Front-loaded Child Benefit Bill [HL]

Viscount Younger of Leckie Excerpts

2nd reading
Friday 8th July 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I congratulate my noble friend Lord Farmer on introducing this Bill and securing its Second Reading. Before I begin, let me say that my imagination was running wild to the extent that, if my noble friend’s Bill was eventually successful, perhaps the value of any front-loaded child benefit might end up in schools’ lost property offices. However, I think we should move on from that.

I thank all noble Lords who participated in what has certainly been a considered and thought-provoking debate, with a good few ideas being promulgated. As my noble friend Lord Farmer set out, the Bill would allow parents to receive a higher rate of child benefit during a child’s early years and a reduced rate as that child grew older. The Government understand the important principle of supporting people who want to start families. This is a subject on which my noble friend has spoken eloquently today. He is known for his interest in family policy and the welfare of children, and continues to be influential in advocating for such changes. I applaud him for that and commend him on the work he does.

I start with some comments in response to a couple of questions that were raised. My noble friend Lord Farmer spoke about recent childcare reforms, and I assure him that a new consultation will look at increasing the number of children that can be looked after by each staff member in early years settings. This could reduce the cost of this form of childcare by up to 15% and could particularly lower the cost for those aged nought to two, which he alluded to.

The importance of the cognitive development of children was raised by my noble friends Lord Farmer and Lord Balfe, and by the right reverend Prelate the Bishop of Durham, and they are completely right in what they say. Children develop quickly in the early years and a child’s experiences between birth and the age of five have a major impact on their future life chances. Good parenting and high-quality early learning provide an essential foundation for children. I assure the House that the Government understand that.

I would like to acknowledge a slightly separate point which is linked to this subject. The Government fully understand the pressures that many families are currently facing with the cost of living. This is why we are providing £37 billion of support to households, including providing the most vulnerable households with at least £1,200 of support this year to help with these costs. The Government also understand the importance of providing support for parents with the costs involved in raising children. Over 7 million families in the UK receive child benefit payments, at flat rates of £21.80 per week for first children, as was mentioned earlier, and £14.45 for each additional child.

Child benefit ensures that families receive predictable, consistent support from the Government for the additional costs of raising a child. The noble Lord, Lord Kennedy, made an important point about the costs of teenage years and I very much took note of the concerns that he raised about money pressures for parents during this time. It is not just about the early years, but I acknowledge the points made by my noble friend Lord Farmer about the expenses of the early years. Unquestionably, he is right to that extent.

However, child benefit is not intended to cover all the costs involved in early years care, as the House will know. The UK offers generous parental pay and leave which is judged by international standards. Women are entitled to take 52 weeks of parental leave, 39 of which are paid. This is more than three times the EU minimum requirement and more than double the OECD average. Parents can share up to 50 weeks of leave and 37 weeks of pay between them, via shared parental leave, a new initiative brought in recently, as the House will know. The standard weekly rate of statutory maternity pay and maternity allowance, at £156.66, is considerably higher than the level of other out-of-work benefits and reflects the special position of new mothers.

My noble friend Lady Berridge asked about hospital care for children and what support exists for them. In the 2020 Budget, the Government committed to introducing neonatal care and leave for parents whose babies need hospital care after birth. It is subject to finding parliamentary time and I am not quite sure when that will be.

New parents in receipt of certain benefits can receive a one-off payment of £500 towards the cost of having a child, through the Sure Start maternity grant. The noble Baroness, Lady Sherlock, spoke about the importance of early years development, and I took note of her remarks. The Government also remain committed to helping parents to access high-quality childcare to support parents in work. Through the DfE’s early education entitlement, as the noble Baroness will probably know, all parents of three and four year-olds can access 15 hours of free childcare per week, regardless of circumstance. Eligible working parents of three and four year-olds can also access an additional 15 hours of free childcare per week. This is described as 30 hours’ free childcare. Some parents may be able to access the disadvantaged two year-old offer, which gives 15 hours of free childcare per week to two year-olds who meet certain social and economic criteria.

Universal credit claimants can also claim up to 85% of their childcare costs, which is worth up to £13,000 a year for a family with two children. Parents not eligible for universal credit or tax credits can use tax-free childcare and receive up to £500 every three months for each child, increasing to £4,000 a year if the child is disabled. Also, on Monday, as the House may be aware, the Government announced ambitious new plans to improve the cost, choice and availability of childcare, which will benefit hundreds of thousands of parents across the country.

I note the cautionary comments made about the Bill by the noble Lord, Lord Kennedy, the noble Baroness, Lady Sherlock, and the right reverend Prelate the Bishop of Durham, but I also noted some positive comments, particularly from my noble friend Lady Berridge. As I said at the beginning, a lot of comments and ideas have come out of this most interesting debate. While supporting families remains a priority for this Government, I regret that we cannot support making changes to child benefit in the manner set out in this Bill. I would like to give the reasons for this.

First, the Government are committed to making the benefit system simple and navigable for claimants. Child benefit is therefore a simple and well-understood benefit, paid at a consistent flat rate to parents. This simplicity has contributed to high uptake rates. Currently, 91% of those eligible are claiming child benefit. Front-loading child benefit would make claiming it more complex, and impose an undue burden on claimants, for example, in respect of submitting certain financial data and completing necessary forms online.

Secondly, it would oblige claimants to make complex, long-term decisions about their future benefits, several years in advance, with no certainty over their future circumstances or income. This slightly plays into the comments raised by the noble Lord, Lord Kennedy. Claimants’ circumstances could change in future. For example, a relationship might break down, as they do, or they might unexpectedly lose a job. By providing consistent child benefit payments, the Government ensure that parents receive guaranteed, predictable support, regardless of how their future circumstances might change.

Thirdly, we must not underestimate the complexity of delivering the proposals set out in this Bill. The Bill would require fundamental changes to how child benefit operates, which would require significant changes in IT systems and upskilling of staff. I suspect that my noble friend Lord Farmer would acknowledge that, in that he has said that this is very much an enabling Bill.

Finally, it is not clear how front-loading child benefit payments would work in practice. It is not clear in the Bill what the new rates would be, at what rate they would be discounted over time or how the Government would ensure consistency and fairness for claimants. It is also not clear in the Bill how we could implement this proposal in a way which is fair for taxpayers.

Making these changes would ultimately necessitate additional government borrowing, given the upfront costs to taxpayers, meaning that we cannot ensure that this change would be fiscally neutral for the taxpayer, as my noble friend Lord Farmer stated. Responsible management of the public finances remains incredibly important at the current time.

The noble Lord, Lord Kennedy of Southwark, asked about uprating child benefit and said that we should uprate by 10%. CPI has been the default inflation measure for uprating these benefits since 2011. This ensures that benefits retain their value in relation to prices. This is a well-established practice, as he will know. We ensure that the welfare system is fair to claimants and taxpayers.

While the Government remain committed to supporting new parents and households across the UK with the cost of living, for the reasons I have outlined, the Government cannot support this Bill, nor consult on it—to respond to a question raised by my noble friend Lady Berridge. However, going back to what I said at the beginning, I recognise and welcome the passion and commitment of my noble friend Lord Farmer on family policy and child welfare. I am sure that he will continue to press the Government on these important issues.