Free Childcare: Costs and Benefits

Geraint Davies Excerpts

Tuesday 19th February 2019 Westminster Hall

[Darren Jones]

I declare an interest because there are two islands within my constituency—Steel Holm and Flat Holm. One of them officially belongs to Wales, so I class myself as a Bristolian and a Welsh MP. I take great pride in joining my hon. Friend in recognising the achievements of the Labour Government in Wales and I long for such achievements in Westminster too.

One issue with the Sure Start centres was that some data suggested that they were being utilised most by more middle-class families, although the policy intention was to tackle the inequality gap that I have referred to. My argument is that a fully funded childcare system, because it is considered a public service, is not seen as a nanny state or someone trying to intervene to tell people how to parent; it is just available and it is what it is. We could have a more mainstream application of early years intervention in this type of system, which would tackle some of the challenges of the past.

I return to my soapbox on maintained nursery schools, which I and my hon. Friend the Member for Bristol West (Thangam Debbonaire), and other hon. Members, have talked about frequently. We have some excellent maintained nursery schools in Bristol, which have the costs of and are regulated as schools, but which are funded as private childcare providers. Some of the Minister’s colleagues have recently responded about them in the House of Commons.

The evidence from maintained nursery schools clearly shows that putting in the intervention and assistance before mainstream school has a huge impact on bringing those children up to the average when they get to mainstream education, which helps to tackle the inequality gap. We should take that evidence seriously and apply it to our public policy, to show that it could be done not just in cities and regions that still have maintained nursery schools—they do not exist everywhere in the country—but across all the regions and nations.

On happier families, the Resolution Foundation produced an interesting report last week that looked at wellbeing markers for the happiness of families. To no one’s surprise, it concluded that being in meaningful work and having more disposable income generally makes people happier. It specifically showed that an extra £1,000 a year of disposable income can have a measurable impact on the wellbeing and happiness of someone’s family life, especially for those on the lowest incomes. To perhaps no one’s surprise, as income gets towards £100,000 a year, extra disposable income has less of an impact, but it can have an enormous impact for someone on £13,000.

Helping parents to be in work and providing fully funded childcare could have an impact on the average cost of £10,000 a year for working families [Interruption.]. One of the consequences of reading a speech from an iPad, Mr Davies, is that pressing the wrong place on the screen returns the speech to the start, rather than staying where I was speaking from. Reducing the amount of disposable income that working families spend on childcare, especially those on the lowest incomes, would have a measurable impact on their wellbeing and happiness. In many situations, parents are having to trade off between each other’s jobs, after-work arrangements, work trips, having to look after children, who does the school run and all those things. We could make a difference not only to family life planning, but to their income.

I do not have any evidence for this, and I would be interested in the Minister’s view, but surely fully funded childcare is an investment in the country. If we allow parents to work, reduce the amount of disposable income they spend on childcare, give them more money to spend on the high street or elsewhere in the market, allow them to pay taxes and VAT on the products they buy and fund properly paid childcare providers which then pay their own income tax through their workers in a fully funded childcare system, that money will not just go into a black hole, but will create a system that could help us achieve public policy priorities on gender, class, economic productivity and all the issues I have raised today. It seems an obvious thing for the Government to want to look at and reform, because it will mean something to so many people across the country, while also stimulating all those important factors.

In conclusion, it is clear that the current childcare system is too complicated, does not work and is not sustainable. When we speak to anyone involved, that is what they say. Parents are not aware which system is most relevant to them. It is very confusing. People might think they are on a better scheme with childcare vouchers, which are easily done through work, and they are being told that is coming to an end and they should consider tax-free childcare, but then the IT system does not work and they cannot calculate which scheme is better. If someone is about to be or has already been pushed on to universal credit, they are told they cannot get tax-free childcare, even though they may have been able to get childcare vouchers if they were on working tax credits. It just does not work.

As a consequence, the Treasury has been saving money. The budget allocation for tax-free childcare alone—that is just one aspect of this complicated service—went from £800 million to £37 million. The Treasury has made a saving of hundreds of millions of pounds. Where has that money gone? Why is it not being invested back into reforming childcare systems? The fact of the matter is that while the Treasury is clawing back this money and spending it on God knows what—ship companies with no ships, or whatever it might be—childcare providers are having to charge parents on top of the already expensive price of childcare, whether it is for food, activities or private hours outside of the hours provided by the system.

We see that time and again. Whether it is policing, council services or childcare, the Government cut the funding to public services and those who provide for our constituents, and then push those costs on to hard-pressed families, whether it is through increased council tax to pay for the police funding that the Government have cut or to cover their cuts to the core grants to councils, or passing on more costs to parents from the attempt to save money on childcare systems. Enough really is enough.

We should be aiming for a fully funded childcare system, with qualified and decently paid childcare professionals. It is an investment in our future. It will break down gender and class inequalities and will help foster happier and healthier families right across our country. I do not see why it is even a debate. I hope that the Minister will set out today what he will do to make it a reality.

[Geraint Davies (in the Chair)]

I will impose an advisory time limit of nine minutes.

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[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Bristol North West (Darren Jones) on bringing this issue to the Floor for consideration. I deal with this issue every week in my office, and in particular with my staff. I will give the Chamber an example of how the matter works in practice.

I have six staff, five of whom are ladies, so the issue comes through clearly. They are of differing ages, though I will not mention their names or refer to their ages, because that is something we do not do, if we want to live well. My part-time worker is in her 50s and is a grandmother. I allow her flexibility to change her days so she can mind her grandchildren and come into my office on the days or mornings that she does not have the children. That is a practical arrangement that works for her and for me—that is important.

A further two staff members in their 40s have children in the last year of schooling, so they are able to work their normal full-time hours. It is easier when children attend secondary schools and further education. I also have a staff member in her 20s who is due to marry next year, and she has informed me that I should be prepared for her maternity announcement the following year, as she wants children right away after she gets married. Again, I support her wholeheartedly in that.

My parliamentary aide is in her 30s, and has a three-year-old and a four-year-old. Her childcare arrangements are more pressing. They are all key members of staff, but she is in particular. When she returned to work after her second child, we came to a flexible working arrangement that allows her to work at home on Tuesday, Wednesday and Thursdays, when I am at Westminster.

In practice, when my aide’s kids are at nursery in the mornings, she works away for me, and when her husband gets home at 6 pm, she works on. She is my speech writer, preparing many of my speeches, so she probably has little to do—I jest, because I keep her busy. I talk the speeches over with her, but cut and add to them as I progress through the time. She is kept very busy, and her workload means that I sometimes see work coming through to me at 1 o’clock in the morning. That is a fact; it is how she does it with her flexible hours—I am very fortunate to have her working for me.

When I asked my aide about childcare, her answer was simple: “Jim, I earn too much to get help from Government but not enough to pay the £300 a week for someone else to mind the children. I am holding on for the P2s”—primary school—“when the kids are in until 3 pm, and I can then cut back on night-time hours.” That has made me ask some questions. How many young families working to pay for childcare are holding on by a thread until they get the care? How many grannies and grandas are missing out on actually relaxing in retirement because their children are not able to pay for childcare?

Too many families are over the threshold for tax credits and struggle to do it all. That was illustrated clearly by the hon. Members for Bristol North West and for Mansfield (Ben Bradley) in their contributions. Families earn too much for social housing, but not enough to be comfortable.

What we have is what I refer to as the working poor and there are a greater number of them, and every one of us could probably reflect that and illustrate that in our constituencies. I believe that if the burden of childcare was lifted, there would be benefits for the quality of life for so many families throughout the United Kingdom of Great Britain and Northern Ireland. We need more schemes such as the tax-free childcare scheme, which puts 20% of Government funding alongside someone’s 80%. The fact is that, although that is good, not many people are aware of it and I look to the Minister to give us some illustration of what can be done to improve that. There are many people who just do not know about the scheme.

Some 91,000 families made use of the new tax-free childcare system in December, which is far below the expected number. What are the Government doing to increase that number and increase awareness, because official figures show that the Government had planned and budgeted for 415,000 families? We are far off that figure, for a scheme that was launched in October 2017. It is a gentle question, but hopefully it will receive an answer. At one point, 3 million could qualify for the help, meaning that only about one in 14 eligible families had applied for it. So we really have an issue to increase that number.

When we look at countries around the world, we see that we are at the top of the league for costs, and they must come down. Just yesterday in the provincial press back home, there was an illustration of the cost of childcare per child across Northern Ireland. In my constituency of Strangford, and in mid and east Down, we have the highest levels of childcare costs anywhere in Northern Ireland. We have a middle class that is squeezed beyond control, with rising rates, rising insurance costs for their home and car, rising food prices and rising petrol prices. Everything is more money, apart from their wages, which remain the same.

It is little wonder that so many people believe that it is better not to work. We have mothers and fathers who slog it out at work, and then try to cram in time with their children in the evening hours, and stay on top of housework and mundane issues. I believe that they need help.

I will finish with this comment: childcare is one way we can help and encourage women with young children to have a career, and find a way to do it all. So I urge the Government to expand the 20% help for childcare and bring us down in the global charts, instead of our being “Top of the Pops” for all the wrong reasons.

[Geraint Davies (in the Chair)]

Thank you very much. We have still got a lot of time.

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure to serve under your chairmanship this morning, Mr Davies.

I, too, congratulate my hon. Friend the Member for Bristol North West (Darren Jones) on an excellent speech. It is a shame that he was not around a few years ago, because he could have been on the Bill Committee that considered the Childcare Act 2016. He would have been a tremendous asset at that time.

Although I would prefer to see a Labour Government delivering big on childcare, I, for one, recognise how the last Tory Government built on the legacy of the Blair-Brown Government—they most certainly did. I know that they like to pinch our policies, but I am always happy when they pinch the right ones.

I am saddened, however, that despite the Government’s policy of expanding childcare, which was progressive and actually made some progress, we are in danger of failing to land the kind of childcare provision that we want, because the implementation has fallen short. It has fallen short because the Government failed to engage properly with the sector originally. They failed to recognise the challenge they were facing in building capacity; they failed to understand the need to develop a sector that would be even more professionally led; and, despite the very welcome cash that came with the policy, they failed to recognise the need for professional staff to be paid a decent wage for looking after all our children.

I am a dad and a grandad, and my sons and grandson are the most precious of precious people to me; I am sure that there is not an MP here in Westminster Hall, or across the Estate, who does not think of their family in that way. Yet as a nation, we seem content to leave those most precious young members of our families to be looked after by people who are often on the minimum wage and discontented with their working lives. The hon. Member for Mansfield (Ben Bradley) referred to that issue in some detail, and I am sure that he agrees that we need much more action on it.

After all, childcare staff are some of the most loving and dedicated people that we have in our country. They do the job because it is their vocation. They do it despite a system that does not appreciate them for not just looking after our children, but keeping them safe. Should we really devalue them so much?

We know why we believe in childcare. It allows parents, especially mothers, to go back to work, which is important not just so that they can earn, but because it gives them the fulfilment of a challenging daily routine beyond childcare—believe you me, I know that that too can be challenging—the fulfilment of earning their own living and supporting their family, or perhaps the fulfilment of doing work that they feel passionate about.

We must ensure that parents have a choice, which the 15 or 30-hour offer provides, but we need to make sure that it is easily accessible and well resourced, and that we create happy spaces for children that result in happy parents who are content to leave them there. If the free childcare that we all like to boast of is not resourced properly, parents end up subsidising it through expensive contributions to meals and the provision of nappies and materials—even wet wipes.

Not everyone is covered, of course, and childcare can be expensive for those who are not. Some rely on family, but not everybody has family members who they can rely on or expect to take up childcare responsibilities. It is also important to recognise the specific needs of adoptive parents. If we are serious about encouraging people to foster and adopt, we must ensure that the law and regulations are favourable and provide them with an environment that supports them and enables them to do their jobs as well.

When I served on the Childcare Bill Committee—I lament the fact that my hon. Friend the Member for Bristol North West was not there—one area we looked at was the costs associated with the provision for disabled children. Parents of disabled children need an extra level of support. Often, going back to work is not an option for them, but they are in desperate need of respite care. From talking to my own local authority, Stockton-on-Tees, I know how difficult it can be to provide adequate respite services to all the families who need it. Last week, the Government passed yet more cuts to authorities, particularly across the north, which does not help to deliver on that agenda.

As other hon. Members have said, in the mainstream, we have a system of childcare vouchers and tax-free childcare. I agree with my hon. Friend the Member for Bristol North West that the new tax-free childcare system is less favourable than the voucher system we are moving away from. In a previous debate on childcare, I reminded hon. Members of what the Prime Minster said on the steps of Downing Street after she entered office:

“We will do everything we can to help anybody, whatever your background, to go as far as your talents will take you.”

Perhaps the Minister can share with us how the Government are actually helping poorer families who are in desperate need of childcare but do not currently qualify for the scheme. My hon. Friend the Member for Bristol North West referred to the Treasury Committee’s report on childcare, which found several gaps in the Government’s childcare schemes, including that one.

Access to childcare support while training is a real issue. Mothers who opt to do a nursing degree are particularly badly hit, especially with the advent of universal credit. There are women in my constituency who struggle to qualify for universal credit because, despite the fact that they work—and I believe they do work—on the wards during training, they do not accrue sufficient working hours, which has a direct knock-on effect on their entitlement to childcare. They are left to survive on child benefit and a student loan that they will have to pay back one day. We all know about the loss of the bursary scheme.

Parents aged 20 who wish to take on training can seek support only if they are on a further education course and are facing financial hardship. Childcare costs are a barrier to the participation of parents, especially young parents, in courses. Those costs actively prevent them from taking on the training that could advance their careers and give them more money to support their families.

My hon. Friend the Member for Bristol North West also mentioned the gig economy. Zero-hours contracts are notoriously inflexible, no matter how much people try to portray them as the opposite. Shifts are offered at the last minute, so staff who can drop everything to come into work at the drop of a hat are prioritised. Workers are also told at the last minute that they are not needed, so they lose out on a day’s expected pay.

There is a real risk of a parent needing last-minute childcare to be able to pick up a shift, but that flexibility does not exist in the system. Parents have to pay for childcare, but they frequently get to work and find that they are not needed, so they are shelling out money that they do not have. Not every worker knows their shift pattern two weeks or a month in advance—a bit like MPs, perhaps. Sometimes, workers are lucky to know 48 hours in advance. I am repeating myself, but we need childcare provision that matches the economy people work in.

During the Bill Committee a few years ago, Pat Glass, the then MP for North West Durham, and I challenged the then Minister time and again on building capacity, on the need for a professional-led service, on engaging with the sector and on so many other things. I know that it was not the Minister before us today, but the former Minister gave reassurances that have proved to be no more than fantasy. We were told that the market would sort it out, that there were people keen to enter the market—many did—that there were sufficient people coming through to staff the system, and that all would be well.

Sadly, that has not really happened. We have seen nurseries close, and we still see demands from parents for more and more support. We have a long way to go to ensure that we have that professional-led service. I would never do down our nurseries, which do tremendous work, but professionals should be leading that service. We need that provision to help people on the bottom rung of society who cannot get a job because they cannot get the training they need, since they do not qualify for the comprehensive childcare they need.

It is time to look again. We have a vast wealth of talent sitting dormant at home, often on social security, because our system does not recognise their need the way it should. We should concentrate resources on those people—starting with childcare, to allow them to get on with work. I also say to the Minister: please look again at the provision for people with disabled children, which remains totally inadequate. We really need action in that area.

[Geraint Davies (in the Chair)]

I call Thangam Debbonaire. I will call the first of the Front Benchers at 10.30, so you have a reasonable amount of time.

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[Thangam Debbonaire]

I applaud the Welsh Government and I look forward to seeing the impact of that, which may have lessons for the UK Government.

I believe that, like the Labour party, the UK Government want to champion people getting into work. We are the Labour party—the clue is in the name—but the Tory party also says that it wants people to be in good quality jobs and to be able to do those jobs without constantly worrying about what is going on at home or about childcare, or about not being able to make it to childcare. I have heard that as a Whip, when people I am whipping say to me that they need to leave before a vote otherwise they will not be able to pick their child up from childcare. That is manageable as a Member of Parliament—just.

I urge the Minister to answer my questions and those of other hon. Members, and to recognise the economic and social value of free childcare to the entire country.

[Geraint Davies (in the Chair)]

On behalf of the Scottish National party, in a late change, I call David Linden.