Child Care (London)

Debate between Lucy Powell and Karen Buck

Wednesday 19th March 2014 Westminster Hall

[Lucy Powell (Manchester Central) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Lewisham East (Heidi Alexander) on securing this important debate and on its timely nature. It is slightly humbling to have such a wealth of experience on these matters on the Benches behind me. I cannot possibly make a contribution on this important topic that will match those made by so many hon. Members over the years, but I will attempt to do so in my winding-up remarks.

The issues facing families in London are the exacerbated version of what families around the country face. Child care costs in London, as we have heard, are much greater than in the rest of the country. For example, a full-time under-twos’ place in London is on average £2,500 a year more expensive than it is in the rest of the UK. We have also heard that the supply of places in London is much more difficult than in the rest of the country. London has the lowest take-up of child care in the country. Given the extent of the growing economy in London, and the vibrant economy that we have always had here, it surprises me that take-up of child care should be that much lower here.

That has a direct impact on London’s maternal employment rates, which I was surprised to see are the lowest in the UK—there is a big gap in the rates—especially given the number of lone parents and other factors in London. That low rate has an impact on individuals, who are not able to fulfil their lives or provide for their families as they would like, and on the London economy, because so many women are out of the labour market. That has an immediate effect on gender pay gaps. It is shameful, or should be, that last year the gender pay gap increased for the first time in 15 years. Women suffer the pay and status penalty for taking time out from work. That should drive us all forward continuously to address fundamental issues to do with child care costs and provision, especially here in London.

The issues are not new. I will not lay all this at the door of the Government. These are long-standing problems that we have tried to address over many years. We have to recognise, however, that some of them have got more difficult over the past few years than they needed to, or than they were. If I may, I will use some of my time simply to ask the Minister questions about Government policy, since we have the opportunity to do so.

Many Members have talked about the two-year-olds offer and its impact, but the take-up of the offer in London is the worst in the country—only 51% of eligible children take up the offer, compared with 75% of eligible children in the country as a whole. What is the Minister doing about that? She has earmarked some new money— £8 million was announced last year—but what will it be used for, and how does she envisage that that will increase places and capacity in the system? Does she feel that the money is enough?

We heard about some unintended consequences of the two-year-olds offer from the hon. Member for Enfield North (Nick de Bois). We strongly feel that provision and planning of nursery and early years places should be decided locally, and put in place in the context of a longer-term strategy. His Government made a mistake in taking those responsibilities away from local authorities.

The new scheme was announced a year ago, but was revitalised yesterday and in today’s Budget. As others have said, Labour Members welcome any new money or investment in child care, because families are desperate for that help, but we must see this in context. On average, families have lost more than £1,500 a year in child care support over the term of the Government, through loss of tax credits and child benefit. Over the same period, nursery and child care costs have gone up by 30%. Taking those two figures together, families are more than £2,000 a year worse off when it comes to meeting their child care costs than they were in 2010. The scheme and the money are welcome, but they will only get parents back to where they were in 2010.

The issue raised by my right hon. Friend the Member for Dulwich and West Norwood (Dame Tessa Jowell) about the Australian model is critical. Will the Minister tell us today what assessment she or her colleagues in the Treasury or other Departments have made of the scheme and whether it will affect price inflation? Will parents feel the benefit of the scheme in the amount that they have to pay?

It would also be fairer of the Government to be absolutely clear about who will benefit from the full amount of the scheme. An average parent tuning in and out of yesterday’s news coverage might be forgiven for thinking that they were going to get £2,000 a year per child for help with child care costs. In fact, the figure is nothing like that. The Government have allocated £750 million a year to the scheme; they say that 1.9 million families will benefit, although in the small print they estimate that the figure will be nearer 1.3 million. Whatever way we do the maths, even the Government’s own figures suggest that the average amount per family on the scheme is somewhere between £400 and £500 a year, which is a far cry from the £2,000 per child that the broadcasters and newspapers were reporting yesterday. Will the Minister confirm that there is no new money for the scheme since what was announced a year ago, which was £750 million, even though the scheme is being extended? Those are the main points that I ask her to cover today.

On the universal credit announcement, as other colleagues have said, we absolutely welcome the plugging of that major gap in the scheme. We have been calling for that for many months. We have to be realistic, however: families on tax credits have seen a huge reduction in their child care support, from 80% to 70% under this Government, and the increase to 85% will not come in until universal credit comes in. We do not even know when universal credit will come on stream for families; it could be 2017 or 2018, and families will have faced a seven or eight-year gap with significant reductions. Will the Minister tell us what steps are being taken to help those families who are struggling with their costs now? Does she recognise that it was a mistake to reduce the rate from 80% to 70% in the first place?

[Ms Buck]

We have not talked about the early intervention grant and children’s centres. On take-up and participation in the offer, certainly in my constituency, a number of parents come through the experience of children’s centres, where they learn to deal with child care, build confidence, and develop their labour market skills. The early intervention grant, however, has been cut by 49% in Westminster. The lights are on in our children’s centres, but no one is home—the tumbleweed is blowing through them, and the services have all been closed—and that is unfortunately impacting on other areas of child care.

[Lucy Powell]

My hon. Friend makes a good point, and I suggest that she tries to secure a separate debate on that issue because of its importance. We welcome yesterday’s announcement, but it needs to be set in context. A remaining real challenge for families is to face these critical issues, which have a real impact on maternal employment rates and the gender pay gap, and that is something the Government should be worried about.