, I know that he will know that is not true. Knowing the Minister from before as I do, my view is that he would support me in the submission that that extra x number of pence—I know it is multiplied many times—would make a considerable difference to this programme.

[Mr Goodwill]

I know the hon. Gentleman is talking about pence, but is he aware that a 10% increase in funding would be well in excess of £250 million per year?

[Stephen Lloyd]

I am well aware of that. I would say to the Minister that if the whole programme crunches and 20%, 18% or 25% of the providers drop out of the business there will be no business for our children. Truly, I believe that £250 million split across that sector, particularly for something as important for our children and their future, is a price worth paying.

Time is always limited in these debates, so I ask the Minister to consider three proposals seriously. First, will he meet with representatives from the childcare provider and nursery sector, and also from independent providers? In my Eastbourne constituency I know many of the independent providers. They are Ofsted-tested, professional, trained women, half of whom, frankly, I can see pulling out of the industry as independents in the next nine months if the situation is not sorted. Will he meet with representatives from the sector, both nurseries and independent childminders?

Secondly, will the Minister also commit to listen to those representatives and to explore how much additional funding would be needed to just make this programme work? We appreciate that it is early days, but there are always teething problems when things start up—do not even get me going on universal credit, or I will be here all day—and if the Minister met with the people who know how much difference the finances would make, that would be terribly useful.

Last but not least, will the Minister reconsider giving providers flexibility when they make that offer to parents? If they have that little bit of flexibility, they can put on the paper, “This is how much extra we would charge you; you would get this.” I will tell the Minister what happens when they do not have that flexibility: people have to be disingenuous, and I do not like that. I know a lot of the childcare providers and the independents. They are honourable people who care passionately for what they do. If they do not continue being disingenuous, what then? They will go bust—

--- Later in debate ---

[The Minister for Children and Families (Mr Robert Goodwill)]

I will make time for the hon. Member for High Peak (Ruth George) to respond. I congratulate her on securing this important debate and thank her for contributing to the debate on the urgent question on 6 September about the 30 hours of free childcare. I welcome her involvement in the all-party group on childcare and early education, and look forward to attending its meetings in due course.

I almost feel as if I am living in a parallel universe. I spend a lot of time visiting nurseries; indeed, yesterday I met someone who owns six nurseries in the south of England that are engaged with the scheme and delivering childcare on the basis of it.

[Tracy Brabin]

I think I mentioned the parallel universe to the Minister in the Chamber. The nursery provider in his example has six nurseries and may be able to square the circle, but we are also concerned about the smaller providers.

[Mr Goodwill]

Precisely. Indeed, the proprietors of many smaller providers often work in their nursery, so their costs are not necessarily higher.

There has been some confusion about the number of children who are eligible. Children become eligible as they turn three. We predicted that there would be approximately 200,000 eligible children in September, followed by another 100,000 or so after Christmas and Easter. Those are the figures that we have always borne in mind. We also estimated that only about 75% of parents would apply for the scheme—a similar figure to the proportion of more disadvantaged families who apply for the free 15 hours of care for two-year-olds.

[Alex Cunningham]

Will the Minister give way?

[Mr Goodwill]

May I make some progress? A lot of points have been made in the debate, and I would like to answer some of them.

I am sure that all hon. Members present join me in acknowledging that, for many families with young children, childcare is not just an issue, but the issue. In many cases, the costs of childcare are a huge barrier to work, particularly for those in lower-paid jobs. Some parents still spend over a third of their take-home pay on childcare—and when I say childcare, I mean good-quality early years educational experiences. Indeed, 93% of the delivery is good or outstanding.

The Government’s priority is to ensure that parents who want to work after having children can do so, and that the cost of childcare is not a barrier. We therefore delivered in September on our promise to double the free childcare available for working parents of three and four-year-olds. We are also supporting parents with childcare costs, through working tax credits and universal credit—where up to 85% of the costs are covered—and tax-free childcare, which provides a 20% subsidy that is worth up to £2,000 per child per year and up to £4,000 per year for disabled children. That answers the point made by the hon. Member for Stockton North (Alex Cunningham) about particular help for disabled children.

[Alex Cunningham]

Will the Minister give way?

[Mr Goodwill]

I have very little time left, so I will make some progress now and give way at the end if I have time.

The Government are committed to giving every child the best start in life, whether their parents work or not. The 30 hours of free childcare are helping the lowest-paid working parents to manage their finances and have more money left over for their children’s needs. A lone parent needs to earn only around £6,500 a year to access the 30 hours of free childcare. Parents can apply for the 30 hours if they have a job offer; in answer to the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) and the SNP Front-Bench spokesperson, the hon. Member for Central Ayrshire (Dr Whitford), I can confirm that we can issue a code on the basis of a job offer even when Her Majesty’s Revenue and Customs has no track record of a person’s income.

[Dr Whitford]

The problem is that a job may start quite quickly. Having a ticket does not mean that someone has found a place. That is the advantage of already being in a place.

[Mr Goodwill]

As the hon. Lady points out, we have tranches of entry, so anyone who has an offer in August for a job that will start in September could get a code. The situation is similar for people who want more hours. We have been as flexible as possible in ensuring that those codes can be given. We take people’s word for it that their job offer is real, but when they confirm the code it becomes apparent.

This provision builds on the existing 15 hours a week of high-quality early learning that workless households of two, three and four-year-olds are entitled to. We know that starting education early makes a difference to long-term attainment and earnings, and that work is the best route out of poverty to transform children’s life chances. I heard this week from a school principal who had supported parents of two-year-olds getting the free hours to retrain and take up employment when their child became eligible for 30 hours. That is a fantastic outcome from a programme in its infancy. The 30 hours is making a real difference.

[Jonathan Reynolds]

I cannot believe that the Minister is not receiving representations that list the problems with this policy. Let me give him an example that I could not fit into my speech in the time available: my children’s school is ending free provision for under-fours, because the funding simply does not work as it has worked in the past. There is actually a net reduction in provision. Is he honestly saying that he is not receiving messages like that from around the country?

[Mr Goodwill]

I am surprised to hear that from the hon. Gentleman, because Tameside council in his area received a 25% increase in the hourly rate given after our review. We are putting our money where our mouth is.

As hon. Members will know, we rolled out the policy with a pilot that delivered for 15,000 children, and on 1 September, we rolled it out nationally, so that all eligible parents could join the 15,000 families in our pilot areas already benefiting from 30 hours. As expected, demand for the 30 hours offer has been high, and more than 216,000 parents have successfully received eligibility codes for the autumn term. I am pleased to be able to update the House: 90% of those codes have been checked by a provider on behalf of a parent seeking a 30 hours place. That is up 19 percentage points from 71% when I last reported, which is fantastic progress.

Of course, that figure may still continue to increase slightly, but I want to be clear that I do not expect it to reach 100%, because we cannot predict parents’ choices and situation. People’s circumstances will change. Not every person who successfully applied for a 30-hours code will decide to seek a free place for their three or four-year-old. Some parents will want to stick with a provider who does not offer 30 hours; other parents who applied for tax-free childcare and were eligible for 30 hours and who were issued a code will not want to take up that place because they might use the tax-free childcare offer. The figure may increase slightly, and I will keep the House updated.

[Alex Cunningham]

Before the Minister concludes, I would like him to return to provision for disabled children. I accept that there is additional money in the system that was promised, but provision simply is not ramping up to the extent needed. What more can the Minister do, beyond funding, to encourage providers to give us facilities for disabled children?

[Mr Goodwill]

Children with special needs certainly need special provision, and we are keen to ensure that we can continue to deliver that. As we move from the old statements to plans in mainstream education, it is proving an effective way to identify the children most in need. We must also consider how to help those in their early years as well.

[Liz Twist]

Will the Minister give way?

--- Later in debate ---

[Tracy Brabin]

Will the Minister give way?

[Mr Goodwill]

No. I have very little time—three minutes—and I need to make a few points.

I am hearing fantastic individual stories showing the extraordinary impact that 30 hours childcare is having on families up and down the country. For example, a local employer in Staffordshire recently told us that parents who work at their factory no longer have to hand over their children in the car park as one parent clocks off and the other clocks on. Families like that are now enjoying family time together, rather than passing each other like ships in the night.

I will quickly cover one or two of the points made in the debate. The hon. Member for High Peak and the hon. Member for Colne Valley (Thelma Walker) mentioned nurseries no longer being able to charge for lunches or additional hours. That is not the case. The early education strategy guidance is clear that providers can charge parents for meals and consumables, and for hours outside the free entitlement. Parents must not be required to pay any fee as a condition of taking up a free entitlement place. Many parents with a long working day need additional hours, and the system includes great flexibility,

[Tracy Brabin]

I thank the Minister for giving way. Does he intend to cap those costs? Such charges will be what keep nurseries’ lights on and their staff employed. Will there be a two-tier system, and will he cap the costs?

[Mr Goodwill]

Nurseries are entitled to charge for additional hours and meals, nappies and other consumables, and they are free to charge what they wish, but a parent with a code can shop around and get a place that meets their exact requirements. As I said, 90% of the codes issued have now been taken up by providers. We are seeing many flexible arrangements: for example, a nursery and a childminder may work together to deliver provision.

I must conclude, but there are a number of other points that I would like to have made. I will write to hon. Members to answer their specific points when I get the opportunity. I am proud of how the 30 hours childcare offer is transforming families’ lives. Parents up and down the country are enjoying more time with their children, more money in their pockets and less stress because the programme is cutting the cost of childcare. I hope that the hon. Member for High Peak has a few moments for a winding-up speech.