Childcare Vouchers

Emma Little Pengelly Excerpts

Monday 15th January 2018 Westminster Hall

[Emma Little Pengelly (Belfast South) (DUP)]

I welcome this debate. I will speak from a Northern Ireland perspective and contribute to it in that regard, but many of the issues are relevant across the United Kingdom.

In Northern Ireland, as across the rest of the UK, childcare costs are one of the most significant challenges faced by young and working families. Affordable childcare comes up time and time again when I talk to parents, when I rap on the doors and when I listen to constituents, because of the significant burden that it puts on young families and working parents.

I worked as a policy adviser to the First Minister of Northern Ireland for around 10 years and had the privilege to have policy responsibility for childcare and affordable childcare. I have sympathy with the Treasury and others who have worked on this problem because it is very difficult to find solutions. One of the issues that came across very strongly in the Office of the First Minister and Deputy First Minster was that the complexity of the problem is partly because of the different variables of the families who need childcare within the overall cohort. There is no one solution that fits all, which is critical when it comes to childcare vouchers.

From that work and from listening to parents, I am absolutely convinced that we need a comprehensive and holistic range of solutions to address the market challenges faced by parents. The reality is that families requiring childcare come in so many different varieties—I will touch on just some of those different types of families and how they are impacted. The variety of incomes and situations has been outlined well—single-parent families, families with two parents working, unemployed families and families with one parent working—so I do not want to go into too much detail. However, I will touch on the range of different families and the challenges that they face. I will do so because I believe that, dependent on the variables, there are good policy reasons why there needs to be a set of tailored solutions for all of those groups and not just for one or two of the groups within the overall cohort.

I am strongly convinced that there needs to be not just a Northern Ireland solution or a Scottish solution or an English solution. We need a United Kingdom solution that provides affordable, good-quality and accessible childcare for all families.

I preface my comments by agreeing with those already made. The childcare vouchers system was not a perfect system—I know that from looking at it from a Government Department perspective and from listening to parents—but flaws within a process can be addressed. The existence of such flaws is not a good reason to throw out the scheme and impact detrimentally on a significant number of parents, including in my own constituency of Belfast South, where well over 200 parents have signed the petition that is the basis of the debate.

Low-income working families—single-income families or families with two very low incomes—is very much the group at which tax-free childcare was targeted. Undoubtedly, that group requires the most support and help in terms of a Government intervention—hon. Members from all parties would agree with that. We need to keep those low-income families in work, and also to keep them progressing and advancing so that they move out of being a low-income family and in to being a middle-income family.

There is no doubt that childcare is a significant barrier for those low-income families. It is not just a barrier in terms of the normal nine to five. Again, I know that we will all be aware of this, but many of those low-income families work in shift-work, work at night and work at weekends, whether they are nurses, care assistants or working in Tesco or other stores. It can be even more challenging for them to find childcare that is flexible, accessible and affordable outside what would be termed normal working hours. We want and need to support those families, which, for me, are a priority group.

I commend the efforts that have been made to look at tax-free childcare, acknowledging the complexity of the childcare voucher system and how it depended on employers. I welcome how the new initiative has been framed to target and support those parents. However, that some parents might lose their eligibility for tax credits or universal credit if they claim tax-free childcare seems, to many, absolutely bizarre—it makes little or no sense. It is not clear whether there is a flaw in the system, but an urgent examination is needed. I suggest that the scheduled closure of the childcare voucher scheme be delayed to enable all the issues to be identified and considered in detail.

The second group is unemployed parents or those on very low incomes. When looking at the policy area of affordable childcare, it did not strike me that that group required childcare, but when I went out to speak to parents—to groups working within communities—they made it clear that the lack of affordable childcare was a barrier to getting qualifications, doing apprenticeships, and accessing and fully participating in the range of back-to-work and into-work schemes they need to get on to the first step of being a working family. In particular, it was a significant barrier for women in their late teens and early 20s who were single parents. I give huge credit to the many groups across Belfast and Northern Ireland—and, I am sure, across the United Kingdom—that have found creative ways to support those women by partnering them up with settings that can provide affordable childcare.

The second issue that became very clear when talking to people in this cohort—families facing challenges, teenage parents, and unemployed parents, with perhaps transgenerational unemployment—was the huge benefit to child development of a good-quality childcare setting. I am passionate about tackling educational under- achievement, and what has struck me starkly in my work in that area is that, if a child is a certain percentage behind at the age of three or four, that continues to be the case right through primary school and post-primary, unless there is significant intervention. Early intervention is critical, and a huge amount of evidence shows that a good-quality childcare setting is absolutely instrumental in supporting a child’s development. It is an invest-to-save policy: we are investing in early education, which will hopefully prevent the need for significant educational intervention at a later stage. There is no doubt that the affordability of childcare comes into play when a parent is motivated to seek work. We need to ask how we can remove the barrier of childcare. Looking at affordability and accessibility is critical. It is also important to offer that cohort of families support and a solution within a holistic childcare setting.

I thank Employers for Childcare, which has been a huge support right from when I started working on childcare policy, feeding through data and information to parents and encouraging knowledge about childcare vouchers and other initiatives. It has supported huge numbers of families in Northern Ireland to take up childcare vouchers in a flawed system that was very complicated for parents. It has also encouraged employers to offer the scheme to their employees.

Finally, the group I believe is most affected by the proposed scheme closure is what would be termed the middle-income families. We know, as do I from talking to families in my constituency, that those families often feel the pressures and the squeeze, particularly if they have two or three children requiring childcare. Childcare is a huge cost for families who are struggling to pay their mortgages and are fearful about what will happen, with bills going up. They pay a huge range of bills and are under a lot of pressure.

A big issue here is keeping women in the workplace. Unfortunately, all the evidence indicates that it is still very much the case that, when it comes to caring responsibilities, it is much more likely the woman who decides to opt out of the workplace to look after children. When we looked at the research in Northern Ireland, those women were third-level educated with good qualifications—perhaps working as teachers or in other professions. The Government had invested right across the United Kingdom in that third-level education, and yet women were having to make a choice. They said to me: “I’m simply working to pay the childminder, to pay for childcare. There’s such a small margin that it’s not worth my while, so I’ll opt out of the workforce to look after the children”. We need to avoid that, for a number of reasons. As has been indicated, to grow our economy and productivity we need to keep those strong, intelligent, capable women in our workforce, and contributing to our economy. There has been investment in third-level education, and losing those women from the workforce is detrimental to the economy.

The second issue is gender equal pay. When we looked into that, it came out that caring responsibilities affect women’s decision to go to part-time work because of childcare costs or to opt out of their employment setting in their 20s and 30s, before coming back in their late 30s and early 40s. They miss a significant amount of time, during which their male colleagues get promotions and apply for managerial positions. In highly skilled and professional posts, that is a huge factor in the gender pay gap. We want, and I think we need, women to stay within the workforce, build their careers and apply for managerial and board positions as appropriate, as opposed to losing at least five if not 10 or more years of their working lives. The third issue is that a significant percentage of women who come back into the workplace decide to come in part time, and we know that part-time work is a significant factor in the gender pay gap.

In summary, middle-income families, for a range of reasons, are squeezed and are under huge pressure and we need to look at solutions for them. There is an agreement that there is a market dysfunctionality in relation to finding both affordable and flexible childcare, and that is an important issue in equal gender participation in the workforce and in the roll-out of tax-free childcare. It has become apparent that a number of families—not particularly high-income families—will be worse off, and issues need to be addressed regarding the targeting of the roll-out for that group.

Those two fundamental issues should at least give the Government something to think about in relation to pushing back the proposed closure to allow for a full inquiry—I understand an inquiry is taking place—and to have conversations and discussions about how we introduce a truly holistic and comprehensive childcare strategy that deals with all the variables and component parts, in order to grow our economy and support all our hardworking families across the United Kingdom.

--- Later in debate ---

[John Glen]

The hon. Gentleman makes a characteristically sensible point, and I am happy to look into the matter and write to him. I do not have a detailed answer that I am happy to give him now.

[Emma Little Pengelly]

Although I welcome the fact that female participation in the workforce is at record high levels of about 70%, male participation in the same age cohort is about 79% to 80%—a significant gap. The Minister has outlined the targeting of measures at those most in need, but has the Treasury given consideration to the productivity gap between males and females? Research has indicated that a significant percentage of women, when asked about participation, give caring for children in the home as the primary reason, but there is a significant economic impact. That policy agenda should also be targeted by a childcare policy.

[John Glen]

As a former policy person, I acknowledge the detail of the hon. Lady’s analysis, and that there is more work to be done. I shall take that back to the Treasury as we try to address all dimensions of the productivity challenge.

The Government think it is right that we replace childcare vouchers with tax-free childcare from April 2018. However, I would like to reassure any parent who is currently receiving vouchers but is not eligible for tax-free childcare that there will be no automatic withdrawal of the voucher scheme. If they currently receive vouchers and their employer continues to provide them, they can continue to receive vouchers as long as they stay with that employer.