Childcare Payments Bill

Baroness Ritchie of Downpatrick Excerpts

Monday 17th November 2014 Commons Chamber

[Priti Patel]

I re-emphasise a point I have made consistently throughout the passage of the Bill: the Government’s overall system of child care remains focused on those who are on lower incomes. We are concentrating on supporting families getting into work and ensuring, as we have touched on in previous debates, not only that work pays, but that child care support remains focused on those on lower incomes.

Living standards—the cash in people’s pockets and what they can buy with it—are perhaps the biggest issue facing British families. The tough decisions we have taken as a Government have a very clear end in mind, which is to help create prosperity and boost living standards. Alongside that, we want to make sure that the Government have the right measures to support working families and households and to ensure that work pays.

Since coming to power, this Government have taken decisive action to ease the pressure on households and families. We are providing free school meals for all infant school pupils in reception year and in years 1 and 2. We have increased the personal allowance to £10,000 and in April 2015 it will increase to £10,500. During the course of this Parliament, we have cut the income tax of the typical taxpayer by £805, taking more than 3.2 million individuals out of income tax by 2015-16 and boosting the take-home pay of 25 million people.

Additional measures on living standards include freezing council tax in real terms and cutting the cost of driving by freezing fuel duty until the end of this Parliament, saving a typical motorist £680. We recently announced that the cost of driving licences will also be cut. Ultimately, however, as every family knows, the best way to raise living standards is by being in work, and we are pulling out all the stops to help those who want to work get into work by making work pay and introducing this Bill, which provides important financial measures to support child care.

I thank all Members for the opportunity to debate all the issues associated with child poverty as the Bill has passed through the House. Child poverty is an extremely important issue and this Government are fully committed to the goal of ending child poverty in the UK by the end of 2020.

[Ms Margaret Ritchie (South Down) (SDLP)]

As my hon. Friend the Member for Foyle (Mark Durkan) said on Report, the Northern Ireland Assembly has already debated the legislative consent motion, which will enable enactment of the legislation in Northern Ireland. Does the Minister accept that there are fewer opportunities to access child care in Northern Ireland and fewer job opportunities? Will she consider allowing the other place to debate the extension of the child care voucher scheme so that it can remain in place while the measures are being implemented and both the scheme and the Bill can run concurrently?

[Priti Patel]

I will come on to Northern Ireland in a moment, because I want to finish addressing child poverty. Our child poverty strategy 2014-17, which was published in June, outlines our plans to tackle the root causes of child poverty, including parents being out of work, low earnings and educational failure. That approach reflects the reality of child poverty today and, importantly, reflects our determination to achieve lasting change to protect the poorest in our society.

The evidence is clear that work remains the best route out of poverty, and children are three times as likely to be in poverty if they live in a workless family. That is why we are taking decisive action to make work pay and reform the welfare system. We have touched on universal credit, the child care support we are providing and increasing the national minimum wage.

This is a complex, multifaceted problem, and it would be wrong to suggest that there is a silver bullet. We have made good progress, but there is more to do in tackling child poverty. The Bill will support this Government’s efforts to tackle the root causes of one of our greatest social ills.

I am grateful to all those who have participated in the debates on the Bill. I welcome the support from both sides of the House for this important new scheme, which marks such an improvement on the current support available to parents. I am particularly delighted that the Northern Ireland Assembly recently voted in favour of a legislative consent motion to enable the scheme to be available to families in Northern Ireland in the same way as it will be to families elsewhere in the UK. That was entirely a matter for the Assembly, which has given the scheme a positive vote of confidence.

I understand that the Offices of the First Minister and of the Deputy First Minister will consider the impact of the scheme and its interaction with other initiatives in the context of wider work on the development of their own child care strategy, so it would be inappropriate for me to make further comment on those devolved matters. Obviously, that is work in progress.

During all stages of the Bill, we have consulted widely on the design of the scheme over the past year. We have listened to feedback from parents, employers, the child care industry and all stakeholders.

Following those discussions, we are already making several changes. We are rolling the scheme out to families more quickly. Within a year of its introduction, all families will be able to apply for support, which is significantly faster than the previously announced timetable for the roll-out, of seven years. There is a more generous cap so that families can receive up to £2,000 of Government support per child. We are making the scheme available throughout periods of paid and unpaid parental leave, and we are making changes to the minimum income level to support those in self-employment. We are extending to 14 days the time during which parents can access the scheme before starting work. I have committed to looking at the cap with reference to the costs of caring for disabled children.

The scheme will not only deliver valued support to hard-working families, but it will do so in a way that works for parents. It will be a smooth, simple and secure scheme. From the outset, it has been designed to have parents at its heart. Rather than requiring parents to report changes of circumstances in real time, the scheme will be based on quarterly entitlement periods. That will give parents the certainty that they will continue to be eligible for support for three months at a time, regardless of any unexpected changes in their circumstances. For parents to reconfirm for the next quarter will simply take a few clicks through the system that we are designing and setting up. Those are just some of the ways in which we have engaged with stakeholders and, importantly, learned lessons from the experience of tax credits. Our ambition is for the new scheme to represent a real step change in user experience.

The scheme will be a vast improvement on the current employer-supported child care scheme, which provides support to a limited number of employees. As well as being available much more widely, it will be better targeted, make payments on a fairer basis—on the number of children, rather than the number of adults—and will be much more efficient. That is why we will close the current scheme to new entrants when the scheme is introduced, although those who already receive support under it can stay in it, if they so choose, for as long as they wish.

As a result of the Bill, more working families than ever will be eligible for Government support with their child care costs. Our proposals have been welcomed by families and child care providers around the country. The Bill represents an important part of the Government’s strategy to get people into work, and I commend it to the House.

[Catherine McKinnell]

Any new investment in child care—particularly support for struggling families up and down the country who are battling to juggle their work and family lives—is clearly welcome. The Bill is therefore important, but it is long overdue for thousands of parents.

Fundamentally, we remain concerned that the Bill will simply not address the situation in which too many parents have been left. The evidence is now overwhelming. The cumulative changes to tax and benefits over the Government’s time in office have hit families hardest, as is clearly shown by new research published today. From our analysis of official statistics, we know that some families in which both parents are in work will be £2,000 a year worse off on average by the next election as a direct result of the Government’s tax and benefits choices. Researchers from the London School of Economics and the university of Essex have released findings showing that the clear losers under the Government are lone-parent families, large families and children.

This summer, the Prime Minister announced that all Government policies have to pass a families test. It is interesting that that is his aspiration only now, because it is abundantly clear that the Government have completely failed the families test to date. We share the widely expressed concern that the Bill will not go anywhere like far enough to make up the shortfall that families face, partly because of the tax and benefits changes, but also because of soaring child care costs.

Aside from that central issue, we have several other concerns. We are worried that parents will be left exposed to inflated child care prices, as my hon. Friend the Member for Wirral South (Alison McGovern) clearly set out in her speech on new clause 2. The Government have only one chance to get the hugely important IT infrastructure right, but crucially there is huge concern that parents might face a nightmare of complexity and confusion if the Government fail to provide adequate support and information to help them to make informed choices and to navigate between the schemes for universal credit and for the top-up payments.

Welcome though the support is, for far too many parents it will be far too little, far too late. I hope that the Minister has taken on board the concerns we raised throughout the proceedings in Committee and on Report, whether on some of the more technical aspects of the Bill’s operation or on the more fundamental issues.

[Ms Ritchie]

My hon. Friend is making some compelling points. Is she aware of research by the Resolution Foundation that found that 80% of the families who will benefit from the top-up payments available through the tax-free child care scheme are in the top 40% of the income distribution scale, and that the remaining 20% will go to families in the middle of it? How will the scheme help those on low incomes, lone parents and those with large families?

[Catherine McKinnell]

My hon. Friend has herself made the point very powerfully. I was concerned when the Minister spoke at length about child poverty because the Bill will do very little to deal with such issues, and we know that such figures will only increase. Levels of child poverty have increased significantly under this Government, as the facts and evidence prove.

Although we should focus on what the Bill will achieve—it will provide support in meeting demand for some payments for child care—my hon. Friend clearly sets out which parents will benefit most from the support. However, even those parents are concerned that the scheme might unduly complicate their lives. It might be burdensome for parents to navigate it, particularly those at the lower end of the income scale who have to navigate between a reduction in universal credit support and a movement into the top-up payments scheme, where potentially disastrous child care support pitfalls await them. We discussed that at length in Committee and we have put our concerns on the record. Other Opposition Members and I very much hope that the Minister has taken all such concerns on board and can deliver on the reassurances that she has given.

Let me take this last opportunity to urge the Government to recognise the value to parents not only of this support with child care costs, but of the extension of the free entitlement to three and four-year-olds. Quite simply, that would ensure that working parents are better off. It would help more parents to get back into work or to work more hours, and it would help to bring home more pay for the hours they work. We know that so many parents are desperate for such support. It would be simple and effective, and it would not place any more burdens on parents than those they already face. It would not add any more complexity to a child care market that is already hugely complicated.

Parents have struggled for four years under this Government with a child care crunch of rising prices alongside stagnant wages. Although we will support the Bill tonight, I urge the Minister to ensure that she, her officials and her partners who deliver the scheme fulfil the promises that have been made during its passage in Committee so that parents can receive this much-needed support.

I look forward to the arrival, in 2015, of a Labour Government who will ensure that parents receive not only the support provided in the Bill, but an additional 10 hours of free child care for three and four-year-olds. That will deal with many of the supply-side and price inflation concerns, and it will also provide child care support for the parents who will not benefit at all from the scheme.