New Clause 1 — Proposals relating to three and four year olds

Childcare Payments Bill – in the House of Commons at 5:44 pm on 17 November 2014.

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‘(1) The Chancellor of the Exchequer shall within three months of this Act coming into force lay a report before the House of Commons setting out—

(a) an assessment of the benefits of top-up payments to people responsible for a child or children aged three to four years since the Act came into force; and

(b) an assessment of those benefits in addition to the likely benefits of funding 25 hours per week free childcare for working persons responsible for a child or children aged three and four.”—(Catherine McKinnell.)

Brought up, and read the First time.

R

The reference to: "funding 25 hours per week free childcare" appears to a Labour proposal to extend an existing scheme offering 15 hours per week of free early education or childcare a year for 3-4 year olds by an additional ten hours a week.

Government Scheme:
https://www.gov.uk/free-early-education

Labour proposal:
http://www.labour.org.uk/issues/detail/childcare

Submitted by Richard Taylor

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

With this it will be convenient to discuss the following:

Amendment 2 in clause 1, page 2, line 4, at end insert—

‘( ) The amount of the top-up payment is 66.66 per cent. of the amount of the qualifying payment where the qualifying child is a disabled child.”

Amendment 1 in clause 14, page 8, line 42, at end add—

‘(3) A child is a qualifying child for the purposes of the Act until the last day of the week in which falls on the 1 September following the child’s eleventh birthday (or eighteenth birthday in the case of a disabled child).”

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

New clause 1 stands in my name and that of my hon. Friend Alison McGovern, whom I wish to congratulate on her new role. It calls on the Government to consider the necessary help that hundreds of thousands of parents of three to four-year-olds need now to cover the ever-rising costs of child care.

Before I elaborate on the new clause further, I wish to reiterate a point that the Opposition have stressed throughout proceedings on the Bill. We welcome any new investment in child care and, in particular, any extra support for hard-pressed parents and families up and down the country who are struggling to juggle work and family life. It is worth remembering because, after all, we are the party which, in government, pioneered investment in early years. The principle that every child matters was at the centre of the Labour Government’s work across all Departments. We are the party that, in government, made no apology for focusing our efforts on, and redirecting any available support to, the children and families who needed our help the most. We are the party that, in government, made it its business to tackle disadvantage and to improve the life chances of every single child from the earliest possible age to give them the best possible start in life.

Photo of Andy Sawford Andy Sawford Shadow Minister (Communities and Local Government)

I agree with the case my hon. Friend is making. Does she share my concern about the closure across the country of Sure Start centres, which were a key part of that commitment to support children and families, including the Raunds Sure Start centre in my constituency, which the Tory county council is now going to close?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

My hon. Friend makes a very valuable point and I was just about to come to that. We are the party of Sure Start and the thousands of Sure Start centres that existed in 2010. It is not specifically relevant to this debate, but we could not allow it to pass without mentioning the very deep concern up and down the country about the future of our Sure Start centres.

There are concerns, which were made abundantly clear by a number of witnesses in Committee last month, that the Bill does not go anywhere near far enough to provide the support that thousands of parents and families desperately need right now. They need that support now, not in 12 months’ time, which is why we tabled new clause 1. Based on the Family and Childcare Trust’s annual survey, we know that child care costs have risen five times faster than wages since 2010, at a time when wages have lagged behind prices, leaving people £1,600 a year worse off on average. This support is even more vital when we see how much parents have lost out as a result of the Government’s choices: the decisions to cut tax credits, child benefit and maternity pay, and to close thousands of Sure Start centres.

As we saw and read in the news yesterday, research from the London School of Economics and the Institute for Social and Economic Research at the university of Essex shows clearly how the burden of austerity under this Government has fallen most heavily on those with lower incomes. The research found that the Government’s tax and benefit changes have seen the poorest lose about 3% of their incomes, while the richest half of the country have actually seen their incomes increase by 1% to 2%. That blows away the Government’s claims from the start that we are somehow all in this together. The research highlighted the fact that families with children have fared worst of all, which confirms our worst fears. Single parent families, in particular, have lost far more through cuts to tax credits and other support than they may have gained through any tax changes, proving that the Government have given with one hand but taken away far more with the other—so much for being the most family-friendly country. Families have lost out on up to £1,500 a year due to changes to tax credits alone. Tax credits are a vital part of income for many working parents, especially those on the most modest incomes.

When we look at all the tax and benefit changes since 2010, including the Government’s much lauded and touted personal allowance increases, we see that families have clearly been hit hardest of all, and that will remain the case right up to the general election. A family with both parents in work will be about £2,073 a year worse off and a family with a single parent in work will be about £1,300 a year worse off. Despite the Conservatives’ claim of creating the most family-friendly country and the Liberal Democrats’ supposed belief that families should get the support they need to thrive, the Government have not been family friendly and they have not stepped in to provide families with the help they so desperately need to get to grips with the soaring costs of child care.

Far from stepping in, they have pulled the rug from under the feet of many families. Any extra help for parents struggling with the cost of child care is clearly to be welcomed. However, not only is the Bill too little too late for hundreds of thousands of families, we are disappointed that the Government have so far refused to consider that additional support could be offered to families right now. That is why we have tabled new clause 1.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Does my hon. Friend agree that we can see the Government’s attitude to child care with their closure of more than 400 Sure Start centres?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Up and down the country, there is deep concern about the disappearing Sure Start services. We know that the worst is yet to come when we look at the dire straits in which many local authorities find themselves and the difficult decisions that many are having to make about their Sure Start services. My hon. Friend makes a very good point: that does sum up the Government’s attitude to support for children and families. They simply wash their hands of the issue whenever it is raised in this House.

We tabled new clause 1 because we want to compel the Government to explore the effectiveness of extending the free entitlement for three and four-year-olds when both parents are in work. The first part of new clause 1 seeks to understand what support the current proposals will provide to the parents who need it most. The free entitlement introduced under the Labour Government, which happily has been continued under this Government, makes a real difference to hard-pressed families. The simple truth is that, months after the Bill was first published and introduced, we are still none the wiser about exactly how many parents will be better off as a result of the top-up payments, or, crucially, by how much.

That stands in marked contrast to our plans to extend the free entitlement for three and four-year-olds, which will be worth £40 a week, or £1,500 a year, to about half a million children. We know from the Government’s impact assessment that of those families who will be newly eligible for support under the Bill—those who are self-employed, or those whose employers do not currently offer employer supported childcare vouchers—the average benefit will be about £600 a year. Clearly, that is far lower than the £2,000 per child that the Government have been touting ever since they announced the policy for top-up payments in March.

It is worth remembering that some 520,000 families currently benefit from ESC vouchers. The Government’s impact assessment sets out a number of case studies where families might be better off or, indeed, worse off under the new top-up payments. The impact assessment suggests that families can retain their ESC vouchers if they wish, but goes on to list a whole range of caveats relating to whether parents will be able to continue to qualify, whether they would be better off remaining under the current voucher scheme, or whether the new top-up scheme might be better for them.

Clauses 62 and 63 seek to wind down the ESC scheme over the next few years, closing it to new entrants. Presumably, ESC vouchers will eventually vanish completely. If a parent changes jobs or if their employer stops offering vouchers—this could well happen, as voucher providers are set to see the majority of their business disappear—they will have no choice but to switch to top-up payments, leaving many worse off.

We heard evidence from a wide range of witnesses in Committee last month who cited the Resolution Foundation’s work. It is worrying that the Resolution Foundation had to undertake that work because the Government have not done sufficient work to look at the true impact on parents. The Resolution Foundation suggests that 80% of the families who will benefit from top-up payments are in the top 40% of income distribution. The remaining 20% will go to those in the middle of the distribution scale. If the key aims of the Bill are to support parents with the cost of child care and to help more parents back into work by making work an economically viable option, those figures raise questions about whether its aims are achievable through this Government scheme alone. In contrast, many child care experts agree that Labour’s child care plans, as outlined in new clause 1, meet these twin aims.

In a follow-up to one of our Committee sittings, the Minister made a worrying admission. In a letter to Committee members, she revealed that on her Department’s estimation almost 10% of eligible families—about 170,000 families—did not have access to the internet and therefore, effectively, might not have access to the top-up payments. The Bill requires that parents hold online child care accounts to receive the Government top-up payments. It is proposed that these would be administered by NS&I, with back office functions provided by Atos. It now transpires, however, that about 170,000 families might be excluded from these top-up payments simply because they do not have access to the internet. That is another reason why the Government should support new clause 1 and our proposals to extend the free entitlement, which would not have any of these implications or complications for parents.

In response, the Government plan to make exceptions for certain people, such as those with a disability or those who live in remote areas and have poor internet connectivity, but the point still stands: if someone does not have a computer or internet-enabled device, either because they cannot afford one or because they choose not to have one, it could essentially exclude them from the top-up payments and child care support. I hope that the Minister will respond to that issue, which I am sure even she would agree is hugely concerning.

Putting aside the question of who will benefit, our other concern—and another reason why we will be pressing new clause 1 to a vote—is whether the Government scheme will be as valuable to parents in a few years as when it is introduced. Our new clause 1 suggests extending free entitlement for three to four-year-olds whose parents are both in work and is a supply-led form of support that experts agree would neither have the same implications for child care prices nor potentially expose parents to artificial inflation—a concern about the Bill that has been expressed repeatedly. We have heard from a wide variety of witnesses that the potential benefits of the scheme could be wiped out by future increases in child care costs, which we know have already risen by 30% in the past four years and will continue to rise and outstrip the value of the support.

The Institute for Public Policy Research and the Resolution Foundation have pointed to Australia and highlighted that demand-led subsidies, such as top-up payments, on their own, with no additional safeguards in place, only lead to even greater child care price inflation and pressure on hard-pressed parents’ budgets. Our new clause calls on the Government to consider a supply-led measure—extending the provision for three to four-year-olds—that is not so susceptible to the risk of price inflation. The Government have so far dismissed the widely expressed and legitimate concerns about the impact of the Bill on future child care prices. I hope the Minister can respond to these concerns, as expressed in new clause 1, as well as new clause 2, which we will come to later.

The third point I want to make concerns perhaps the most striking thing we took away from the evidence sessions last month and our line-by-line scrutiny sessions: the potential nightmare of complexity and confusion that parents might face following the introduction of top-up payments. The Bill proposes an entirely new mechanism for administering support for parents. By contrast, the measures in new clause 1 would simply extend an existing scheme—three to four-year-olds are already entitled to 15 hours of free child care—by providing an additional 10 hours where both parents are in work.

Widespread concerns have been raised that the Bill might add complexity and confusion when parents come to access child care support and have to decide whether to remain within the voucher scheme or switch to the top-up scheme. In particular, it might create additional confusion for parents on lower incomes who might not be in a position to make an active choice between schemes, but instead might have to move between schemes as their incomes fluctuate—as they move between being eligible for tax credits and universal credit support and losing that eligibility as they move into higher-paid work. We discussed those issues at length in Committee, but so far Ministers have failed to address them. For that reason, our new clause 1 seeks an alternative, additional support and cushion for vulnerable parents on the borderline between universal credit and the top-up payment scheme.

We know that there are plans to develop an online “better off” calculator, similar to the tax credit calculator, to aid parents in making these decisions, but if Ministers cannot tell hon. Members who will benefit from which scheme and by how much—depending on their income and circumstances—how do they propose to convey these messages to parents simply and effectively? How will parents be able to make a straightforward decision? So far, Ministers have been unable to answer these questions. Given that child care is vital for so many people who are in work, looking for work or looking to increase their hours, we need to know exactly how much support this scheme will provide for parents struggling with child care.

It is no use promising parents that the Government will provide thousands of pounds of support when in reality they will get much less; it is no good offering support to parents when the scheme comes into operation if in a short time that help will be worth far less; and it is no good dreaming up an entire new mechanism of child care support if it only makes parents’ lives more complicated —or, worse still, is prone to errors and failure. Furthermore, the scheme is untested and potentially costly. The figures have already been significantly revised, raising concerns about whether they have been properly calculated.

For those reasons, we have tabled new clause 1. Given the numerous concerns expressed about the Government’s top-up scheme, we urge Ministers to give proper consideration to an additional, alternative plan—one that we know works and will make a big difference to 500,000 working families with three to four-year-olds: the plan to extend Labour’s free entitlement for three to four-year-olds from 15 hours to 25 hours a week for 38 weeks a year. We know that it would be worth £1,500 per year per child; that the funding would go directly to child care providers and therefore would not leave parents so exposed to inflated child care prices; and that it would be simple and straightforward to administer and implement for both parents and the Government; and we know how it would be funded—through an increase in the bank levy, which has returned so much less than the Government said it would.

The free early education entitlement for three to four-year-olds introduced under Labour has been hugely successful in providing vital support for parents and in helping them back into work. We know from the latest data from the Department for Education this year that some 94% of three-year-olds and 99% of four-year-olds—around 1.3 million children in total—currently benefit from this provision, the vast majority of whom, 1.2 million children, benefit from the full 15 hours a week to which they are entitled.

Kitty Stewart, research associate and associate professor at the Centre for the Analysis of Social Exclusion at the London School of Economics gave evidence to the Bill Committee last month. She commented on the remarkable progress seen with this child care offer over the last decade or so, saying:

“Considerable progress has been made in expanding access to early education and childcare over the last decade. One million new places have been created and the near universal take up of the free entitlement for three and four year olds is a remarkable achievement, ensuring that those families who were least likely to use ECEC services now have access.”

That is why we believe, as set out in new clause 1, that the Government should consider extending this hugely successful and effective offer to three and four-year-olds whose parents both work, in addition to the support provided in the Bill. We believe that doing so would be a far more effective way of achieving the Government’s aim of supporting parents with the cost of child care and helping more parents get back into work—aims that I know we all support.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North 6:00, 17 November 2014

I rise to support new clause 1 and specifically to speak to amendments 1 and 2, which are aimed at getting a fairer deal for parents with disabled children by respectively rethinking how we identify qualifying children to expand the definition beyond that planned by the Government, aligning it with the prescriptions of the Childcare Act 2006, and increasing the amount of top-up payment available to support parents of disabled children.

The provisions in clause 14 relate to “qualifying children” and lay out the criteria that such children must meet to be eligible for the scheme. Clause 14 is therefore fundamental to the entire Bill, so it is of the utmost importance that we get its provisions right. Failure to do so risks undermining the entire scheme.

After this amendment was brought forward in Committee, I understand that the Government’s intention was to frame regulations such that a “qualifying child” is defined as one aged under 12 or, in the case of a disabled child, under 17. I do not need to recap fully on the reasoning I set out in Committee; suffice it to say, as I mentioned at the time, that the stated definition of a disabled child does not fit easily with section 6 of the Childcare Act 2006, which places a duty on local authorities to provide sufficient child care for working parents with disabled children aged up to 18 “as far as practicable”.

The Exchequer Secretary objected to raising the age of eligibility for disabled children to 18 on the grounds that the age limit was set in line with the child care element of universal credit. However, it is important to recognise that the regulations on the child care element of universal credit reflect a maximum age that was set more than a decade ago when the child care element of working tax credit was established. Put simply, markedly less evidence was available on how families use child care, and our understanding has improved greatly since.

The Childcare Act 2006, however, was designed to take into account the evidence of child care needs in families with disabled children, which in many cases remain significant up to 18 and beyond. It therefore makes sense to adopt the maximum age set by the Childcare Act, which set a higher age because it was based on a comprehensive review of the available evidence, rather than revert back to an historical maximum age that no longer reflects our best understanding of families’ child care needs.

Through the tax-free child care scheme, the Government are committing significant new resources to support parents with child care costs. This will come at a cost of more than £800 million each year, and my hon. Friend Catherine McKinnell made it very clear that we welcome that. There must be some scope to ensure that a balance exists between supporting all parents and those who face significant additional costs.

The additional costs of raising a disabled child are well documented, and the Minister herself noted in Committee that she was “conscious” of these additional child care costs that families with disabled children might have to meet. I need not go into any great detail, but these can include such things as extra nappies or continence supplies, specially designed shoes, IT adaptations and communication aids, as well as specially adapted toys or equipment. That is on top of the day-to-day premium that is paid already in the shape of higher travel and activity costs, and the like.

The Minister noted in Committee that the Government already provide additional support to disabled children, pointing to universal credit, which she suggested provides

“more generous support for disabled adults and disabled children than it does for people in similar circumstances who are not disabled.”––[Official Report, Childcare Payments Public Bill Committee, 23 October 2014; c. 192.]

However, it is critical that we are clear about this. This extra support for disabled children that comes as part of universal credit is designed to offset the extra costs that have already been acknowledged, and not to pay for child care. This is the difference. If child care costs could be met within the basic element of tax credits, there would be no need for a further child care element for all parents. That, however, is not the case, and the Government have recognised as much by accepting that the significant extra costs of child care justify an additional child care element.

Time and again, it has been emphasised that parents with disabled children often face markedly higher child care costs. As the Committee heard when taking oral evidence, 38% of parents with disabled children paid between £11 and £20 an hour for child care, while 5% paid more than £20 an hour. This is obviously very high when compared to the national average of £3.50 to £4.50 an hour. The support parents receive should reflect that reality.

This brings me nicely on to the case for amendment 2, which is designed explicitly to address the problem of affordability of child care for all parents with disabled children through the tax-free child care scheme by increasing the amount of support available through top-up payments. As Members are all aware, access to good-quality, affordable child care is important for all parents. Quality provision has positive impacts on children’s learning outcomes as well as wider benefits such as enabling parents to work.

However, the recent independent parliamentary inquiry into child care for disabled children highlighted that parents with disabled children are often excluded from child care owing to a range of barriers, including affordability. It is an uncomfortable reality that childhood disability is a not uncommon trigger for poverty because families incur considerable additional and ongoing expenses as a result. As I mentioned a few moments ago, the costs associated with bringing up a disabled child can be as much as three times higher than those incurred by bringing up a child without a disability.

The principal driver behind these high costs is the additional cost of one-to-one care or extra supervision, while suitable providers might need to meet the cost of physical adaptations and staff training. As I mentioned in Committee, I was pleased to see the Minister acknowledge these additional child care costs that families will need to meet and to hear her commitment to explore the possibility of going further to support these families. She now needs to do that. Even so, I hope that she will agree to examine the amendment in more detail, with a view to doubling the top-up available for disabled children from 20% to 40%.

Restrictively high child care costs are self defeating in that they act as a barrier to inclusion for both parents and children. Of parents who responded to the inquiry survey, 80% of lone parents and 66% of couple parents who did not work full time said they wanted to find work or work more, while 72% of families with disabled children had cut back or given up work because of child care problems.

Worryingly, the survey also highlighted that parents without access to mainstream child care were struggling to find opportunities for their children to be independent, build confidence and make friends. Many Members will be aware that disabled children are much more dependent on organised activities, which fall within the child care registration system, to stay active, make friends and participate in activities outside of school.

As a direct consequence, parents with disabled children are more dependent on accessing child care provision to support family well-being and manage what is often an extremely tough combination of caring and work. However, with high child care costs and a reduced scope for work, these are needs that are all too often unmet. Indeed, the 1,200 parents and carers who responded to the independent parliamentary inquiry’s survey made it overwhelmingly clear that existing financial support for disabled children is not addressing the barriers of affordability. Despite the support that is currently available, child care is still beyond the reach of many families with disabled children because the hourly cost means that they quickly reach the weekly cap on support.

In addition to the burden imposed by higher everyday costs, there is the problem that less good-quality child care provision is available to parents of disabled children. Only two in five parent carers believe that child care providers in their areas can cater for their children’s disabilities, while only 35% feel that providers are available at times that conform with their daily commitments. According to the survey, matters are made even worse for parents of disabled children by the limited choice of suitable child care.

Both those issues must be addressed if the barriers to social inclusion are to be removed and parents are to be helped to work. The discrepancies in support for parents of disabled children are abundantly clear. Supporting amendment 1, and taking steps to align the maximum age of eligibility for the tax-free child care scheme and the child care element of universal credit with the Childcare Act 2006, would ensure that older disabled children benefited from financial support, and would help to remedy the poor provision for that age group. Failing to adopt the amendment would effectively mean that disabled children as young as 16 lost out. We all know that it would greatly improve the well-being of young people and benefit their families if support continued until after their 18th birthdays.

Photo of Maria Miller Maria Miller Conservative, Basingstoke 6:15, 17 November 2014

I understand what the hon. Gentleman is saying, because it accords with my experience in my constituency, but does he not think that local authorities have an obligation to ensure that there is sufficient care for disabled children? KIDS nursery in my constituency is a specialist nursery for disabled children. Should not local authorities be thinking about providing such services as well?

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

I have been fighting the ending of specialist nursing provision at my local hospital, because it meets the specific needs of parents of disabled children. There has been a considerable reduction in the amount of money that enables local authorities to meet the demand for essential services—if they were given more means, they might well be able to expand provision—but I agree with the right hon. Lady that someone should take responsibility, and I think that my amendment goes some way towards ensuring that that happens.

In Committee, the Minister said:

“It is right that we make the new scheme consistent with the current framework.”––[Official Report, Child care Payments Public Bill Committee, 23 October 2014; c. 192.]

I urge her to reconsider her decision not to increase support for parents of disabled children. She can help today by increasing the maximum age at which disabled children become eligible for the tax-free child care scheme—and, in future, for the child care element of universal credit —to 18, to align the scheme with the prescriptions of the Childcare Act sufficiency duty, and to give the families of disabled children the support that they need and deserve.

At the same time, the Government should aim to establish a framework that would include all children with disabilities in child care in order to fulfil the basic principles of equality and inclusion. Equitable access to affordable, flexible, high-quality child care would be hugely valuable to children’s social and educational development, not to mention parents’ well-being and long-term economic prospects. In its present form, however, the tax-free child care scheme will not effectively remove the additional affordability barriers from parents with disabled children. To address that inequality, the Government should provide the additional top-up payments for disabled children through the tax-free child care scheme that amendment 2 would provide. I hope that the Minister will consider that proposal.

Photo of Priti Patel Priti Patel The Exchequer Secretary

It gives me great pleasure to speak in the debate. Let me begin by thanking everyone who contributed to the Committee stage, engaging in constructive dialogue, submitting the Bill to line-by-line scrutiny, sharing their views and giving evidence. I think that all Members found the evidence sessions extremely helpful. Opposition Members tabled a number of well-considered probing amendments that were designed to seek clarification throughout—

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. This is not an opportunity to review all the work that was done in Committee. The debate is very narrow. The Minister should be responding to the debate on new clause 1 and the amendments. I do not want her to come to that gradually; it is the only thing that she should be doing. I have given her a little bit of latitude, but perhaps she will now return to new clause 1.

Photo of Priti Patel Priti Patel The Exchequer Secretary

I will do so very promptly, Madam Deputy Speaker.

New clause 1 would require the Government to publish, within three months of Royal Assent, an assessment of the benefits of this scheme to parents of three and four-year-old children, together with an assessment of the benefits in addition to the likely benefits of funding 25 hours of free child care per week for such parents.

The Government fully understand the importance of high-quality early education for that age group, which is why they fund 15 hours a week of early education for every three or four-year-old. We have extended that entitlement to the least advantaged 40% of two-year-olds, thus saving their families about £2,440 a year. By the end of this financial year, funding for early education places alone will have risen by over £1 billion during the current Parliament. We have committed ourselves to that substantial investment in early education because there is overwhelming evidence, here and elsewhere in the world, that high-quality early education has long-lasting benefits for children. We have seen big year-on-year improvements in the development of five-year-old children who have benefited from early learning, although we recognise that many factors influence school readiness and later attainment. We have commissioned academically robust and detailed research in order to understand more about the way in which high-quality early education affects children’s attainment and social and behavioural development.

However, it is important to recognise—as the Bill does—that the cost of child care is an issue not just for under-fives, but for school-age children. For many working families, the high costs of child care make it one of the largest parts of the household budget. The Government believe that there is a powerful case for improving access to child care throughout childhood, and to ensure that parents are helped to work if they choose to do so. The new scheme for children up to the age of 12 will build on the £5 billion per year that the Government already spend on early education and child care. It will help many more parents to meet their costs, including self-employed parents who cannot gain access to support under the existing employer-supported child-care scheme.

We recognise that every family is different, and will have different child-care needs and cost. We recognise that no one size fits all. The scheme is therefore designed to provide flexible support for working families, and to cater for different family circumstances. For example, it will allow parents to build up money in their child-care accounts to cover increased costs at holiday times.

As I have already said many times during our debates on the Bill, the Government have made a clear commitment to reviewing the impact of the scheme two years after its full implementation. That was made clear in the impact assessment that was published alongside the Bill. The review will consider the impact on all age groups within the scope of the scheme—which will, of course, include three and four-year olds—but it will not consider the effects of free early education, which is already the subject of extensive evaluation.

The Government take the evaluation of early education very seriously. We have commissioned a significant longitudinal study of early education and development, which will evaluate the effectiveness of the current early-education model in England and, more specifically, the impact of funded early-years education on two-year-olds from lower-income families. It will also update evidence from the effective pre-school and primary education project. It will continue until 2020.

Catherine McKinnell made a number of points. For instance, she mentioned children’s centres. Let me reiterate that the Government want to see a strong network of children’s centres throughout the country, offering families access to a wide range of local and flexible services, tackling disadvantage, and preparing children for later life. Again, we covered in Committee many of the points about what goes on in centres and support in children’s centres.

The hon. Lady also specifically mentioned supply-side provision of child care, which we touched on in Committee, too. There are 100,000 more child care places than there were in 2009 and a lot of work is being done on the supply-side provision of child care, which is the point of this Bill.

On the quality side, we are providing £50 million in extra funding in 2015-16 to nurseries, schools and other providers of Government-funded early education, to support disadvantaged three and four-year-olds. This is also about improving quality as well as quantity, and improving qualifications for the early-years work force and introducing early-years educator qualifications are vital. We have discussed that, too.

The hon. Lady made a point about the overall support for child care and those on lower incomes. The overall system of child care support remains focused on those on lower incomes. The Government are already spending over £1 billion a year on child care support through tax credits and will extend this support in universal credit. Under UC, this Government are investing an additional £400 million so that families can claim up to 85% off the costs of child care from 2016, and £200 million is also being put in so that child care support will be available regardless of the number of hours worked.

The hon. Lady mentioned the impact assessment and the average increase in tax-free child care being £600. On average this increase in support is £600, but the average award will be higher because that is an average figure.

The hon. Lady also mentioned access to the internet for families—for 200,000 families—and I would like to bring some clarity on this point. The newspaper stories that appeared yesterday were inaccurate because what was reported is simply not fully the case; they distort the situation. As outlined in the letter circulated to Members of Parliament, there will be “assisted approaches” for families who cannot access the internet, which will make sure that no parent misses out. We do recognise that some parents will have difficulty accessing or using the internet, and in such cases Her Majesty’s Revenue and Customs will support them to register and use their child care account online, providing opportunities for learning and, where appropriate, encouraging parents to use online services independently in future. I touched on this in Committee: the HMRC support is very specific and the support will be there. I want to make that clear so no Members leave the House tonight thinking there is no support for those families. Where parents are simply not able to access the internet, there will be facilities for them to access the scheme by telephone. That point was also made previously.

We also touched extensively in Committee on the point about the system being too complex. I want to assure all Members that this scheme is designed with parents in mind. It is intended to be streamlined in its application, and very straightforward, simple, flexible and convenient for parents. As I said in Committee, we are working with parents and many stakeholder groups—including many who gave evidence in Committee, and those we have been working with on the design of this scheme—to ensure that their suggestions, advice, counsel and guidance are taken on board.

This is not meant to be a complex scheme. It is meant to be as user-friendly for parents as possible, which is why we are listening and consulting, because it is all about the design and making sure that those who need to access the scheme can do so.

Photo of Maria Miller Maria Miller Conservative, Basingstoke 6:30, 17 November 2014

The Minister will have provided a great deal of clarity today for parents who might have been concerned about some of the reports they had read in the papers. I thank her on behalf of my constituents for what she has said.

The Minister mentioned the communication she is having with stakeholder groups. Is she also communicating with employers to make sure they are aware of the way the new system will work, especially those who may want to make their own contributions to their staff’s child care costs?

Photo of Priti Patel Priti Patel The Exchequer Secretary

I thank my right hon. Friend for her intervention and comments. She is absolutely right; as she will know from discussions in Committee, this scheme has been designed to be parent-focused—parent-friendly is, I think, the term to use—and to work with employers, because this is about engaging both parties to communicate, educate and inform. Employers have an important role to play—we must not forget that—so working with employers on the scheme design is key.

The introduction of this new scheme sits alongside strong early-education entitlement for pre-schoolers to support families and hard-pressed families with their child care costs and support parents to work more if they want to do so.

As I said in Committee and we have touched on again today, we have already committed to reviewing the impact of this new scheme after two years, and it is hard to see what purpose would be served by a review only three months after Royal Assent, given the Government’s clear commitment to reviewing the scheme.

I shall now move on to the points made about amendments 2 and 1 and the comments of Alex Cunningham. I welcome his comments and I followed his remarks with interest, and we discussed these matters in Committee. We fully accept that child care costs are higher for parents with disabled children; there is no disagreement here at all. The families and parents of disabled children struggle with the challenges of raising and looking after their children. We had a very fluid debate about this in Committee.

The effect of amendment 2 is straightforward. It would increase the level at which the Government top-up payments are paid to parents of disabled children from 20% to 40%. This would mean in practice that for every £10 spent on child care, the Government would contribute £4 and the parent the remaining £6. This contrasts with the position set out in the Bill, which is that the Government would contribute £2 of every £10 spent on child care.

I am very well aware of the keen interest the hon. Gentleman takes in families with disabled children. He spoke with great eloquence in Committee and I thank him for his contribution on this point. As he rightly pointed out, families with disabled children face significant costs, and that fact ought to be reflected in the scheme. A number of witnesses who gave evidence to the Committee made similar points. I have already put on the record that I fully understand the arguments the hon. Gentleman and others have made and it is absolutely right that parents of disabled children are properly supported, which brings me to why I will ask him to withdraw his amendments.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

I thank the Minister for her kind comments, but the multiplication that I want to achieve for disabled children does not even reflect the multiplication factor in their child care costs. Child care can cost £20 an hour, but all I am asking is that the Government double the amount of support they give. I am not asking them to increase it by four or five times.

Photo of Priti Patel Priti Patel The Exchequer Secretary

I thank the hon. Gentleman for his comment. I outlined measures relating to disabled children in Committee. We recognise the high costs faced by parents of disabled children, and the specialist care that their children need, but increasing the amount of top-up is obviously not appropriate, for the reasons that I have already outlined. I have made a commitment on disabled children, and I am exploring the possibility of increasing the maximum amount that a parent of a disabled child can pay into their child care account. For those reasons, I ask the Opposition to withdraw their new clause.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I thank the Minister for her thorough reply to the concerns that I expressed earlier. She has gone some way towards alleviating them, but some concerns remain. We shall have to give the Government the benefit of the doubt on the delivery of her reassurances, but that does not take away from the fact that dealing with the supply-side issues and extending the free entitlement for three and four-year-olds would constitute a much better offer to parents. The Government could do that now to provide support for parents who are struggling with child care costs and with the cost of living more generally. We will therefore press new clause 1 to a vote.

Question put, That the clause be read a Second time.

The House divided:

Ayes 206, Noes 274.

Division number 80 Childcare Payments Bill — New Clause 1 — Proposals relating to three and four year olds

Aye: 206 MPs

No: 273 MPs

Aye: A-Z by last name

Tellers

No: A-Z by last name

Tellers

Question accordingly negatived.