Nick Gibb (Shadow Minister, Education; Bognor Regis & Littlehampton, Conservative)

I thought that this might be an opportunity to get a little more detail from the Minister about financial assistance. The clause concerns arrangements between a local authority and the provider of child care which involve financial assistance from the former to the latter. Clarity on the Government’s intentions would be helpful. Will that financial assistance help with the capital cost of providing child care places or will it subsidise the running costs of child care places, or will it be a combination of both?

In paragraph 5.1 on page 34 of “Choice for parents, the best start for children: a ten year strategy”, it says:

“The Government’s vision is that all families with children aged up to 14 will have an affordable, flexible, high quality childcare place for their child that meets their particular circumstances. In addition, support should be available for finding care outside these hours where necessary.”

Paragraph 5.2 says:

“To meet our commitment a new duty will be placed on local authorities who will be responsible for ensuring that local childcare needs are met, working with central government to make sure that services are both affordable and of a high quality standard wherever families live.”

What does that mean in practice? The child care strategy goes on to say:

“parents will be expected to contribute to the cost of childcare, supported through the childcare element of the Working Tax Credit and any subsidy to the provider.”

My understanding of that is that the principal means by which the Government intend to make child care affordable is through the child care element of the working tax credit. Moreover, they intend for all three and four-year-olds to receive a full 38 weeks of free early education and child care from 2006. The Minister alluded to that. That means, according to page 51 of the 10-year strategy,

“an extension of the 12.5 hours of free childcare for all three and four year olds to 15 hours for 38 weeks a year for every three and four year old by 2010, on the way to the vision of 20 hours a week for 38 weeks a year”.

The Government have said that the principle behind financial assistance—indeed, behind their entire child care strategy—is what they call “progressive universalism”. That is probably the first time that that phrase has been uttered in this Committee, and that surprises me. What does it mean, Mr. Benton? It means help for all and additional support targeted on   those who need it most. The way in which the hon. Member for Doncaster, North is nodding, I half suspect that he invented the phrase in an earlier existence—but perhaps not.

The increased number of child care places is as a result of the working tax credit, which is a demand-side subsidy funded by central Government. Furthermore, supply-side subsidies, through the neighbourhood nurseries initiative, have provided for about 45,000 child care places. Central Government funds those also, as they do free places for three and four-year-olds in schools and nurseries. Other initiatives include the new opportunities fund subsidies for out-of-school child care and the Sure Start programme.

The Government’s position is summarised in paragraph 7.4 on page 52 of the 10-year strategy. It says:

“in common with other countries the Government invests in childcare on both the supply side and the demand side. On the supply side payments are made direct to the provider to support and procure provision. On the demand side, payments are made to parents to help with the cost of childcare”.

Paragraph 7.5 continues:

“In addition to providing the universal free part-time early education for three and four year olds, the Government sees an enhanced role for supply side subsidies in driving up quality and ensuring sustainability. The Government also sees a continuing and enhanced role for the childcare element of WTC in helping to make childcare more affordable for families.”

I set that out, Mr. Benton, in an attempt to understand what financial assistance local authorities are being given the duty to provide to child care providers. Is it a supply-side subsidy, in which case is it a capital subsidy to help establish more child care places, or is it a revenue subsidy to help to keep the costs down for parents? If it is the latter, will it be universal or will it be targeted at those who need it most? If the assistance is meant to be a demand-side subsidy, how will that work in practice? Finally, can the Minister set out how the new duty is fully funded? What elements of the support to local authorities are earmarked and covered by the new duties?

Maria Eagle (Parliamentary Under-Secretary (Children and Families), Department for Education and Skills; Liverpool, Garston, Labour)

I am grateful to the hon. Gentleman for reading out chunks of the 10-year strategy, and not even opposing any of them. That is good because it means that we are all together on the Committee in our aspiration to improve child care provision across England for our youngest children, which the Government greatly welcome.

Clause 9 relates to the funding arrangements that local authorities make with child care providers. Authorities may make payments to providers in two ways: first, for those who supply the free entitlement for three and four-year-olds under clause 7; secondly, under the powers to grant financial assistance under clause 8. We have debated those, but the hon. Gentleman asks now for detail about the power in clause 9 that allows local authorities to place conditions on funding. He asked a number of questions about whether it is demand-side, supply-side, revenue or capital. It is many of those things; it could be revenue or capital. The hon. Gentleman   asked earlier today what the proposed extension to access to early years provision is—the free entitlement, if we might call it that. The Committee will recall that we set out our aspirations. We have definite funded plans to increase it from 33 to 38 weeks per year, and from 12.5 to 15 hours per week in maintained and non-maintained settings from next April. That will then go up from 15 hours per week with an aspiration to go further, perhaps up to 20 hours per week, the funding for which we have not yet sorted out in the spending review.

The hon. Gentleman will also be aware that we have plans to extend the provision of children’s centres. Perhaps he will think of those as Sure Start centres, but they will in future be children’s centres. We expect to have 2,500 by 2008 and 3,500 by 2010. The extra funding that will go to local authorities to establish and run children’s centres will be capital and revenue, through various spending grant streams. On the demand-side and supply-side subsidy, he referred to the child care element of the working tax credit. He was right to quote the Government: that is how we envisage making it affordable for those at the lower end of the income scale. We might call it progressive universalism. I do not know who invented that term, but it seems to be a good way of ensuring that those who did not have access to child care in the past have such access, hopefully with the laudable and—across the Committee—welcome consequence of giving every child a great start in life. That, after all, is what child care is mainly about.

In answer to the hon. Gentleman’s questions, there will be financial support, in the form of both revenue and capital, for the establishment and running of the children’s centres. Through tax credits, we are already seeing £2 million a day going into the tax credit subsidy for those at the lowest end of the income scale, to ensure access for those who would not otherwise have it. It is a combination of all the matters that he raised. The power to make all that available is contained in clause 9. I hope that members of the Committee will agree that it is important that it stand part of the Bill.