Childcare Bill [Lords]

Baroness Morgan of Cotes Excerpts

Wednesday 25th November 2015 Commons Chamber

[The Secretary of State for Education (Nicky Morgan)]

I beg to move, That the Bill be now read a Second time.

I am delighted to open this Second Reading debate. At the general election, the Prime Minister promised that a Conservative Government would

“give working parents of three and four-year-olds 30 hours of free childcare a week”.

We put the early years at the heart of our manifesto because we know how important those years are for children’s school readiness and future educational success. We also know that working families struggle to find flexible, affordable and high-quality childcare. For many parents, this challenge is the biggest barrier to work. So I am determined—and this Government are determined—to deliver these measures that will give children the best start in life, support parents to work and allow our economy and our society to prosper as a result.

We brought forward this Bill so that we can give working parents an extra 15 hours of free childcare—in addition to the current 15 hours of free early education for all three and four-year-olds. The 30-hours offer will give hard-working parents a real choice to earn more by going out to work or working more hours, if they want to do so. We have not wasted any time in delivering on this commitment. Just one month after the election, we introduced this legislation to the other place and launched a review of the cost of providing childcare—something that providers had long called for to inform a fair and sustainable funding rate.

[Mrs Maria Miller (Basingstoke) (Con)]

My right hon. Friend rightly says that she wants to make sure that her measures are delivering for all children. How is she going to make sure that this Bill delivers for disabled children and their access to childcare, which can be so important for helping parents who want to get back into work?

[Nicky Morgan]

I thank my right hon. Friend very much indeed for that question. She raises an important point. We want local authorities—in fact, they are under a duty—to ensure that they provide places for all children, including those with disabilities.

This Childcare Bill and the 15 additional free hours it provides is, of course, part of an overall package of childcare measures being introduced by this Government. My right hon. Friend has already talked today about the fact that we are spending over the course of this Parliament £1 billion more on childcare every year. I shall come on to talk about this in more detail.

We will conduct an early years funding formula review, as we want to understand how providers cater for children with disabilities and special educational needs. I should also point out for the sake of completeness that our tax-free childcare proposals mean that the maximum amount parents of these children could pay into their childcare accounts is double the amount that could be paid for children without disabilities. Parents can use that money for children with disabilities until they are 18, and for children who are not disabled until they are 12. I hope my right hon. Friend will agree that we are offering a comprehensive package of childcare support for all children and all families.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

I am very grateful for what the Secretary of State has said, but can she reassure nursery providers in my constituency, such as Broadstone Christian nursery and Montessori nursery in Lytchett Minster, that there will be a fairer funding formula? We heard about the formula a few moments ago, but it is particularly important for childcare providers.

[Nicky Morgan]

I am delighted to hear about the work of the nurseries in my hon. Friend’s constituency. Yes, I can give him that assurance. The national funding formula review will apply not only to schools but to early years, and it will include the high-needs block of funding as well.

[Bob Stewart (Beckenham) (Con)]

The doubling of hours for childcare is great, but how will we ensure that the quality of the care that our children receive will be doubled up? How will we ensure that there are sufficient places, and that they are of the right quality?

[Nicky Morgan]

My hon. Friend has raised an important point. We are, of course, doubling the entitlement to free childcare for two-year-olds, which originally applied to 20% who were the most disadvantaged, and now applies to 40%. The sector responded by creating an additional 230,000 places over the last Parliament. It has already risen to the challenge, and will do so again. I shall go on to say something about the way in which families will respond to the entitlement and how they will use the additional hours—I am sure that other Members will speak about that as well—but we know that there is already spare capacity in the system.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

The right hon. Lady will correct me if my reading of the Blue Book is wrong, but I understand that the maximum amount will be £5,000 per child. If that applies only to term-time, we are talking about 30 hours times 38—1,140 hours—which, as things stand, means a maximum of £4.38 per hour. In my constituency, where childcare costs more than £9 an hour, that will not be enough to pay for it.

[Nicky Morgan]

I shall go on to talk about the hourly rate. I shall be publishing the findings of the funding rate review, but as part of the funding formula review, we want to ensure that as much money as possible goes to the front line.

[Julian Sturdy (York Outer) (Con)]

The Secretary of State is right to refer to the fairer funding formula, which is vital to nurseries. She will probably come to this later, but what measures is she introducing to guarantee that local authorities will pass on all the extra funding to nursery providers, and will not top-slice it?

[Nicky Morgan]

I will come on to that, but my hon. Friend is absolutely right. As I have said, we want as much money as possible to go to the frontline, and that will be one of the issues that we will raise as part of the funding formula review.

[Emily Thornberry]

Will the Secretary of State give way?

[Nicky Morgan]

I am going to make some progress. I think the hon. Lady will want to hear what I say about rates. She may want to ask a further question after that.

The hon. Member for Manchester Central (Lucy Powell) is on record as saying that she is pleased to see that the Government are offering more support for early years, and wants to see our policies turned into reality. Today, she has the chance to demonstrate her support by joining us in the Lobby to support the Bill. It appears that she will be doing that, and I welcome the support of the Labour party.

Questions were raised in the other place about why the Bill was introduced so early. My response to that is “Why would we wait?” It is clear from the interest expressed by Members today, and from the reaction of our constituents, how successful and important the existing 15-hours offer is in supporting better outcomes for children. As the OECD’s latest “Education at a Glance” study reminds us, the United Kingdom is one of 13 OECD countries in which more than 90% of children aged three are enrolled in pre-primary settings, and pupils who each received one year of pre-primary education in the United Kingdom perform better at the age of 15 than their peers who did not.

We also know that the extension of free childcare is something that working parents want, so instead of waiting, we committed ourselves to implementing the extended offer early in some areas, from September 2016. We know that that is what parents want because we have listened to them. Over the summer, my Department consulted nearly 20,000 members of the public and 750 employers. Those who took part told us that they wanted 30 hours of free childcare and that the increase in hours would support their work choices. I heard that myself on a visit to Rolls-Royce in August with the Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah), who has responsibility for childcare and education. Employees talked to us about their childcare decisions and what they are looking for from the entitlement to 30 hours of free childcare. It was a pleasure for us to meet them and I thank them for sharing their views. They were very clear that they want more flexibility and choice in how they can access childcare.

I am determined to ensure that high-quality, affordable childcare is available to those parents, so that pressure is taken off their household budgets, and so they are more financially secure and better able to plan for their future. I am confident that we have a childcare sector that will deliver. The childcare market is flourishing: it has grown by 230,000 places since 2009.

[Mrs Flick Drummond (Portsmouth South) (Con)]

Does my right hon. Friend agree that the 124 childminders who create 597 places in Portsmouth make a big difference to the overall quality of childcare? Will measures be put in place to support them with administration, in particular?

[Nicky Morgan]

I thank my hon. Friend for her intervention. Childcare by childminders is very much part of the response. They are popular and flexible. We want to continue to do what we did in the last Parliament—to offer childcare business support grants, which enable people to set up in business as childminders; often they are women setting up in business for the first time. We welcome their contribution to this market.

Providers have demonstrated what they can do through the two-year-old free entitlement programme, with nearly 60% of eligible children accessing a place at the beginning of this year, four months after the entitlement was extended. Now we will increase our overall investment in the childcare sector and set an increased funding rate that will enable providers to deliver the entitlement and ensure fair value for the taxpayer.

The Chancellor has just made the autumn statement and he could not have demonstrated more clearly the Government’s commitment to funding the early years and childcare. In the last Parliament, we invested around £20 billion to support parents with childcare. The Chancellor’s announcement today, along with the funding announced at the Budget in the summer, mean that this Government will go even further and invest a record amount in childcare.

The Government will provide more support than any other in history, with, as I have mentioned, a package that includes rolling out tax-free childcare from 2017 and more support for families on universal credit. The extended entitlement means that working families will be entitled to receive an unprecedented increase in childcare support, with savings of up to £5,000 per child per year for working families. By 2019-20, we will be investing more than £1 billion a year to fund our manifesto pledge for 30 hours of childcare for working parents of three and four-year-olds.

As well as being the only party to commit to extending free childcare to 30 hours, at the general election we were the only party to commit to raise the average funding rate paid to providers. Today we are confirming we will do so.

[Carol Monaghan (Glasgow North West) (SNP)]

Will the Secretary of State give way?

[Nicky Morgan]

I am going to make some progress on this paragraph and then I will come back to the hon. Lady.

The increase in funding includes nearly £300 million for a significant uplift to the rate paid for the two, three and four-year-old entitlements. That will deliver a new national average funding rate paid to providers. Both rates will increase by at least 30p per hour. For three and four-year-olds, the new average rate will be £4.88, including the early years pupil premium and the rate for two-year olds will be £5.39. With that increase we have set the level of funding that providers need to deliver high-quality childcare, while at the same time providing good value to the taxpayer. We will also consult on a package of reforms to improve efficiency in the sector and further ensure value for money. I can also confirm that the early years pupil premium will not change and is worth £50 million in 2015-16, helping to ensure that three and four-year-olds from the most disadvantaged backgrounds have the best start in life.

The increase in the funding rate is supported by the robust review of the cost of childcare carried out over the last six months. Today that review is being published and will be made available in the Library of the House. I thank those who responded to the call for evidence as part of the review, as well as those who were involved in attending round table discussions across the country.The participation and engagement of organisations including the Pre-school Learning Alliance, the National Day Nurseries Association, the Professional Association for Childcare and Early Years, the Independent Schools Council and other key partners, meant we were able fully to understand the concerns and arguments around the funding of the entitlement.

As the Chancellor has also announced, we are committed to ensuring that funding is allocated in the fairest way. Next year, we will consult on an early years national funding formula, which will give due consideration to funding for disadvantaged children and to special educational needs funding for the early years.

[Emily Thornberry]

I am sorry; I remain genuinely confused. I hear the Secretary of State talking about a fairer funding formula. In Islington, the rate is £9.40 per hour. Will money be taken from other boroughs to pay for the childcare there? Obviously, an amount less than £4.50 an hour will not be enough to pay for it. These are not my figures.

[Nicky Morgan]

I suggest that the hon. Lady look at the review, which is being published as I speak. The figure of £9 an hour is not one that we recognise. No such case has been made to us in the course of the review. As I have just set out, the average rate is going to go up to £4.88 for three and four-year-olds, and to £5.39 for two-year-olds. We are confident, based on the evidence we have gathered, that that increase will provide high-quality childcare for children in Islington and elsewhere in the country.

[Emily Thornberry]

rose—

[Nicky Morgan]

Let me just answer the hon. Lady’s other question. She asked about the funding formula review. That is about making sure that as much money as possible goes to the frontline. I hope she has also had a conversation with Islington council. The duty is on me, under this Bill, to procure the places, but the local authority’s role is to provide a sufficient number of places for families needing childcare and it must pass on as much of the money as it possibly can—we have already talked about top-slicing—so that the front-line providers get the money that the taxpayer is providing.

[Emily Thornberry]

As I understand it, the figure of £9.50 that I quoted was provided by the Daycare Trust. The Secretary of State really ought to be aware that there are boroughs, particularly in inner London, where the price of childcare is much more than £4.50 an hour. We simply will not be able to afford to provide childcare for the amount that is being announced today.

--- Later in debate ---

[Nicky Morgan]

The Bill is going to enter Committee and I am sure that there will be debates on this, but the evidence-based review we are publishing today does not support the figure the hon. Lady mentions. She might be talking about the additional rate that some providers will charge, but we are talking about the free entitlement and about the hundreds of millions of pounds of hard-earned taxpayers’ money that this Government are going to spend to ensure that working families get the support for childcare that they need.

[Michelle Donelan (Chippenham) (Con)]

The subject of councils siphoning off a bit of the money has been mentioned. That happens in Wiltshire, and I welcome my right hon. Friend’s intention to try to stop it. What measures will be put in place to achieve that, so that people in Wiltshire will get just as much as everyone else?

[Nicky Morgan]

Part of the reason for having the funding formula review, which is part of the wider review of school funding, is to ensure that we talk to the local authorities, and the other bodies that receive the money, to find the best ways of doing this. In my opinion, that should involve maximum transparency so that people know how much money is being given by the Government, how much the local authority is receiving and how much is being passed on. That would enable the childcare-providing businesses and the families who were potentially going to be paying additional costs to know exactly how much money was not making it through to the frontline. We need to have that review and ensure that we get contributions from across the country.

[Julian Sturdy]

Is this new money going to be ring-fenced? I am a bit uncertain about that. I had assumed that it would be ring-fenced specifically so that it could go to nursery providers.

[Nicky Morgan]

The money for childcare providers is paid to local authorities as part of something called the dedicated school grant, and it is obviously paid for the provision of childcare. This goes back to the point I have just made about transparency. We need to know exactly how much of it is being spent and how much is reaching the frontline. In this case we are talking about childcare providers, but this also applies to the other money that local authorities receive for their education budgets.

Let me turn to the funding review clause, which was added to the Bill in the other place. Now that we have carried out a substantial funding review and acted on its findings, we want to get on with implementing free entitlement. However, the first clause in the Bill, which aims to establish an independent funding review before the Bill comes into force, will put early implementation at risk. Despite claiming to be on the side of working parents, Labour peers were willing deliberately to delay these important measures by asking for a further funding review.

I appreciate that the hon. Member for Manchester Central and other Opposition Members might be feeling a little embarrassed as the Chancellor has comprehensively debunked all their scaremongering and doom-mongering of recent weeks about education funding. She now has the opportunity to redeem herself by backing the Bill and helping us to overturn the amendments that seek to delay the implementation of the extended entitlement. If she does not, then I do not think working parents will look kindly on her attempts to delay their access to more free childcare.

The Government deliver on their promises, so the Bill intentionally places the duty to secure 30 hours of free childcare on the Secretary of State. Local authorities are very successful in delivering the first 15 hours of free early education for all three and four-year-olds, with a take-up rate of 96%. The Bill places the duty to secure free childcare on the Secretary of State, but I will discharge it through English local authorities, which are best placed to ensure that working parents are able to access their free entitlement.

The Government are committed to working with local authorities as we develop the delivery of the programme now, through the early implementer stage from September 2016, and beyond that into full roll-out of the system from September 2017. We have been working closely with the Local Government Association and I would like to thank it for the work it has done with us and for its co-operation. About 1,800 local authorities and providers have already come forward to register their interest in taking part in the early implementer pilots. There are huge opportunities through the early implementers to test capacity, flexibility and innovation, and to make sure that all eligible children, including those with special educational needs, are able to access the 30 hours offer.

As part of early implementation, we particularly want to encourage innovative approaches to providing flexible childcare for working parents whose children are disabled. I am clear that early years providers should be able to meet the needs of all children in their care. In the previous Parliament, the Children and Families Act 2014 delivered the most significant reforms to the special educational needs and disability system for 30 years, putting early identification and integration at its heart. We are committed to continuing to make a real difference for families through inclusive early years provision.

We also want to encourage providers to offer the free hours at the times of day that will help working parents with their busy lives and offer flexibility to those working outside of nine-to-five. That means delivering flexible, full-day childcare, which is the type that parents often need. The Government recognise that the need for childcare does not end when a child starts school. That is why we are also going to give more working parents something the best schools already do. We will give parents of school-aged children the right to request childcare in the form of breakfast and after-school clubs or holiday care at their child’s school.

[Jess Phillips (Birmingham, Yardley) (Lab)]

I welcome the news about before and after-school clubs. Will the Secretary of State guarantee that parents will be able to access those places? I recently lost all breakfast facilities for both my children and was offered only one morning a week on two separate mornings for each of my children, which is absolutely no use to me. Will she guarantee that parents like me will be able to get that?

--- Later in debate ---

[Nicky Morgan]

The hon. Lady sets out precisely the problem we are trying to solve. She and other parents at her children’s school would be able to contact the governing body and request that. I will publish more details shortly. There is a real need for schools to make their facilities available for the schools or others to provide both before and after-school clubs and activities. That would extend to having provision during school holidays, which are another time when it is very difficult for working parents to juggle their parental responsibilities while keeping employers happy.

I talked about tax-free childcare. I do not know the ages of the hon. Lady’s children, but up to the age of 12 she will be able to pay money into the account. The Government would top that up, up to £2,000 a year. She could also then use that for provision. In my experience, when schools and others realise there is parental demand they want to respond to it.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

I am delighted to see that the Government are trying to implement more Labour policy. The Secretary of State talks about the provisions that schools can make, so will she confirm that she has allowed the Chancellor to deliver a £600 million cut to the academies budget, through the education services grant?

[Nicky Morgan]

First, the hon. Gentleman should be pleased the Conservative party is on the side of working people, as he will know that his own Front-Bench team are not at the moment—if he would like to join us, he would be very welcome. Secondly, when he was shadow Education Secretary at the general election, his party did not commit to increasing the funding for early years in the way we have done. We can, of course, have a wider debate about the schools budget, but that is not the subject for debate today. I just point out to him that not only have we committed to protecting the schools budget in real terms, but by the end of this Parliament the Department for Education’s resource budget will be higher than it was at the start. His policies would never have delivered that.

[Emily Thornberry]

rose—

[Nicky Morgan]

I will give way to the hon. Lady, for the last time.

[Emily Thornberry]

I have a number of questions, but I will just stick to the money. When Labour was promising 25 hours a week in term-time only, as opposed to 30 hours a week in term-time only, the Minister at the time told us it would cost £1.6 billion. Is not the Secretary of State’s problem that she is missing £1 billion? That is why she cannot cover childcare at its real cost.

[Nicky Morgan]

Yet again, I do not agree with the hon. Lady’s figures. The point is that she is missing the additional help we also giving to families through tax-free childcare and through universal credit, which net each other off. She needs to look at the funding review rate that has been published today, where she will see the response from those who are working in the sector regarding the rate they have been asking for and the reason the figures have been arrived at today. I have just mentioned them and they are an increase. She should also take note that we are going to be spending £1 billion more on childcare every year in the course of this Parliament. If she wants to be a member of the Committee, I am sure that she would be very welcome and that her Whips will ask her to do that.

Let me turn to eligibility for this childcare package. One of the key messages from parents during the consultation was a desire for a simpler system. We confirmed in the other place that eligibility for the 30-hour entitlement will align with tax-free childcare. As the Chancellor set out, parents will be able to access the 30-hour entitlement if they each work at least the equivalent of 16 hours per week at the national living wage—or national minimum wage for those aged under 25—including those who are self-employed. In the case of lone-parent households, the same threshold will apply. This makes it a significant offer of additional support and means that anyone earning more than £107 a week, at this year’s minimum wage rate, will be eligible.

As many parents and children will be able to benefit from both the extended entitlement and tax-free childcare, it makes sense that parents will be able to apply for both schemes through a joint online application being developed by Her Majesty’s Revenue and Customs. This will provide a simple and straightforward way to access both schemes, saving parents and providers valuable time. The Government recognise that families are complex and that different circumstances need to be taken into account, so the additional free hours will be available where both parents are employed but one or both parents are temporarily away from the workplace—for example, on maternity or adoption leave. That will ensure continuity and will limit disruption for young children and providers. The additional free hours will also be available where one parent is employed but the other has substantial caring responsibilities or where one parent is disabled.

We are making a significant commitment to investing in the early years, but doing so at a time when we are facing difficult decisions across all spending areas. At the centre of these difficult decisions has been the belief that it is right for those with the broadest shoulders to bear the greatest burden. We therefore intend to introduce an income cap, whereby parents who earn more than £100,000 per annum will not be able to access the additional entitlement.

We want to support parents to make informed choices about what is right for them and their children. To do so, it is vital that parents have easy access to information about the childcare available in their area, including hours offered and cost, as well as suitability for disabled children. That is why, through the Bill, we have introduced a requirement on local authorities to publish information and advice for parents on childcare in their area. The childcare.co.uk digital app, which now allows parents to search for free childcare for two, three and four-year-olds based on where and when they need it, will make it even easier for parents to find out about high quality and flexible childcare places. That will mean that parents can access the information they need to find the childcare that is right for their child and that suits their family’s circumstances.

The message and the measures in this Bill are clear: the Conservative party is the party of working people and this Government are on the side of working parents. Through the passage of this Bill, we will fulfil our manifesto pledge to do more to help ease the pressure on many working families by supporting them with the costs of childcare. We are pushing forward with this legislation to get families that support as quickly as possible and it should be supported from all parts of the Chamber.

I look forward to hearing Members’ contributions, and I hope that the principles behind the Bill are ones that everyone in the House will support. The Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah), who is responsible for childcare and education and I look forward to working with all Members on this Bill.