Clause 2 - Qualifying childcare

Childcare Payments Bill – in a Public Bill Committee at 10:30 am on 21st October 2014.

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Question proposed, That the clause stand part of the Bill.

Photo of David Heath David Heath Liberal Democrat, Somerton and Frome

I want to raise one point briefly with the Minister. She knows that I am concerned about access to child care in rural areas. Of course my constituency plays a large part in that, but there are many constituencies around the country in which it is extremely physically difficult to get to child care provision. The problem is of course that there needs to be a critical mass for a nursery to be viable, and in many rural areas there  simply is not the population to support a multiplicity of nurseries. This means that people have to travel a reasonable distance, which can often be extremely difficult. I very often say to the House that my village has one bus per week. I am not sure whether anyone believes me, but it is true. If people do not come back within two hours, it will be a week before they can return, if they do not have private transport. That is an illustration of how difficult it is.

Travel is also expensive. I am concerned that in some rural areas a further barrier is the cost of getting children to the place where child care is provided. This can be a significant part of the total cost. I ask the Minister simply whether it is possible to bundle up some of the access costs into the qualifying child care regulations for those people whose transport costs form a significant part of their child care costs. That would make a real difference, and I ask the Minister to take this away and ask her officials to at least look at it. It is entirely proper that the cost of getting a child to the nursery be part of the cost of providing child care. It will not be easy to find the funds to cover these costs, but we should consider this, with the provision that there is some regulation regarding what would or would not qualify. The total must still fall within the cap. I see no reason why the total should exceed the cap, because the cost of child care in rural areas is generally not at London prices—there is certainly no need for it to be at London prices—so I do not think that this would approach the £10,000 cap.

Help with transport costs would be a significant boost to people who are in great need of this provision on two grounds. The first is that it is often more difficult to find employment in rural areas, and the second is that the dangers of lack of socialisation and isolation are greater for young children in areas where they are not regularly in contact with other children. As I say, I do not expect the Minister to say, “Yes, of course, that is a good idea and I shall implement it immediately.” However, I request that she ask her officials to look at whether it is possible for the regulations to meet what I believe to be a modest request.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

It is a pleasure to serve under your chairmanship, Mr Sheridan, and to serve on this Committee. Members of the Committee will already be aware that provisions in clause 2 allow parents to use the scheme to purchase child care only when the main purpose—or one of the main purposes—is to help them to work. However, such a requirement will cause headaches for all parents, and is likely to prove particularly problematic for parents of disabled children. I would therefore like to take this opportunity to highlight the importance of relaxing these restrictions by broadening the definition of qualifying child care, and making sure that the available support is made more flexible for these parents.

We are all aware that access to good-quality, affordable child care is important for all parents. The quality of provision has a positive impact on children’s learning outcomes, as well as enabling parents to work. However, we must also be conscious that the relationship between work, family life and child care is not always straightforward, particularly for families with disabled children. There are intricate complexities that are unique to individual families. Indeed, it is impossible to foresee and cater for every eventuality, although that is not to say that we  cannot look to do more with the knowledge that we have. I was therefore pleased to see the Minister acknowledge in her letter to the Chairs of the Committee the additional challenges faced by parents of disabled children, and offer a commitment to giving more support to these families.

One such complexity that is destined to arise is that the parents of disabled children need to buy child care outside of normal working hours, in order to allow them to combine caring and working. This may, for example, be over the course of a weekend, or perhaps for the purpose of providing respite care or short breaks. An extended definition of qualifying child care would be very beneficial for those parents. Let us also remember that for families with disabled children in particular, access to good quality child care is of great significance, because they are comparatively far more vulnerable to poverty.

It is an unfortunate reality that childhood disability is frequently a trigger for poverty, because families incur considerable additional and ongoing expenses as they care for their child or, in many cases, children, with it costing as much as three times more to bring up a disabled child than a child without disability. As a direct consequence, parents with disabled children are more dependent on accessing child care provision to support family well-being and to manage an often extremely tough combination of caring and work. To complicate matters further, disabled children are also more dependent on organised activities that fall within the child care registration system to stay active, make friends and participate in activities outside school.

Adding to the burden imposed by the higher everyday costs incurred is the fact that less quality child care provision is available for parents of disabled children to access. Only two in five parent carers believe there are child care providers in their local area that can cater for their child’s disability, while only 35% feel that providers are available at times that fit around daily commitments. We have had an example locally in Stockton-on-Tees, where the parents of one child are absolutely distraught at the decision of the local hospital foundation trust to close the nursery at North Tees hospital, where they believe provision is of high quality and specialist enough to cope with their child’s special needs.

This is not the case at North Tees, but generally speaking, where suitable child care for disabled children is available, it is often significantly more expensive than care for non-disabled children, which can render such options unattainable for many parent carers. That does not help parents of disabled children to return to and access work.

I was pleased to see the Minister acknowledge the additional child care costs that such families will need to meet, and to hear her commitment to exploring the possibility of going further to support them. I hope the written and oral evidence presented to the Committee will convince her that she needs to go further. I look forward to hearing her expand on the theory outlined in her letter.

As the Committee heard when taking oral evidence, a recent parliamentary inquiry found that 38% of parents with disabled children paid between £11 and £20 an hour for child care, while 5% paid much more than £20 an hour. That is obviously very high, particularly when compared with the national average of £3.50 to £4.50.  As a result, 72% of such families were forced to cut back on, or give up, work. That not only risks forcing parent carers out of the labour market, but leaves working parents to pay what amounts to a significant income penalty due to their child’s disability. There cannot possibly be any fairness in that.

It would therefore make eminently good sense to expand the definition of qualifying child care to include that which supports carer well-being or educational and social activities for disabled children. As a feasible alternative, the parents of children with disabilities could simply be exempted from the requirements in clause 2. That would, effectively, allow them to qualify for child care under the regulations, because they would not be subject to the specific requirement that the cost of child care was incurred for work purposes only.

I hope the Minister will consider those potential courses of action when exploring the possible additional support that can be provided to parents of disabled children. She has gone some way, but I hope she will go the extra distance and make the difference that is needed.

Photo of Maria Miller Maria Miller Conservative, Basingstoke

It is a great pleasure to serve under your chairmanship, Mr Sheridan, and to have the opportunity to welcome this Government Bill, particularly because it will make tax-free child care available to almost 2 million families and to 200,000 self-employed people for the first time. That is particularly welcomed by working women in my constituency; as I am sure Members know, record numbers of women are now in work in this country.

I want to make a short contribution to the clause stand part debate to build on what the hon. Member for Stockton North talked about: what constitutes qualifying child care, as set out in clause 2. It is clear that the Bill is about supporting working families and those who are moving into work, and that is clarified in clause 9, which says that a person or their partner will be eligible under the Bill if they are in qualified work or moving into qualified work. However, there is merit in considering what is required, as subsection (2) says,

“to enable the person to work”.

Families with disabled children face particular difficulties; the hon. Gentleman set out a number of examples.

In Basingstoke we are privileged to have the KIDS nursery, which Hampshire county council helped establish. It is there particularly to support disabled children. Parents at that local nursery have explained to me clearly the distinct problems that parents of disabled children face when trying to get into employment. Short breaks and respite, for example, which may not occur when an individual is in employment, enable individuals to recuperate and have the energy to continue to be a working, contributing member of our community.

I urge the Minister to go a little bit further, if she is able, and provide details about the Government’s recognition that parents of disabled children—families—may require additional child care support. I know that the Government understand that parents of disabled children face higher child care costs, and that that might restrict their ability to get into employment. Evidence from the Family and  Childcare Trust showed that the way the system works at the moment may be restricting the supply of child care for disabled children.

It is not necessarily advantageous for such detail to be included in the Bill. There is far more flexibility to do that in regulations, and I could accept the Minister’s saying that. However, I hope that she takes this opportunity to reassure Committee members that these differences and difficult circumstances faced by many families with disabled children have been fully recognised by the Government, and that that recognition will be acted on, either in the Bill or through regulations that will support it.

Photo of Lucy Powell Lucy Powell Shadow Minister (Education) 10:45 am, 21st October 2014

The Opposition have not tabled any amendments, but there are a few grey areas that I hope the Minister will use this opportunity to clarify.

The clause defines what qualifying child care is. The two qualifying criteria are that the child care must be

“registered or approved childcare”,

and

“the main reason, or one of the main reasons, for incurring the costs of the childcare” must be

“to enable the person to work”,

and where they have a partner, the clause specifies that the child care must enable them to work, too. Obviously, we strongly support the principle behind that. On eligibility to qualify for the scheme, the Bill sets out how “work” will be defined for the purpose of the clause. It suggests that “enabling persons to work” will be defined as meeting the minimum income rule.

What steps is the Minister taking to define more clearly “enabling persons to work”, where they might also have a minimum income? For example, if they are in training, to what extent could that be used? They may be in paid work elsewhere, although being paid a small amount, but are in education and training for the other part of the week. Perhaps she will clarify what that means. Looking more closely at the explanatory notes, there is also confusion regarding the suggestion that this will be tested and measured in other ways, other than simply by how much a person earns.

Paragraph 30 of the explanatory notes states:

“This means that a person cannot use the money in their childcare account, which the Government will have topped up, to pay for childcare that enables them to pursue leisure activities. For example, if a person works for one day a week and pursues a hobby for two days a week, they will be able to use the funds in their childcare account to pay for childcare only for their one working day a week. They will not be able to use their childcare account to pay for childcare for the two days a week when they pursue their hobby.”

There will be no other checks to ensure that rule is met. Indeed, the explanatory notes go on to clarify that paying for child care to enable a parent to travel to work will be permissible. Again, this suggests that the Government, or HMRC, will require further proof from parents about whether they meet the minimum income rule and what activities they are undertaking in the rest of their week. Do the Government intend to require parents to prove that they are not using top-up payments to enable them to “pursue leisure activities” and how will they define travelling to work? If not, why is that requirement not made clearer in the draft regulations?  Do the Government intend to introduce further regulations that set out the kind of activities that parents can and cannot pursue while paying for child care? Can the Minister clarify the issue of training and education? I echo the comments made by my hon. Friend the Member for Stockton North about the other reasons that parents might want to claim for childcare. For example they may claim for respite for a disabled child while working on other days, and claim child care for days when they are not in work. That is a grey area and I hope that the Minister will take the opportunity to clarify the issue.

Photo of Priti Patel Priti Patel The Exchequer Secretary

We have heard already, and I will explain again, that the objective of the new scheme is to ensure that parents can choose to go out to work and are not prevented from doing so because of the high cost of child care. Fundamental to the scheme is what is meant by child care for these purposes. As we have already heard, the definition is set out in clause 2. It contains two conditions which child care must meet to be treated as qualifying child care.

I will respond directly to the points made by the hon. Member for Stockton North and my right hon. Friend the Member for Basingstoke, in particular about their focus on disabled children. Obviously, the Committee saw my letter last week, which was very clear that we recognise that parents of disabled children face a range of additional challenges as well as costs and burdens when they are trying to fulfil working life alongside caring for a child. It is challenging and incredibly difficult. We have already recognised that by allowing support under the scheme to continue until a disabled child reaches the age of 17.

A number of points were made about whether parents will be able to use the scheme to pay for short breaks, assistance and cover in terms of carers’ breaks. Parents will be able to use the scheme to help pay for a disabled child to take a short break, providing the care meets the definition of qualifying childcare and the parent is using the child care to enable them and their partner, if they have one, to work. The scheme will also support parents of disabled children in other ways. We recognise that the costs of child care are incredibly high.

I re-emphasise the points that I made last week to remind hon. Members of my commitment to look at increasing the limit for parents of disabled children. I am very keen to engage with interested parent groups to discuss how that might be done. It is important that we invest time to try to get this right. I assure the Committee that I will make any necessary changes to draft regulations in due course. The scheme as it stands recognises that this is a difficult issue and that disabled children need specialist care, which is expensive. Therefore we are extending support to care that is regulated by the Care Quality Commission and allowing parents to use domiciliary care to access the scheme as well.

Photo of Maria Miller Maria Miller Conservative, Basingstoke

I thank the Minister for giving way: she is very generous. Her comments are welcome and I am sure that parents listening to this debate will recognise that she has worked incredibly hard on this and will be extremely pleased with the comments she has just made.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

I echo those comments. For the sake of clarity, is the Minister confirming that short breaks and respite care would qualify 100% under the scheme?

Photo of Priti Patel Priti Patel The Exchequer Secretary

I thank both Committee members for their comments on and contributions to the debate on this important clause and for the points that they have just made. As I have said, we want to spend time with parents and stakeholders to get it right. I do not think that anybody would benefit if we were to rush into a decision. It is vital that we get it right. We developed the scheme to give maximum benefit to families and children.

I thank the hon. Member for Somerton and Frome for his contribution and observations about travel time. That is particularly important in rural communities, and it is important to recognise the challenge that it poses for all working families and households, full stop. The main reason test allows parents to use their childcare account to pay for child care that enables them to work, and that includes commuting time. We have outlined an example in draft guidance, but the point is that child care covers travel time from the nursery to work and back each day, which will enable a parent to access and use their tax-free child care account to pay for their total costs.

Photo of David Heath David Heath Liberal Democrat, Somerton and Frome

I am grateful to the Minister for that helpful comment. Actually, I was referring specifically to travel costs rather than time. Sometimes it will be necessary to hire a taxi in order to access child care.

Photo of Priti Patel Priti Patel The Exchequer Secretary

I hope that I can assure the hon. Gentleman that we are addressing an aspect of that. Potentially, as the scheme evolves and as we assess it, we might look into wider considerations and aspects.

Photo of Lucy Powell Lucy Powell Shadow Minister (Education)

I know that the Minister has moved on from this point, but I wanted to put on record Opposition Front-Bench Members’ gratitude to her for the concessions that she has made on parents with disabled families and their ability to use the payment for respite. She has done a fantastic job getting that through.

Photo of Priti Patel Priti Patel The Exchequer Secretary

I thank the hon. Lady, and I welcome her comments on this important issue. We must all work collectively to achieve the right outcome. I have nothing else to add on this clause, so I commend it to the Committee.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.