New Clause 1 — Childcare provision

Oral Answers to Questions — Foreign and Commonwealth Office – in the House of Commons at 5:42 pm on 8th April 2014.

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‘(1) The Chancellor of the Exchequer must undertake a review of ways in which changes to the tax and childcare systems could be used to increase the affordability of childcare before April 2015, with particular reference to—

(a) the cost of childcare for parents in work; and

(b) the cost of childcare, including the impact of changes in the tax and benefits system during this Parliament.

The Chancellor must publish the report of the review within six months of the passing of this Act and lay the report before the House.’.—(Catherine McKinnell.)

Brought up, and read the First time.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I beg to move, That the clause be now read a Second time.

It is a pleasure to serve under your chairmanship, Mr Amess. New clause 1 draws attention to the rising costs of child care for working parents since 2010, and seeks to commit the Government to addressing their failure in that regard. It also seeks to establish ways in which the tax and benefit systems could be used to make child care more affordable before April 2015, so that hard-working families experiencing a cost of living crisis can have the help that they need now, especially in the light of the challenges that they face as a result of changes made by this coalition Government.

The new clause gives us a welcome opportunity to explore one of the most pressing issues that face millions of parents throughout the country, and to address the fact that millions of families are facing a child care crunch. It is important to set the issue in context by revealing just what has happened to child care costs on this Government’s watch. The average bill for a part-time nursery place providing 25 hours a week has risen to £107, the highest level in history. The cost of nursery places has risen by 30% since 2010, five times faster than pay, and the average weekly cost of a full-time place has risen to £200 or more. That means that parents working part time on average wages would have to work from Monday until Thursday before they had even paid their weekly child care costs.

Photo of David Burrowes David Burrowes Conservative, Enfield, Southgate

The hon. Lady has given statistics showing what has happened since 2010. Did child care costs increase before 2010, and if so, what did the last Government do about it?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The point of putting the issue in context is that the rise in child care costs since 2010 is astonishing, and has made child care unaffordable for many parents. I shall say more later about the number of parents, particularly mums, who feel that the cost of child care prohibits them from going to work. I think that rather than questioning the statistics, Government Members should get real and do something about that. Waiting until 2015 to make a promise for tomorrow is just not good enough, which is why we tabled our new clause.

According to alarming new research from the Family and Childcare Trust, families are paying more on average for part-time child care than they are spending on their mortgages. They are handing over a staggering £7,500 a year or more for child care for two children, which is about 4.7% more than the average mortgage bill. Rising prices have been matched by the fall in the number of child care places. The number of places provided by nurseries and childminders has fallen by more than 35,000 since 2010, at a time when the number of four-year-olds has actually increased. Most worrying of all, there are 576 fewer Sure Start children’s centres than there were in 2010, which means that an average of three are being lost each week. At least, that was what we were seeing before the Government took their database down.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

The point about children’s centres is really important. Many of those centres have simply reorganised the way in which they work, and now have operational entities in different places and a single administrative centre. That is why the headline figure suggests that children’s centres are closing. In fact, very few have closed, and those closures have been due to rationalisation rather than cuts. I find it very upsetting that Labour Members insist on making an assertion that is not correct.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The figure that I gave is correct. It is from the Government’s own database, before they took it down. Goodness knows what the number is now, but we know from our local communities that even the Sure Starts that remain open are offering reduced services, and that a huge number of Sure Starts are under threat as local authorities struggle to meet their current budget requirements.

Photo of Barbara Keeley Barbara Keeley Labour, Worsley and Eccles South

Government Members might like to know that Salford city council, owing to the budget cuts amounting to £100 million that have been forced on it, will have to cut eight Sure Start centres this year, leaving us with only four. Government Members must stop being in denial about this issue.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Yes, I agree that it is important that Government Members stop being in denial, because it will be a dreadful indictment of their being out of touch with reality if they fail to address this issue and instead stand by and watch our network of Sure Start centres disappear.

Very much connected to that point is the recent ASDA-mumsnet survey which reveals that seven out of 10 stay-at-home mums consistently say going back to work simply would not make financial sense because the hefty child care costs would leave them worse off, and 52% rely on household salaries for child care and 35% rely on their family for child care. In this context it is still disappointing, if not surprising, that the Institute for Public Policy Research recently published a report showing that the UK’s maternal employment rates are far lower than those of our OECD competitor countries.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Human Rights) 6:00 pm, 8th April 2014

Does the hon. Lady agree that for many people with children if they did not have their grandparents or their aunties, the cost of child care would be too great for them to return to work? Does she feel that while the Government have made some concessions on child care, they have not given enough of an incentive for those people not to need to depend on their grandparents and aunts in order to be able to continue to work?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The hon. Gentleman raises an important point. There is a heroic army of grandparents out there providing that much-needed support within families to ensure that those really struggling with the cost of living crisis can still be in work, but unfortunately some people do not have that luxury. There are an awful lot of people who cannot rely on that support and who find the current cost of child care too prohibitive to go to work or find that, despite working all hours, they cannot put food on the table.

Photo of Bridget Phillipson Bridget Phillipson Opposition Whip (Commons)

While it is right to recognise that families will decide on the best ways of making arrangements and that grandparents and other family carers have an important role, do not children from the most disadvantaged backgrounds benefit the most from having access to formal child care, whether in a nursery or with a childminder? That gives them the best start in life and we need to do more to target families from the most disadvantaged backgrounds so that they can access child care.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

My hon. Friend raises an important point. There is a multitude of reasons why we should support parents and enable those who want to work to do so, one of which is the benefits for children of being in that child care setting. That is why Labour has made one of our key pledges—and we call on the Government to take it up in this Budget—to extend the free child care that is available for three to four-year-olds. We call on the Government not to wait until 2015, but to do it now and to pay for it through the increase in the bank levy that we have suggested and which the Government should take up—or at least they should certainly undertake the review we are calling for today to look at the viability of that in this year’s Budget.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

Does the hon. Lady genuinely think it is realistic and practical to implement that policy right now bearing in mind that the Government are already rolling out their offer for two-year-olds and nurseries are already under pressure from the implications of the influx of two-year-olds?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The amendment is perfectly reasonable. I know the hon. Lady cares about this issue and I am sure she would want to see her Government doing everything they can to provide support and to help parents up and down the country who we know are struggling with this important issue. That is why the amendment we have tabled today calls on the Government to

“undertake a review of ways in which changes to the tax and childcare systems could be used to increase the affordability of childcare before April 2015”.

It is a perfectly reasonable amendment and I see no reason why Members on both sides of this House would not support it if it could bring about the changes that parents need today, not in 2015.

Returning to the issue of maternal employment rates, for mothers whose youngest child is aged between three and five that rate is currently 64% across the developed world, yet the rate in Britain is six percentage points lower at 58%, which is the equivalent of about 150,000 mothers not being employed. The rate in Sweden is 80%.

As the interventions today have demonstrated, it seems that Government Members prefer to gloss over the uncomfortable facts and figures that do not fit with their messages when they boast about the record numbers of people in employment, much as they do when they ignore the fact that almost 1 million 16 to 24-year-olds are out of work, a quarter of them for 12 months or more.

The child care crunch, like youth unemployment, is bad not only for families but for the country and the economy. Parents who want to work should be able, and supported, to do so. There have been consultations and numerous announcements—and, indeed, re-announcements —about the Government’s new flagship child care scheme, but we see absolutely nothing in the Finance Bill that will address the spiralling costs that families face now, rather than in 18 months’ time.

Photo of Lorely Burt Lorely Burt Liberal Democrat, Solihull

Does the hon. Lady acknowledge that the Government announced in the Budget that the tax-free child care cost cap will be raised to £10,000, which will be worth up to £2,000 per child? I know that 6,000 families in Solihull will be grateful for that.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I appreciate the hon. Lady’s point, but that help for families will not arrive until 2015 and beyond, after the next election. Many families could do with some support over the next 18 months, not just beyond 2015. There are also serious concerns about whether parents will actually be better off when the Government’s policy is introduced. I will say more about that later.

I shall turn now to the second part of new clause 1, which focuses on the impact of the tax and benefit changes introduced in this Parliament. Just last week, the Opposition published an analysis of figures produced by the independent Institute for Fiscal Studies, along with analysis by the House of Commons Library, which showed that working families with children, and one-earner families in particular, had been the hardest hit by the changes introduced since 2010. Those changes, which were voted through by Government Members, mean that on average, households will be a staggering £974 a year worse off by the next general election. It is worth listing what those tax and benefit changes will mean for families with children. The constituents of Government Members will no doubt be paying close attention to their household budgets when it comes to casting their vote in May 2015.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

Will the hon. Lady tell us whether that analysis includes fuel duty? Does she agree that if this Government had kept the Labour fuel duty escalator going, petrol would cost 90p a gallon more today, the equivalent of £450 a year for the average family?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

On average, by the time of the next general election, a family in which both parents are working will be £2,073 a year worse off. A family in which one parent works will be a staggering £3,720 a year worse off, and a family in which no parents work will be £2,114 a year worse off. A lone parent in work will be £1,335 a year worse off, and a lone parent who is not working will be £1,901 a year worse off. These changes are in addition to the impact of wages falling in real terms, which has left working people an average of £1,600 a year worse off since 2010. Households have faced 24 Tory tax rises over the same period. However, while millions of families have seen their real household incomes go down since 2010, millionaires have been given a huge tax cut by this Government. The top 1% of earners—85% of whom just happen to be men, by the way—have been given a £3 billion tax cut worth an average of £100,000 for those earning more than £1 million a year.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I will give way to the hon. Lady, who I am sure is as disappointed as I am by that policy.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

Will the hon. Lady confirm what the top rate of tax was during the last 10 years of the Labour Government? Will she also confirm that it changed only a couple of days before the last general election?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The hon. Lady is well aware that we have a budget deficit that needs to be addressed. This Government promised to balance the books by 2015, but look set to be way off that target. Of course the increase to the 50p rate was part of a balanced deficit reduction programme that Labour would have put in place. Instead, this Government came in and made cuts that slowed growth and resulted in three years of a flatlining economy. The only people who seem to have benefited are the top-rate earners who have been given a tax cut by this Government.

Going back to the subject under debate, the same tax cut came from a Conservative-led Government who, in their 2010 manifesto, promised to make Britain

“the most family-friendly country in Europe.”

They claimed:

“We will help families with all the pressures they face: the lack of time, money worries, the impact of work, concerns about schools and crime, preventing unhealthy influences, poor housing.”

Of course—[Interruption.] Lorely Burt groans from the Liberal Democrat Front Bench. The Liberal Democrats claimed in their party’s 2010 manifesto:

“Liberal Democrats believe every family should get the support it needs to thrive, from help with childcare through to better support for carers and elderly parents. Liberal Democrats will improve life for your family.”

Oh, how they disappointed!

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

The hon. Lady is being very generous in giving way. Will she welcome the fact that one of the major newspapers today reports that wages are growing faster now than they have been in the past seven years, and that there are 1.6 million workers in private sector employment since 2010, which means that many more families are now able to afford their weekly household bill?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Any good news on the economy will always be welcomed, not just by Members of this House but by those out there who are struggling with the cost of living. No matter what good news we see in the coming months, it will not outweigh the fact that we have had three years of a flatlining economy in which wages have been squeezed and prices have risen much faster than wages, particularly in this area of child care costs. People will be worse off in 2015 than they were in 2010. We know that a family in which both parents work will be £2,073 worse off by the next election. Perhaps the electorate will just have to add that to the ever-increasing list of Liberal Democrat broken promises.

The Prime Minister is currently touring the country, boasting about the rise in the personal allowance—I am surprised that Government Members have not raised that yet. Incidentally, the Deputy Prime Minister claims that the Conservatives were dragged kicking and screaming to every meeting on the personal allowance. The simple truth is that working families are thousands of pounds worse off now than they were in 2010 thanks to tax and benefit changes, falling living standards and rising child care costs, all of which this out-of-touch Government have continually failed to get a grip of, and all of which contribute to the fact that child poverty is set to increase rapidly under this Government. After an unprecedented reduction in child poverty under Labour, the IFS now predicts that an extra 400,000 children will be in relative poverty by the end of this Parliament and it is clear why that is. It says:

“Tax and benefit reforms introduced since April 2010 can account for almost all of the increase in child poverty projected over the next few years.”

As we know that families will be significantly worse off by the next general election, let me turn to the Government’s proposals for tax-free child care, which were lauded in the Budget but which are missing from this year’s Finance Bill. Parents would be forgiven for thinking that they are in for a £2,000 subsidy of their child care costs, based on what Ministers have been claiming in interviews and articles in recent weeks. Let us be absolutely clear about this. Although any new money to help families facing soaring child care costs is undoubtedly welcome, this coalition will not fool mums and dads. When we scratch beneath the surface and go beyond the headline figures of £2,000 and 1.9 million families, we find that the facts very quickly come to light.

Only one in five families will receive help through tax-free child care, yet that one family in five would have to incur child care costs of £10,000 per child to get the maximum £2,000 that Government Members have been boasting about. Ten thousands pounds per child per year! How many families in Britain could possibly afford to spend the £8,000 required to receive the maximum support from the Government? Well, the latest annual child care costs survey by the Family and Childcare Trust suggests that over a year a British family spends an average of £5,487 for a nursery place for a child of two and above, which, incidentally, is £1,298 more than it cost in 2010, so in reality most families will receive at best just half the support being parroted by Government Members—[Interruption.] I am pleased that Mr Jones has been enlightened by that, as he was so horrified when I enlightened him about the reality of this Government’s policy.

Photo of Lorely Burt Lorely Burt Liberal Democrat, Solihull 6:15 pm, 8th April 2014

On the one hand, the hon. Lady seems to be bemoaning the soaring costs of child care, but on the other she is bemoaning the fact that parents do not have to pay the full £10,000 to get the maximum child care support.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

A family’s child care requirements are a family’s child care requirements. If somebody has to go to work and they need child care, they need to invest in child care for however many hours they need it for. The Government’s child care proposal does nothing to address the supply side issues, which is why Labour proposes to increase the number of free hours available for three to four-year-olds to help increase the supply of child care, which we have seen diminish under this Government.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

We have had this debate before in Westminster Hall. Does the hon. Lady not recognise that the number of childminders fell under the previous Government? I realise that the point about quality has been made before; nevertheless, there were fewer childminders at the end of that Labour Government than at the start.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

There are 3,000 fewer childminder places under this Government so I caution Government Members about trumpeting their success in this area, because it is far from a success for mums and dads who are struggling with soaring costs.

Photo of Bridget Phillipson Bridget Phillipson Opposition Whip (Commons)

Dr Coffey is right: we have discussed these matters at length before. Quality is important, and although the number of childminders has fallen in the past, if we want children to be properly looked after in a child care setting, we must ensure that setting is of the highest possible quality. Unfortunately, some childminders were not able to provide that high-quality care and did not want to continue. We are talking about the most vulnerable children who need high-quality care. Childminders who felt that they were not able to offer that any more and did not want to go through the Ofsted registration process might have been one reason behind that fall in numbers.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

My hon. Friend makes a powerful and heartfelt point and she touches on an important issue. We are talking about the quantity of child care that is available and the cost of that child care, but we must always factor in quality too.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

I know that this is not an issue of party politics but a straightforward issue of quality, but I want to point out that over-regulation led many childminders to want to pull out of providing that care. I have spoken to many childminders who pulled out because of the complex box-ticking—the questions about what sort of doors they had, or what sort of facilities. The important thing for our society is that very young children should be cared for by people who genuinely love them and who will take good care of them. We risk the perfect being the enemy of the good if we go down the avenue of over-regulation.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I think we risk going down the road of debating the quality of child care and issues to do with Ofsted registration, but I would question some of the hon. Lady’s assertions about the requirements for regulation and the absolutely fundamental importance of ensuring the quality of all child care places, including those with childminders.

Let me return to the issue of child care costs, which is what our new clause 1 seeks to get the Government to address. Gavin Kelly, chief executive of the Resolution Foundation, has pointed out in relation to the Government’s recent increase in the cap from £6,000 to £10,000 for tax free child care:

“About 80 per cent. of the gains from this will flow upwards to those in the top half of the income distribution. It’s also the case that it’s low- and middle- income parents who find the costs of childcare the biggest obstacle to taking on more work—so targeting support at them would make sense.”

I should be interested to hear the Minister explain how effective the scheme will be in supporting the very parents who need help the most. I should also be grateful if she could clarify the Treasury sums on tax-free child care because, welcome though any extra support is for families struggling with child care costs, it is curious that the Government have managed to tweak their sums so that an almost doubling of Government support per child has not cost even a penny extra.

I am sure that the IFS would also be interested to hear the Minister’s answer to that question, as it has queried the matter. It said:

“Surprisingly, today’s announcements come with no new money. Extending the new Tax Free Childcare scheme to all children under 12 within its first year will cost money compared with a world where it was limited to children under 5, but the Treasury can make this announcement without altering its public spending plans because it has significantly revised down its estimate of how many families are likely to be eligible for the scheme (from 2.5 million to 1.9 million).”

It is not clear what has led to this dramatic change, so we cannot judge whether the new estimates are any more plausible than the initial ones, but the fact that the change is so large suggests that the Treasury would benefit from being more open about the way it costs new policies. Perhaps the Minister will elaborate on these figures and how her Department arrived at them.

Ultimately, the simple truth is that, even if people spend enough to receive the full support, this help will not come until after the general election. That means no help with child care in five years from the Conservatives or the Liberal Democrats. Instead, Ministers have presided over soaring costs and cuts to tax credits for thousands of families, meaning that, even when this help comes, most families will still be worse off than in 2010.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

I recognise the hon. Lady’s genuine concern about working parents and her ambition that the Government get on with increasing child care, but she must recognise that the number of hours of child care has increased under this Government. She should be gracious enough to accept that.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

It is interesting that the hon. Lady mentions that, because I will quote directly on this issue a little further on in my submission.

We know that the Government are good at con tricks, giving with one hand but taking much, much more with the other. For example, they made a U-turn last month when they decided to support 85% of child care costs for all universal credit claimants. That was a welcome reversal after the coalition decided in 2011 to cut the support for child care through the working tax credit from 80% to 70%—a decision that led to an average loss of £570 a year for low-paid working parents. It is just another example of this Government taking with one hand and giving with the other.

As Alan Milburn, chairman of the Social Mobility and Child Poverty Commission, has said, low-income families will still lose out, despite this increase in support for those most in need. He told The Independent on Sunday:

“The Government has taken half a step forward. The announcement that 85% of childcare costs will be met under universal credit from 2016 will help work pay for low-income families. This is very welcome. The sting in the tail is that this £200 million expansion in childcare support will come from within the universal credit programme…That risks robbing Peter to pay Paul.”

Perhaps the Minister could also give a bit more detail on how she intends to pay for the increase in support. While she is at it, perhaps she could provide some clarity on when low-income families eligible for universal credit can expect to receive this support with their child care costs.

Under the original plans of the Secretary of State for Work and Pensions, most would have expected to receive the increased support when the tax free child care is introduced in 2015, but clearly that is not going to happen. Will the Minister clarify when the Government expect to introduce this support and whether it will be in the near future? Ultimately, as Opposition Members have made absolutely clear, parents facing a cost of living crisis will see through any child care con, because it does not make up for how much the families are now paying for child care under this coalition Government.

I come now to the first part of new clause 1 and the Opposition’s proposals for improving child care support, which we know will make a real difference to working parents. New clause 1 proposes that the Chancellor should undertake a review of the ways in which child care could be made more affordable before April 2015. We have done much of the work for him with our clear suggestions for supporting families on this pressing issue. We want to extend free child care for three to four-year-olds from 15 to 25 hours a week for working parents, which can be fully funded by increasing the bank levy. As with the 15-hour early-years entitlement, the new 25 hours would be for 38 weeks of the year, which would mean more than £1,500 of extra support per child each year. Perhaps most important, Labour’s plans will not demand that working parents spend £10,000 on child care in order to get the maximum promised help.

We also know that for school-age children, child care can become a logistical nightmare, with many parents increasingly struggling to find before and after-school child care, while the Government stick their fingers in their ears and hum. On the Government’s own record, 62% of parents of school-age children say that they need some form of before and after-school or holiday care in order to combine family life with work, but of those nearly three in 10 are unable to find it. To give parents of primary-age children peace of mind, the Opposition would set in law the guarantee that they could access wraparound child care from 8 am to 6 pm through their local school if they wanted it. This primary child care guarantee will benefit parents of primary-age children most, because those parents most need support. Of course, these plans will be in addition to all the support that parents will already receive, and they will not be contingent on spending thousands of pounds on child care in order to qualify.

At Prime Minister’s questions recently, following a Budget empty of any measures to address the problem now, I asked the Prime Minister to explain why his Government had failed to take the action to help parents with child care costs before the next general election. He answered:

“We are helping families with child care, not least by giving 15 hours…That is happening before the election; it has happened under this Government in this Parliament—15 hours of free nursery care for three-year-olds and four-year-olds…Opposition Members say it is not enough; it is more than Labour ever provided.”—[Hansard, 26 March 2014; Vol. 578, c. 344.]

That was not only a very complacent response but, unintentionally I am sure, misleading, and goes to show just how out of touch this Government are on this issue of child care.

The previous Labour Government introduced 12.5 hours of free nursery education for three to four-year-olds a decade ago, back in 2004, with the clear intention that that would be extended to 15 hours by 2010. Far from this being a coalition policy, the plan was inherited by the coalition from the previous Labour Government. As I set out, the future Labour Government will continue to build on this legacy, extend it to 25 hours a week for working parents, funded by an increase in the bank levy, and guarantee wraparound child care.

This was the Chancellor’s final opportunity to introduce policies that will really benefit parents before the general election, to give much needed support to working parents now, not in 18 months’ time. Parents have already seen their child care costs rise five times faster than their pay. They are already spending more on child care than on their mortgage. They have already seen the number of nursery places fall by thousands. They have already seen hundreds of Sure Start centres close, despite the Prime Minister’s promises to the contrary. Of course, most stay-at-home mums, as well as working parents, already see child care costs as one of the biggest barriers to their going back to work or increasing their working hours. A review of the issue is both due and urgent, and I commend new clause 1 to the Committee.

Photo of David Burrowes David Burrowes Conservative, Enfield, Southgate

It is a pleasure to take part in this debate. It is always interesting to hear Catherine McKinnell. Essentially, she seeks to press a reset button in relation to a new Labour history—is it new Labour any more?—of child care. It seems that for Labour life started—or, it might say, ended—in 2010.

We did get to an element of truth at the end of the hon. Lady’s remarks when we heard reference to the previous Labour Government’s policies. When I came into Parliament in 2005, the Labour Government announced a new tax relief for child care benefits, which, as we heard, then went through various stages. In September 2009, the then Prime Minister, Mr Brown, fronted the extension of free child care for two-year-olds. We inherited those two policies. In the coalition Government’s first Budget, we confirmed that the previous Government’s measures were being taken forward. Therefore, any reference to the costs in 2010 must be a reference to the legacy of the previous Labour Government.

By any logic, this coalition Government merely extended the previous Government’s policy on tax relief and free child care for two-year-olds. It is inappropriate, and a partial view of history, not to refer to the legacy inherited from the previous Government.

I welcome the proposals on tax-free child care, not least the simplicity of accessing it. One of the big problems with the previous Government’s meddling relationship with child care was that it led to complexity and a lack of application and extension.

Photo of Bridget Phillipson Bridget Phillipson Opposition Whip (Commons) 6:30 pm, 8th April 2014

I should point out to the hon. Gentleman that it would be wrong not to acknowledge the great strides forward that were made in child care in the 13 years of the Labour Government. For the first time, child care was taken seriously as a matter for Government. In the past, it had been regarded as a private family matter, but it is not; it allows women to play a full role in the economy. Perhaps he could acknowledge that in those 13 years many good things happened that supported women back into work and allowed children to take up these places.

Photo of David Burrowes David Burrowes Conservative, Enfield, Southgate

I am a generous person, I hope, and I recognise that there were benefits, but we have to look at the history. Let us go back to 1990, when the then Chancellor, John Major, introduced the policy that meant employees would not be taxed on the benefits they received from using a nursery or play scheme provided by an employer. Perhaps the hon. Lady would like to intervene to recognise the benefits of his proposal. He set in train a process to allow more affordable child care by ensuring that the tax system recognised the need to give benefits, in particular, to women who need to be out and working and to have affordable, accessible child care.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

I certainly recall the efforts of Labour Members to try to sort out child care. I had two young boys at the time. I put my two little boys into a nursery and claimed the child tax credit vouchers, but then needed to get a nanny for them because my hours changed and the situation became impossible. It is rather like so many of the Opposition’s ideas: they might be all right in principle, but in practice they are absolute rubbish and do not meet the needs of our society.

Photo of David Burrowes David Burrowes Conservative, Enfield, Southgate

I am grateful for that robust intervention. There is obviously cross-party support for recognising that child care is a central and significant issue in dealing with parents’ ability to manage their budgets and go out to work.

The lack of affordable child care is one of the reasons for the increasing numbers of relatives looking after children, especially grandparents. Two thirds of grandparents—well over 5 million—regularly look after their grandchildren. It is important to recognise the wide variety of child care. As we properly extend formal child care, I encourage the Committee, and the Minister, to recognise the role and value of informal child care for the millions of parents and grandparents who are out there saving a lot of money—thousands of pounds a year—for working families. Yes, the cost of child care is one of the reasons for the increasing number of grandparents taking on this role, and it is an important factor in parents’ decisions, but the significance of grandparental child care cuts across many areas. One in three families relies on it; one in two single-parent families particularly relies on it. It is relied on especially by families with disabled children. Often they may be living nearby, perhaps on the margins of poverty. Grandparents play a very significant role in providing emotional, financial and practical support, often through short-term care in times of crisis which then extends into long-term care.

Black and minority ethnic households are more likely than other households to have a grandparent living under the same roof as the parents and the child, taking on caring responsibilities. As we extend formal child care, it is important to acknowledge the calls from vulnerable families in particular for more flexibility in terms of tax-free relief and, as has been said in other debates, unpaid leave for grandparents who are in work.

It is important to talk not just about pounds and pence, but about child care and development. A review on child development conducted by the Institute for Fiscal Studies and the Nuffield Foundation asked parents to rank the factors that motivated them to ask grandparents to care for their children. The top-ranking factor was trust and just below it was love. We have to recognise that. Yes, more affordable child care is needed to relieve the strain on grandparents and other family members, but at the same time what parents want is for the person looking after their child, particularly in their early years, to have a trusting, loving relationship with them. The report was published in 2012, but it still holds good. It provided evidence that care from grandparents often results in high vocabulary and socio-emotional development.

It is obvious to parents and, indeed, those relatives and friends who know their children best, that the love and general interest shown by grandparent carers is invaluable. It is hard to quantify in financial terms, but it is certainly valuable. Relatives put themselves out on a personal level and that is what we want for all our children. We want them to have that type of care, whether it be in a nursery, from a childminder or, more often than not, from a grandparent or relative. We want them to receive that extra support on a personal level, which is of immense value to the child’s development and care.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

I am not knocking grandparents, who obviously play a valuable role in many cases, but there are studies that clearly show that grandparent care does not necessarily mean a higher level of early-years education for children, and that care in a formalised or trained setting can be better for child development.

Photo of David Burrowes David Burrowes Conservative, Enfield, Southgate

I appreciate that and I have looked at various parts of that evidence, but it is important to recognise that the Nuffield Foundation and IFS report noted that, while being in formal child care appeared to make children initially more school ready,

“being cared for by grandparents did not significantly put children at a disadvantage in school readiness compared to children not in formal childcare”.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

I challenge the concept suggested by Opposition Members with regard to formal versus informal child care. It is incontrovertible neuroscience that a baby’s brain develops through being stimulated by the love of an adult carer, and that is what gives a baby its lifelong potential. Of course early-years education has its place, but in those very early, vulnerable periods in the first couple of years of a baby’s life, there is no doubt that the love of an adult carer—a primary or secondary attachment figure—is far more important than whether they are in a formal or informal child-care setting.

Photo of David Burrowes David Burrowes Conservative, Enfield, Southgate

I pay tribute to my hon. Friend for her work on “The 1001 Critical Days”, which highlights the importance of attachment, care and attention. Parents seek to find such care in a formal as well as informal child-care setting, but the reality is that families, particularly disadvantaged families, rely on the help of grandparents and relatives who are close at hand.

Undoubtedly, the Government are right to take important steps to make child care affordable, because obviously one of the key routes out of poverty is work, which we all support, but we should also support quality child care in all its forms.

There is also a need for flexibility. I have been seeking to make the point that we must have a wider understanding of child care. It involves more than grandparents, because at least 300,000 children are cared for full time by relatives, friends or other people. That often starts in a crisis or an emergency, when friends and family members step in, particularly those in the extended family—perhaps an older sibling, an uncle or aunt. Those people may have their own challenges. They may be in work, but have to stop work to care for a friend’s or relative’s child. They may be on a pension giving a fixed income, and there may be a significant impact on them. We must therefore recognise that there is a considerable impact on carers. A significant number of children are cared for by that group of people.

It is therefore right for the Government to focus on encouraging more people into work and to ensure that it does pay to work. We must recognise the impact on families on different earnings. Reference has been made to poverty. Statistics from the Joseph Rowntree Foundation show that 52% of children living in poverty are in single-earner families. One answer to that is the straightforward one of providing the single earner’s spouse, through the opportunity of affordable child care, with the choice of going into work.

We must recognise the Government’s statistics. The “Childcare and early years survey of parents 2012-2013”, which was released this January, had some interesting findings on parents. It is important to recognise that 71% of parents at home were there by choice, while only 13% of them cited cost as a problem. [Interruption.] Lucy Powell speaks from a sedentary position. If she wants to intervene, she may do so. I am simply citing a Department for Education survey from January 2014. Some 37% of working mothers said that they would prefer to stay at home and look after the children if they could afford it, while 57% said that they would like to work fewer hours and spend more time looking after their children if they could afford it.

According to the Netmums survey on “The Great Work Debate”, which had some 4,000 respondents, 33% of part-time working mums said that they would prefer to be at home. I am not here simply to bang the drum, but it is interesting that when one raises the issue of stay-at-home mums, there is immediately an artificial dividing line between yummy mummies exercising a lifestyle choice and those unfortunate mothers and others who want to work. I know that hon. Members will not want to make such a distinction, but it does happen and it can be paraded in that way in the media.

As a Conservative, I believe in freedom and aspiration. Freedom must include freedom of choice. People should be free to work, and we must ensure that affordable child care is available for them. However, we must also recognise that a considerable number of parents want to be able to choose to be at home. That involves income strands, and income is particularly relevant, as I have highlighted. Households on lower income levels, which are on the margins of poverty or indeed in poverty, often want to call on relatives and friends or their own family structures to support them. It is important to allow them the choice and flexibility to do that, and to recognise the impact on such family members in the tax system.

We can all agree that we must support aspiration as well as freedom. Aspiration includes the aspiration to work, and the aspiration of mothers or indeed fathers who want to give up their career or take a cut in their income to care for their family at home. The question is about how we can provide support. We will have a similar debate tomorrow on the transferrable married couple’s allowance, which would provide some recognition of that.

We can also all agree that raising children needs time. It needs time to cultivate relationships, and that can happen in a variety of forms. Such time is what many parents are striving for. Many parents look back on the fact that, because of all their other commitments, they did not have enough time to spend with their children. As Members of Parliament, we are probably the last people who should talk about that. We have our own concerns about that, and we can certainly declare an interest about our lack of time. I have six children, so I can understand that.

We also have to recognise that many parents—from looking at some surveys I would say most parents—want more choice and more opportunities to have time with their children. They also want to be sure that if they do not have the opportunity to care for their children at home because of the choices that they have to make, or if they prefer not to, there is a guarantee that they will be able to entrust their children’s care to others who will be able to give them the time and commitment that they need.

I welcome the Bill’s provisions, which will make massive strides in providing support for affordable child care. However, let us ensure that we do not lose sight of the need for greater flexibility, freedom and aspirations for families, so that we can support good-quality child care whether it takes place in a formal setting or through grandparents, parents or other relatives.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch 6:45 pm, 8th April 2014

This is such an important issue that I hope we do not end up with a false party political divide. The new clause is a sensible and proportionate measure that we should all support, because it would not tie anyone to anything much. It simply suggests that we should assess the impact of changes to the tax and tax credits system, to ensure that we all work together to make the system fairer, simpler and more cost-effective for parents and better for children.

The issue of child care is about both supporting supply and ensuring that it is affordable for the user, and both parts of that need to be simple. We have seen problems in the system, because without subsidy at the supply end there is a disincentive to provide supply. I have suggestions about how we might address that through the tax system, which I will come on to later.

Governments of all parties often talk about the difference between child care and early years education, and we have heard a little of that divide in this debate. However, I am sure that all of us who have had experience of the matter would like to see the two combined in most cases. When Governments talk about early years education, which is inevitably expensive, they mean providing 15 or 25 hours a week, not the number of hours that would be needed for somebody to work full time. I recognise that that is unaffordable at the moment, although I have ambitions on the matter—I do not speak for my Front-Bench colleagues, but I have aspirations for what they will achieve in time.

Child care needs to be different for different children. I will come to the issue of older children, but whether it is after-school care or pre-school care, flexibility is the key. I concur with Andrea Leadsom, although not completely—she decided to rubbish the Labour Government’s achievements, and I will make no apology for what Labour achieved through Sure Start, with a massive increase in the quality and availability of child care and reductions in cost in many places. As she, I and other Members recognise, flexibility is vital, because people, particularly in London, do not work nine-to-five as much as is often believed.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

I am moved to intervene as the chair of the all-party group on Sure Start children’s centres. I once wore a hat in the Chamber so that I could take my hat off to the Opposition for having created Sure Start. However, I hold to the fact that, brilliant as the idea was, there is still a huge amount to be improved on. I urge the hon. Lady to agree that we do not do nearly enough to focus on the developmental needs of the very young.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

There is cross-party support for all of that, because I agree that Sure Start was a revolution in early years support. I felt that it should continue so that there was Sure Start at the ages of five and 11. We would stray off the debate if I got into that territory, but my constituency still has 37% of children living in poverty and it is a young constituency. Families of all backgrounds have used Sure Start, learned from each other and got support. Whatever their background, people have challenges with their children at an early stage, and children really have got a sure start. Titles of Government initiatives often become glib, but Sure Start meant something to me and to many of my constituents.

The London assembly Labour group carried out a study on the London cost of living, and it found that flexibility in child care was particularly important in

London, where there are long commute times and variable hours. One of the benefits of the child care voucher system, which is not universal, is that where it has been taken up it has provided a good deal of flexibility for parents to buy into properly qualified, registered child care. Again, the study proposed by the new clause could investigate how to support quality through a tax voucher system. Of course, we have seen a reduction in tax credits, although I welcome and support what my hon. Friend Catherine McKinnell said about the U-turn on universal credit paying 85% of child care costs. The key point is that we can have Government initiative after Government initiative, but parents want the system to be kept simple. They want to know what money they have to play with and where they can spend it, which means that both the supplier and the purchaser of a service, in this case the parent, can understand the system.

We need cross-party agreement so that we have a system that sticks and is not tinkered with time after time so that people do not have to work out, “Does that apply to me? My child is going to be that age on that date, so does it apply to them? Oh, they have missed that cut off by one day, so that whole term will be more expensive than it will be for the neighbouring child, who got in by one day.” There are all sorts of silly little bits of the system that make it complicated for people to understand. Such things can be disincentives for accessing child care and ensuring that people get the right support, particularly mothers who are going back to work.

I am a London Member, and the new clause would particularly benefit people in London, because child care costs in London are inevitably higher. The costs of premises are higher. Although there is a minimum wage, child carers are rightly paid more, and in London their wages will be higher than in other parts of the country. Research by child care site found that a quarter of parents in London who were not in work were prevented from getting a job because of high child care costs. The Resolution Foundation found that one in five mothers who were already employed would like to take on an extra 10 hours’ work a week on average but could not do so because they would need the commensurate extra child care—not just 10 hours extra but enough child care to allow them to travel to and from work.

A parent in London buying 50 hours of child care a week for a child under two would face an average annual bill of nearly £14,000, if they can find a child care setting that opens during the hours that they need to work. In the current climate, in which people are expected to work longer and harder for their money, 50 hours of child care is the bare minimum. Anyone who is not working regular hours, as the hon. Member for South Northamptonshire said, would need the flexibility of having someone come to their home, or a very flexible childminder. That might be manageable for a child under two, but things get much more complicated with children above that age who are looked after outside the home.

Just over a year ago, I called for child care to become a top priority, and it is heartening that we are having more debates on the issue, but talking about it does not mean that the Government are getting it right with the offer of so-called tax-free child care. I will not repeat the arguments made by my hon. Friend the Member for Newcastle upon Tyne North, but the Government’s offer depends on how much people spend, and it is complicated for people to understand. I know a number of people on low incomes who have a simple approach to the tax system and who will find the proposal complicated. They will not benefit to the same extent because of the amount of child care that many of them will access because of their working hours.

I represent one of the youngest parliamentary seats in the UK. More than a fifth of residents are under 16 and more than a third, about 34%, are under 24, so child care is a big concern. I am stopped on the streets of Hackney South and Shoreditch by mums, childminders and others who want to raise that concern. When I ask any working parent what the toughest part is, they say that it is sorting out the child care, which is a logistical challenge as well as a financial challenge. I know that, because I am a working mother of three, and I am lucky to be well paid enough to buy in that flexibility. For anyone who does not have a salary as generous as mine, buying in that flexibility is very difficult.

Nationally, we know that 70% of working parents do not work nine-to-five Monday to Friday, and in London, because of the journey times, doing a full day’s work means long and expensive child care, if parents can get it. We have the most expensive system in the world. The review proposed in new clause 1 could consider examples from around the world. In Denmark, a day care Act means that local councils provide child care for all between 8 am to 5 pm, with parents and the Government—this is where new clause 1 would come in—contributing to the cost. Child care is free for families on the lowest incomes. The subsidy is tapered, depending on the family income—in this country, it would need to be done sensibly through the tax and tax credit systems—which means that three quarters, 76%, of Danish women are working. That is a huge improvement on the number of women working in the UK. I will touch on the points made by Mr Burrowes on women wanting to stay at home, but we need women to be economically active. This is not just about child care, but about giving women their rightful place in the work force. Hearteningly, women outnumber men in the Chamber at the moment. I applaud my male colleagues of all parties for being here, because this is not just a women’s issue. Women who play their equal role in society and in the work force are more satisfied, better role models and better parents as a result, if we make things as stress free as possible, which is about providing flexibility.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

That is such a sweeping statement. It completely undermines those women who choose to do the utterly groundbreaking and profoundly valuable job of staying home to raise their children. The hon. Lady is not being fair to those people.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

I will come to that point in a moment. I am saying not that women who want to stay at home and who can afford to do so should not make that choice, but that it is important that women have the choice to work and to be economically active and play their full role in society in that way. Even women who stay at home to look after their children for a period of their child’s early years may well need or want to work at a later stage. That choice is therefore important whatever stage we are talking about. We should not conflate being at home with a very young child under five with being at home all the time. Under the hon. Lady’s Government’s benefits system, parents have to work or they will seriously lose money, and their children will be pushed into greater poverty.

In Hackney South and Shoreditch, women’s average earnings are higher than men’s, which shows what could be achieved if that was applied across the workplace. A decent universal system of child care will pay for itself in the long run. More parents working and paying taxes, and not claiming tax credits and benefits, more than pay for the state’s investment. I do not speak for my party on this, but I hope that those who do take that mantle and look towards the overall goal of a universal free child care system that will pay for itself. That is an aim we need to work towards. If the Government agree to new clause 1, we will be set on a cross-party basis along that route. It would not solve the problem overnight or mean that things will be easy, but it would mean that we can look closely at the options.

As I have said, child care costs in London are higher than in the rest of the country. I will not go into the details but, for instance, a nursery place for an under two is £140 a week typically in London compared with a UK average of £109. I know many people who pay a lot more than that. There is an idea that people have choice, but it is not often the case. Many parents take the option of what is available at the time, which is why we need to provide incentives at the supply end.

I have a couple of suggestions that the study proposed in new clause 1 could consider. It could examine the idea of a London weighting in universal credit for the provision of child care. It could also consider more family-friendly approaches by employers. Practices such as working from home arrangements and on-site nurseries could be fuelled by tax breaks. Speaking as a member of the Public Accounts Committee, we would clearly need to monitor that to ensure that it was not abused, but the brilliant brains in the Treasury, including the Minister’s, could probably work through such a system.

We need to push private and public sector providers to extend the hours available to parents, particularly late in the evening and weekends. That could happen through a tax incentive or a tax break system. There are an awful lot of opportunities. The Minister is nodding. I am sure that she, as a working mum, will recognise the challenges and needs.

I commend to colleagues the London cost of living report by the London assembly Labour group. Although it is a Labour report, it can be read by other parties. I read it as a cross-party report. The Institute for Public Policy Research has done a big bit of work on child care. It has found that directly funding child care facilities, which happens in other European countries, can function better for parents and be more cost-effective, because there is a guarantee of a place. We have to monitor and ensure that the money is not wasted, but it would mean certainty for the supplier, which means certainty for the parent trying to buy.

I want to pick up on some of the comments made by other hon. Members. The hon. Member for Enfield, Southgate talked about the importance of informal child care and I think we would all agree with that. Any parent will use informal child care at some point, whether for an evening out or as part of a longer-term arrangement with grandparents. Let us be honest, though. Not every grandparent wants to take on child care. I meet grandparents, and those whose own parents are caring for their children, who say that they do not necessarily want to take on child care but feel they should to support their child. Many of those grandparents are young and give up work to look after their grandchildren. That is fine if it is a matter of choice, but it is a real issue if they feel they have to step in because of the lack of availability and options. There is a danger of creating generational issues. For every individual who wants to work but cannot, we reduce the tax take. We need to bear that in mind.

The hon. Member for South Northamptonshire talked movingly about the loving bond in early years. I completely agree that that is important, but it is not exclusive to informal or formal early years education or child care, and I hope she did not interpret any of my comments in that way. It is not either/or: love at home and in a child care setting are both very important. Of course, some children do not get that love in the home in the same way that others do, and some get it more in their child care setting. I will resist the temptation, Mr Amess, to thank all the fabulous child carers my children have had over the years in different settings, but when my children love their child carer I am happy about that, because I want them to be loved and happy when they are not with me. That should come in all settings, but I also want to ensure that they are getting the education and support that I am not there to give them when I am here in this Chamber discussing child care, rather than delivering it. No one disputes that a loving bond is necessary, but I think we would all agree it can come from all settings and, hopefully, in all cases.

The hon. Member for Enfield, Southgate talked about choice. New clause 1 touches on this issue, particularly in relation to early years. Maternity leave, a great breakthrough of the Labour Government, is now allowed for a year. It is not paid in most cases for a year, although some generous employers do. We could consider proper paid maternity leave for a year to match the entitlement, so that mothers are not pushed to go back to work if their household income relies on their salary. Shared care is coming in, but even that does not necessarily solve the problem for women who really want to be at home with their children. I would have loved that. I did not have that option and I would love to see it for other women if it could be found to be affordable. There may be ways, through the tax system, to consider that.

Finally, tax incentives and simplification could be extended to childminders and other flexible child care, as I touched on earlier. Childminders are a backbone for many parents in providing flexible child care. Thankfully, childminders are now professionalised so we do not have cowboys in the business. I pay tribute to the 40 very active childminders in our childminders’ network in Hackney who bang the drum positively for quality child care. They are small business women—I think they are all women—and there may be ways to encourage more people to be childminders by making it simpler to set up that sort of business. This is not a point about regulating the quality of child care—I am firmly of the view that that is vital—but there may be ways of making the tax paperwork easier. That could be easily considered if new clause 1 was adopted. I would also like to see support for alternative models, such as social enterprises and co-ops, by making sure that the tax system allows support for them as suppliers.

New clause 1 is proportionate and measured. It does not ask the Government to spend a lot of money or commit to a great deal. It asks them to set the ball rolling, so that we can have an open and honest debate on the costs and benefits of child care. We need to consider carefully and closely what incentives can be brought in through the tax system and how they could impact on both supply and demand. That would be a good start and a good basis for us all to work from, so that at the next general election every politician—not just the women who form the majority in the Chamber today—and the party leaders will be talking about child care as a vital issue for the future of our country.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire 7:00 pm, 8th April 2014

It is a great pleasure to follow Meg Hillier, with whom I agree on many aspects of early years.

The first thing I want to say is that children are everything to those of us who have them, and to those of us who have young nieces, nephews and grandchildren. Children are at the centre and heart of our world. They make incredibly selfish human beings become extraordinarily unselfish. It is when a child is about to get run over that a parent gets superhuman strength to push them out of the way. People are capable of the most enormous sacrifices for the sake of their children. It is clear to us all that top quality child care is vital.

In my case, with three kids of my own—aged 18, almost 16 and 10—I have had just about every form of child care that can be imagined. I was fortunate to start off with my stepfather acting as my nanny until my second son was five years old. Therefore, I thoroughly recommend informal child care. There are not many childminders who will take two little boys out—one in a backpack, one in a frontpack—and explain to them for hours what a worm cast is, build little toy forts and play with toy cars. Even today, I cannot get to Parliament until I have dropped one off at a friend’s, sorted out another with some A-level revision and got the third out of his bed, basically. For us, particularly mums, our children and the child care at whatever age they are—I talk to people with older children who are still looking for food, money or a taxi service—are at the centre of our lives. We all spend a lot of time thinking about the safe and happy lives of our children. Child care is a vital part of whatever we can offer to support those at work in our society.

We also need to support thoroughly the choices that families want to make. They may want an au pair and to deal with someone who is living in and who, perhaps, does not speak very good English. I asked one au pair I had to make a salad. She peeled some parsnips and gave us the peel, nicely dressed, as a salad. That was an interesting one. There are also childminders although, sadly, not nearly enough of them. There is also the formal child care setting; some truly superb, others truly awful. Unfortunately it was the formal child care setting—the nurseries—that led to the old joke about “hair or care”; in other words, someone not smart enough to be a hairdresser could try to become a nursery nurse. That was the reality 10 years ago where some young girls—themselves barely out of their teens—would become the carers looking after our very young children in nurseries. Care for our children comes in all shapes and sizes.

I also want to say a word on behalf of those heroic mums—I would have loved to have been one—who have stayed home and looked after their children themselves, giving up potentially lucrative, satisfying and successful careers. They might feel very depressed about their lack of self-worth, certainly in the eyes of too many politicians. I want to pay tribute to those women who decide to stay home and raise their own children.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

I just want to go back to the point about au pairs and others. Will the hon. Lady acknowledge that with the cost of housing and the overcrowding in many cases in London, the idea of someone living in your home is not an option, which is why the formal setting is particularly important in a city such as London?

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

Yes of course I agree. My point was merely that child care comes in all shapes and sizes. My real point is that we should support the choices that families want to make, which are the best choices for them. That is particularly why I am so delighted that the Government have introduced shared parental leave. What more choice could there be for a woman who perhaps is earning more than her husband than to be able to decide to go back to work in the knowledge that he will be doing that critical early part of the child care? That is a huge tribute to the Government and many families will be delighted. It will be life changing for them.

Another area for which the Government deserve a lot of credit is the introduction of the early years professional status, particularly to deal with the quality of child care. I have been told by the Under-Secretary of State for Education, my hon. Friend Mr Timpson—who is Minister for children—that early years professional status will require a great deal of training. It will involve learning about the importance of secure attachment, about how the brain of a baby develops, and about how vital it is for the baby to receive loving, attentive care, whether that care is provided by parents or in a formal setting. As Meg Hillier pointed out, when life at home is devastatingly awful because of domestic violence, bereavement or drug or alcohol misuse, the attachment needs of a baby may be far better met in a formal child care setting than at home. What is really important is choice and good quality.

Another enormous tribute should be paid to the Government for the creation of childminder agencies. I know that that has been a contentious issue, but I believe that children’s centres that adopt childminder agency status can serve as signposts for all families who seek child care. They can provide ongoing professional development for childminders, many of whom have felt unloved and uncared-for over the last few decades—which, along with over-regulation, has been their reason for leaving the business. The agencies can help childminders to understand regulation, to become established, and to provide the top-quality care that they so want to provide.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

I thank the hon. Lady for being so generous with her time. Childminders have told me that their main fear is that childminder agencies could replicate the private sector company model for older people’s domiciliary care, creaming off a profit from childminders’ salaries and not delivering a good service. The hon. Lady has described an entirely different model. Does she have any inside information about what will be announced?

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

I do not, but I can tell the hon. Lady that I have been lobbying the Minister, and telling him that children’s centres could play a fantastic and very appropriate role if they became childminder agencies. I think that the support, encouragement, training and quality control that they could offer would be good for childminders, and it would certainly be good for families.

What else have the Government done for families? They have done an enormous amount. Child care tax credit has been given a huge boost: a contribution of up to £2,000 per child will greatly help families to make the right child care choices. Even more significant is the increase in the tax-free personal allowance, which has put an enormous amount of money back into the hands of taxpayers, and which will benefit working families of all shapes and sizes. As was pointed out by my hon. Friend Dr Coffey, the fuel duty freeze has made the cost of living for families lower than it would have been under the Opposition.

But what have we really, fundamentally done for our children—the children who are at the heart of everything that we do? We have paid down the deficit by a third, which is no inconsiderable feat. Why is that so important? As a result of the financial crisis and the Labour Government’s overspending, we put ourselves in a position in which we stole not just from our children, but from our grandchildren. We mortgaged their future. This Government have paid down the deficit significantly, with the intention of clearing it altogether so that we can start to reduce the debts that our children and grandchildren would otherwise be paying. We have been able to keep the cost of borrowing down, because we had a credible plan for returning strength to our economy. That has enabled all families with mortgages to keep down their borrowing costs, and has been a huge boost to families that is never talked about.

What is the payback? Our economy is the fastest-growing in the developed world. Wages are rising faster than they have done for seven years—that was announced today—and the private sector has created 1.6 million new jobs. That means that well over 1.5 million new families are finding work, and are able to meet the needs of their household budgets.

Photo of Bridget Phillipson Bridget Phillipson Opposition Whip (Commons) 7:15 pm, 8th April 2014

I will make a brief contribution and put on record just how much progress was made under the previous Labour Government. Child care was previously regarded as something for families to deal with on their own. When Labour came to power in 1997, there was no guarantee that children had access to a nursery place. In many areas, nursery school provision was such that there simply were not the places available even when children wanted them. We should also remember the Sure Start children centres and all the work that went into them. It is important to acknowledge that a major transition was made. The fact that we are debating child care here today shows just how much progress we have made.

I recognise that Government Members want to deal with this issue. It is just unfortunate that the measures they are talking about will not come into force until after the general election, if they were to be re-elected. That is disappointing because families in my constituency need help now.

Families across the country are facing a reduction in the number of places at the same time as costs are rising. Those of us with children know just how difficult it can be to find child care that meets the needs of families now. As has been pointed out, we in this House are very fortunate in having the luxury of being in well-paid jobs that allow us to make choices, but for many of my constituents who work shifts or who are on zero-hours contracts or have insecure employment those choices simply are not available.

We have had an interesting discussion about the role of informal child care, with some useful points being made on both sides. Many families, mine included, rely on grandparents and other friends and family to help out, and they provide invaluable support and play a very useful role. I do not in any way denigrate that support, but children from the most disadvantaged backgrounds benefit the most from having access to high-quality formal child care.

When I visit nurseries and primary schools in my constituency, it becomes clear just how important for their development it is that children are given the best start in life and have access to early years child care. That enables their vocabulary to develop and gives them access to a whole range of different experiences that sometimes are not available in the home for one reason or another, whether it be poverty, domestic violence or mental health.

We have a long way to go on this issue. Labour’s policies are on the right lines. This is a sensible new clause, and I hope the Government will take action now to help families, rather than waiting until later. Families need action now.

Photo of Nicky Morgan Nicky Morgan The Economic Secretary to the Treasury

It is a pleasure to serve under your chairmanship, Mr Amess, and I thank all Members who have spoken in this debate. After a rather partisan opening speech, the debate improved and we had a genuine discussion of views, which will no doubt carry on throughout the Committee stage of the Finance Bill. We will also be able to discuss child care measures in greater detail later in the year.

I take on board the comment of Meg Hillier that there is a certain irony in the fact that all of us in the Chamber debating this matter today have children yet we are discussing this rather than spending time with them. If my son were here at the Dispatch Box, he would be very opinionated and have plenty to say on the subject of what I get up to, and I suspect that applies to the children of other Members.

New clause 1 asks the Government to conduct a review of the affordability of child care, but while Opposition Members are proposing yet another review, this Government are taking action, and have taken action, to address the rising costs of child care faced by families.

Before I address the Opposition new clause, let me briefly set out this Government’s approach to supporting parents with their child care costs. As the hon. Member for Hackney South and Shoreditch said, we on this side of the House believe in the importance of flexibility. We do not want to prescribe any further the number of hours that families should have. We want there to be full flexibility, and that is one of the advantages of the tax-free child care provisions this Government are suggesting. Parents and families will be able to build up credits in accounts and will then be able to spend them in the way that suits them best.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

The flexibility of provision is as important as the flexibility of payment. It is no good talking about flexibility if the child care provider does not provide it or does not provide the number of hours and length of day needed, whether long or short. What are the Government planning to do about that?

Photo of Nicky Morgan Nicky Morgan The Economic Secretary to the Treasury

I take that point on board. I shall come on to talk about the number of child care places, but the hon. Lady is right: flexibility in all sorts of different ways is what is important. Having the money in an account that the family can decide how to spend is an important part of the policies we have introduced.

My hon. Friend Mr Burrowes was absolutely right to say that this was all about choice. Bridget Phillipson talked about maternal employment. That is a debate that we need to have in this country. We know from various surveys conducted by the Department for Education that some mothers want to work, and some need to work. Many of those who need to work find child care costs a barrier to going to work. That is why it is so important to have this discussion.

Child care costs are a major part of most working families’ budgets. Figures from the Family and Childcare Trust show that, between 2002 and 2010, child care costs increased by around 50%. The Government have therefore taken action to tackle those rising costs. We have funded 15 hours a week of free child care for all three and four-year-olds, and extended that offer to the 20% of most disadvantaged two-year-olds. We are now extending it further so that, from September 2014, about 40% of two-year-olds will be eligible. As my hon. Friend Andrea Leadsom pointed out, the Government have also increased child tax credit to £3,265 a year, which is £420 a year more than it was at the last election, representing a rise significantly above inflation. We have also introduced shared parental leave.

The Government are also taking action to drive up the supply of high-quality child care provision—for example, by legislating for childminder agencies, which will make it easier to set up a childminding business; making it easier for schools to change their school day and encouraging primary schools to open for longer; and reducing bureaucracy and red tape for providers. Encouragingly, the most recent information shows that costs in England have stabilised. The National Day Nurseries Association has reported that the average fee increase across all nurseries was 1.5%, which was well below inflation. The latest survey from the Family and

Childcare Trust shows that the cost of after-school clubs in 2013 was £49.71 per week, and that in 2014 it is £48.40. Also, the cost of childminders’ after-school pick-up was £72.79 in 2013 and it is now £64.75—a 12.8% reduction in real terms. Opposition Members have talked about the availability of child care places, but it is worth noting that the number of child care settings rose from 87,900 in 2010 to 90,000 in 2011. This equates to 2 million early-years places, or a 5% increase on 2009.

My hon. Friend the Member for Enfield, Southgate talked about informal child care, and he was right to suggest that that is an important subject. A number of families rely on grandparents and other family members to provide child care, and it is important that we recognise that. However, I also have sympathy with the view that formal child care settings are important. We need to know that our young children are ready and able to go to school. I am not saying that that cannot happen in an informal child care setting, however. As I have said, it is a question of choice and flexibility.

Let me now turn to new clause 1, which asks the Chancellor to publish a review of the affordability of child care costs. We believe that such a review is unnecessary, because in addition to the actions I have already outlined, the Government announced a new scheme in Budget 2013 to help working parents with their child care costs. I do not know whether the hon. Member for Hackney South and Shoreditch really meant it, but she said that the review would “not tie anyone to anything much”. Actually, that is part of the problem with the proposal. We want to get on and bring in our provisions as soon as possible.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

What I meant was that the review would not require the Government to act on its findings. However, it would give us all a basis on which to argue about what was best for local people and, I hope, reach consensus. It would not stop the Government doing what they were already doing, but it could open up other opportunities.

Photo of Nicky Morgan Nicky Morgan The Economic Secretary to the Treasury

I believe that some of those policy issues will come out in the debates that we are going to have on tax-free child care. Rather than postponing our activities while we have yet another review, I want to get on and make progress. I want families to know that we are serious about listening and helping them with child care costs and the availability of places.

We have consulted widely on the detail of the scheme. More than 35,000 responses were received to last year’s consultation, and we have listened to that feedback. On 18 March this year, we published our response to the consultation on tax-free child care. This was welcomed by families and child care providers around the country, and as a result of the consultation, we are rolling out tax-free child care more quickly than had previously been announced. It will be launched in autumn 2015 and rolled out to all eligible families with children under 12 within the first year of the scheme’s operation. That is significantly faster than previously announced, as children under 12 would have gradually qualified for the scheme over a seven-year period.

The Government will also now provide 20% support on child care costs up to £10,000 per year for each child via a new simple online system. The cap had previously been set at £6,000. That means that families could receive up to £2,000 child care support per child—two-thirds more than originally planned.

We expect that tax-free child care will be open to at least twice as many families as the current employer-supported child care scheme. At the same time, we announced that all families eligible for universal credit will benefit from additional support at 85%, rather than just taxpayers as previously consulted on. We have also announced £50 million for an early-years pupil premium to help improve outcomes for the most disadvantaged three and four-year-olds in Government-funded early education. Taken together, the Government’s child care offer will provide flexible support for all eligible working families while maintaining free, universal early education support.

The Government are also taking wider steps to support hard-working families. The income tax personal allowance will rise to £10,000 in 2014-15, and in the Budget we announced a further increase to £10,500 in 2015-16. That is a tax cut for 25 million people. Since 2010, this Government will have taken 3.2 million people on low incomes out of paying income tax altogether. It is worth noting that of that 3.2 million, 56% are women, which is something to be recognised and welcomed.

The Government have also helped local authorities freeze council tax in every year of this Parliament, and we have taken action on fuel duty, saving a typical motorist £680 by 2015-16. The shadow Chief Secretary to the Treasury talked about the fuel duty cut being a theoretical cut. Perhaps he would like to chat to the shadow Economic Secretary who quoted from the Asda Index, which showed that families now have slightly more discretionary income to spend per week, and it attributed that to a fall in motoring costs—[Interruption.] I suggest that Catherine McKinnell read the press release, as it made encouraging reading.

The changes suggested in new clause 1 are unnecessary and would not help hard-working families with the cost of child care. The Government have already reviewed how best to improve child care through the Childcare Commission, which was launched in June 2012. We do not need another review. We need to take action now to support hard-working families, which is why we are supporting parents through tax-free child care and universal credit. More people than ever before will be eligible for that support. We have consulted widely on these changes, and our proposals have been welcomed by families and providers around the country. I therefore request that new clause 1, which was tabled by Opposition Members, be withdrawn.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

This has been a well-considered and well-argued debate, but the essential facts remain. This Government have presided over soaring child care costs and have cut tax credits for thousands of families, meaning that even when their proposed long-grass support is eventually introduced, most families will still be worse off than they were in 2010. Parents and working families need help now, not in 18 months’ time, so I urge hon. Members on both sides of the Committee to back new clause 1, which would secure a review of action that the Government can take to provide the support that hard-pressed families up and down the country so desperately need today.

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

The Committee divided:

Ayes 226, Noes 286.

Division number 248 Foreign and Commonwealth Office — New Clause 1 — Childcare provision

Aye: 226 MPs

No: 286 MPs

Ayes: A-Z by last name


Nos: A-Z by last name


Question accordingly negatived.

The occupant of the Chair left the Chair (Programme Order, 1 April).

The Deputy Speaker resumed the Chair.

Progress reported; Committee to sit again tomorrow.

Photo of Charlotte Leslie Charlotte Leslie Conservative, Bristol North West

On a point of order, Madam Deputy Speaker. I would like to apologise for failing to inform the Register of Members’ Financial Interests of financial donations to my local Conservative party in a timely fashion. I discovered this in August last year, and immediately acted to register these donations, which were already registered with the Electoral Commission. I have today been alerted to the fact that because of this I have asked three written questions, made my maiden speech and one intervention and asked a Select Committee witness a question, all without declaring a potentially relevant interest. I can confirm, however, that I have in no way personally financially benefited.

Although I am registered dyslexic and sought to put in place additional administrative support as a result, I take complete responsibility for this. I am unspeakably sorry that despite all the efforts that I made as a new MP to get things right, I have nevertheless made this very serious error, and I want to reiterate my heartfelt apologies to the House and have sought the earliest possible opportunity to do so.

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

I thank the hon. Lady for that point of order. It is not a matter for the Chair, but I am sure that the House has heard, and the record will show her comments.