Childcare Bill [ Lords ] (First sitting)

Ruth Cadbury Excerpts

Tuesday 8th December 2015 Public Bill Committees

[Mr Gyimah]

Parents can get 75% of their costs paid for today, and that will rise to 85% when universal credit comes into force. That goes to the crux of the measure: no parent will be worse off as a result of the Bill, and no parent will get anything taken away from them as a result of the Bill. This is a new entitlement.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

The Minister says that “no parent” will be worse off, but I understand there are differences in the funding arrangements. Nationally, the new funding rate for the three and four-year-old offer is £4.88, including the early years pupil premium funding. All regions except London will see an increase in the hourly rate, but London will lose 65p of funding per child per hour for the extension of the entitlement, with some boroughs losing as much as £4.29 per place. How will that play out for the parents of three and four-year-olds in London?

[Mr Gyimah]

The hon. Lady talks about the money paid to local authorities. I was making the point that no parent will be worse off in terms of the childcare that they get.

I will come to this in more detail later, but we have announced that we will consult on an early years national funding formula to ensure that we smooth out the allocations for local authorities. It is not fair that one local authority can get £9 an hour and afford to offer 20 hours’ childcare, while another local authority, such as in Birmingham, gets £5 an hour. We need to ensure that a local authority gets the funding that reflects the needs of the children in that local authority, rather than the amount being based on history, as is currently the case. I will come to that point in more detail later.

--- Later in debate ---

[Mr Gyimah]

Let me put the hon. Gentleman’s mind at rest—I am glad he is taking so much interest in my area, rather than his. As a result of the combination of policies that I have talked about, a parent could get up to £40,000 of subsidy towards their childcare for two children. That is how far the Government are going to subsidise parents with the cost of childcare.

We are discussing amendment 10 and clause 1. I understand the arguments made by some members of the Committee about funding for disabled children and children with SEN to support them in accessing the free entitlement, but let me be clear that I do not believe that clause 1, on the funding review, should remain in the Bill.

Before I address the key points, I want to thank hon. Members for their contributions. I particularly thank the hon. Member for North West Durham for her extensive work on improving access to childcare for disabled children. That is clearly an area of her expertise and I thank her for her contribution to the debate. I also want to put on record that, beyond our line-by-line scrutiny in Committee, I want to work with her and officials on how we can improve access to childcare for disabled children, so I invite her to the Department to discuss that.

I want to be very clear that the Government believe that parents with disabled children should have the same opportunities as other parents via increased choice of and access to high-quality childcare. The Government’s commitment to improving the system for children with SEN and disabilities was strongly demonstrated in the previous Parliament, during which we legislated through the Children and Families Act 2014 to introduce the biggest reform to the SEN and disability system for 30 years. The reforms, which introduced a nought-to-25 system, with an emphasis on early identification and the importance of integration between education, health and social care for children across the age range, were supported on both sides of the House.

[Ruth Cadbury]

The Minister listed three factors in the review of disabled children’s education, but he did not use the word “childcare”. The parents of disabled children want to be able to work as well as to have good care, education and social services support, so will childcare be part of the review that he has just mentioned?

[Mr Gyimah]

I am coming to precisely that point. The changes will not solve all issues in the system overnight, but they are at the early stages of implementation and are starting to make a real difference for families. As I pointed out in relation to funding for parents of disabled children, tax-free childcare for families with disabled children will provide support of up to £40,000 until the child turns 18. So, from nought to 18, a parent with a disabled child will get twice the allowance that a parent with a non-disabled child will get through tax-free childcare.

I recognise that the extensive work carried out by the parliamentary inquiry into childcare for disabled children, co-chaired by the hon. Member for North West Durham, found that some parents have difficulties accessing childcare. That is disappointing. I am clear that the entitlement to 15 hours’ early education is for all children. It is not acceptable for children with disabilities to be unable to access their entitlement.

--- Later in debate ---

[Mr Gyimah]

No, I would definitely like to see the report. Of the £1 billion, £300 million is for a significant uplift to the rate paid for two, three and four-year-old entitlements. We have increased the rate not just for the three and four-year-old entitlement, as promised at the election, but for the two-year-old entitlement. The new average hourly rate—we have to be clear about it—is £4.88 for three and four-year-olds and £5.39 for two-year-olds, and the equivalent rate per carer, for three and four-year-olds, is £39. The uplift will apply to all children accessing the free entitlement.

We did not stop there, however. We also announced £50 million of capital funding to help providers who wish to expand and increase the number of places they are able to offer, as well as committing to a fairer funding distribution through the introduction of a national funding formula for early years. Neither of those elements, which are critical to a comprehensive and sustainable system, is mentioned in the clause.

Introducing a fairer funding formula for early years is essential. Current funding for early years varies considerably around the country, enabling some areas to offer parents additional hours of provision above the statutory 15 hours a week. The additional investment is a strong signal of the importance that the Government place on early years, and of our desire to help hard-working parents back to work and help them with the cost of living.

The rate increase is underpinned by the comprehensive review of the cost of childcare that was published on 25 November. The review was based on the best published evidence available, with additional evidence being collected through the review itself. Some 2,000 pieces of evidence from the childcare sector were reviewed, and every major childcare organisation contributed to the review. Childcare providers generously even provided their own profit and loss accounts so that we could identify and understand how their cost base worked. We promised the view at the election, and we have delivered on that promise. It is the most comprehensive bottom-up analysis of the cost of childcare provision in the country, and I have no doubt that hon. Members will agree with the rigorous, evidence-based approach we have taken to the analysis.

On how the review was conducted, it was led by the Department for Education’s chief analyst, who analysed the best published evidence and went the extra mile by collecting additional evidence throughout the review. The review examined the cost of childcare provision at provider level and considered all evidence on the current demand for and supply of childcare places for two, three and four-year-olds, for whom there is free entitlement. It also considered cost pressures that providers will need to meet in future, including the national living wage, and found that there is scope for providers to be more efficient, for example by reducing under-occupancy.

That analysis has allowed us to understand the funding needs of the sector and gain better insight into the characteristics of a diverse market and how it might respond to deliver the entitlement.

[Ruth Cadbury]

I thank the Minister for describing the review. He mentions under-occupancy. Has he had the chance to analyse how childcare providers can deal with occupancy figures and capacity, given that many parents work uneven hours, shift work and so on, and other parents are on flexible contracts? How does the Minister expect childcare providers to operate at high occupancy rates when so many parents work different hours in different weeks?

[Mr Gyimah]

There is significant scope for looking at under-occupancy, and we want to work with the sector. Most nursery providers say that they are very busy on Tuesdays, Wednesdays and Thursdays, and less so on Mondays and Fridays. Some nurseries price their offer in such a way as to encourage parents to take up the quiet times, when there are still staff costs but no parents taking up the offer. There are ways to make that possible.

[Ruth Cadbury]

It is generous of the Minister to consider the needs of childcare providers, but how does that work given that it is the employers of those parents who determine the hours for which they need the childcare offer?

[Mr Gyimah]

If a childcare provider wants to say to parents, “This is how we price; it is a market,” parents can pick and choose the spots that work best for them. We are saying that there is more scope to look at under-occupancy. It may work for some providers and not for others. We will work with the sector on that.

As I said, the review had extensive input from the whole sector. I will name some of the key organisations that provided input: the National Day Nurseries Association, the Professional Association for Childcare and Early Years, the Family and Childcare Trust and Contact a Family, as well as providers that attended round-tables that we held in the summer. The review does not just reflect costs in the south-east and London, because those round-tables were held around the country. I would like to take the opportunity to thank everyone who contributed to such a significant achievement, with the review being the first of its kind.

We are debating the impact of the provisions on children with additional needs, and the review also considered the impact on the cost of provision for children with special educational needs and disabilities. We held thematic discussions on childcare for children with additional needs, including special educational needs and disabilities. The review found that the nature and level of support required by those children can vary significantly, as does the prevalence of additional needs across each setting. The cost estimates reported in the review made allowances for some of those factors.

Our analysis of the responses to the call for evidence also highlighted that providing for children with additional needs, special educational needs and disabilities drives up costs for providers, particularly salaries. That is because children may need more one-to-one support, and there may be a need for greater involvement of other services—for example, health services or therapists—to support the provider in caring for the child. I saw that for myself when I visited Bath Opportunity pre-school, a specialist nursery providing childcare for children aged nought to five with a range of additional needs. The pre-school delivered excellent care for the children, but it was clear that the cost of delivering that care depended on children’s level of need. To deliver that care, the provider needs to work closely with a range of agencies, supported by the local authority to access funding from the high needs block, which is for ages nought to 25.