Clause 5 - Entitlement periods

Childcare Payments Bill – in a Public Bill Committee at 11:00 am on 21st October 2014.

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Photo of Lucy Powell Lucy Powell Shadow Minister (Education) 11:00 am, 21st October 2014

I beg to move amendment 3, in clause 5, page 5, line 2, at end insert—

‘(5) The Chancellor of the Exchequer shall, within 12 months of the opening of the first childcare account under section 17, undertake a review of the impact of the three month entitlement period under this section.

(6) The report referred to in subsection (5) must in particular consider—

(a) the administrative impact of this requirement on eligible persons;

(b) the effectiveness and necessity of a three-month entitlement period; and

(c) what provisions are necessary to ensure effective awareness and communication of the requirement to reconfirm eligibility on a quarterly basis.

(7) The Chancellor of the Exchequer must publish the report of the review and lay the report before the House of Commons.’.

May I first put on record our gratitude to the Minister for the concessions that she has made on the entitlement periods for the self-employed? They will prove to make the measure much more effective, especially for those people who work, for example, a lot in the summer and less in the winter; those who have what was described in the oral evidence sessions as a “lumpy” income—that was a new phrase to me.

The amendment would allow for a review of the need for a three-monthly reconfirmation process, given the concern about whether that is necessary and the burden that it might place on parents. It is a probing amendment to allow us to understand the process better.

I understand where the Government and the Minister are coming from in trying to get the balance right between learning lessons from the tax credit system, where people ended up in a situation where they were overpaying, and taking some of the best parts of the employer-supported child care voucher scheme, which leaves people in the system on an ongoing basis without the need to reconfirm. I want to see whether we have got that balance right, so the amendment would provide the option to look at this measure again in time.

The clause sets the entitlement period—the time for which a person has made a declaration and will receive top-up payments—at three months, which means that parents and other eligible people will have to reconfirm  their eligibility each and every quarter. Concerns have been raised about that requirement, which is why we would ask the Government to undertake a review of the impact of the reconfirmation. In particular, the amendment would ask the Government to consider fully the administrative burden that the clause will place on people as well as the provisions necessary to ensure that all child care account holders are fully aware of the requirement and do not accidently slip through the net.

According to the consultation documents, the Government have promised that this process will be light touch and we warmly welcome that. However, to reconfirm, parents will have to prove each quarter that they are: still in paid work; expecting to earn more than the minimum income rule but less than the maximum income limit; and not claiming other child care support that would render them ineligible. HMRC in turn will have to check any relevant PAYE references and self-assessment forms. However, the mechanics of the reconfirmation process are still not entirely clear. Will the Minister therefore take this opportunity to talk us through the process? She has mentioned on a couple of occasions that she has had the privilege of walking through some of these processes, so perhaps she could expand on them.

Does the Minister recognise the potential downside to the three-monthly revalidation, compared with the employer-supported child care scheme? Have the Government made any assessment of how long it will take the average parent to do the paperwork every quarter and whether parents are willing to do it? From the evidence we heard last week, I understand that the Minister and HMRC are changing the reconfirmation window from seven days to 14 days, which is to be welcomed. Why did the Minister alight upon 14 days rather than a longer period that might enable those of us who are busy both at work and at home to ensure that we do not unintentionally fall foul of the system?

The amendment would also require the Government to review the necessity of the reconfirmation requirement, because we are not entirely sure of the extent to which HMRC will be able to use other information to clarify what parents state. In their response to the consultation in March, the Government elaborated on the process, suggesting that

“HMRC will be able to use its existing information streams” to assess whether a declaration is valid. Could that be done automatically so that parents do not themselves have to reconfirm?

Will the Minister clarify whether the reconfirmation process is necessary? Perhaps she can expand on why parents must reconfirm rather than simply having them enrol and stay in the system while other checks are made, and taken out of the system if their circumstances change.

Photo of Priti Patel Priti Patel The Exchequer Secretary

Clause 5 deals with entitlement periods, another fundamental building block of the new scheme, which are designed to ensure that it is simple for parents to use. Entitlement periods will deliver certainty and make parents safe in the knowledge that their entitlement will last until the end of the period, regardless of any changes in their circumstances.

The clause sets out that an entitlement period will be three months long, a key scheme design feature that takes into account both the views of parents and the need to learn lessons from tax credits—as we have touched on—about the risks of long entitlement periods. The three-month entitlement period also avoids both the additional errors and overpayments that an annual scheme entails and the excessive administrative burden that monthly reconfirmations would place on parents.

A three-month period strikes the right balance between simplicity and certainty for parents and not allowing entitlement to continue for too long without checking continuing eligibility. Furthermore, the requirement for parents to reconfirm their details regularly in order to access Government support will be an effective means of reducing the number of ineligible parents seeking to access the scheme, and it will be more effective than requiring parents to notify us immediately of every change in their personal circumstances. We know from tax credits that many simply would not do that.

The clause also allows regulations to vary the length of an entitlement period for a particular person in specified circumstances. We intend to make regulations to allow, for example, an entitlement period to end around the middle of the month, thus avoiding the potential confusion that might arise if a parent were required to reconfirm their eligibility at the same time as payments were made into and out of the account. We also intend to use the powers in the clause to allow for all child care accounts held by one parent to have the same entitlement period end date, so that they can reconfirm their eligibility for all their children at the same time.

The hon. Lady’s amendment appears to reflect a concern that the quarterly reconfirmation cycle will be onerous for parents. It would require the Chancellor to review the effectiveness of the three-month entitlement period 12 months after the first child care account is opened, then to publish a report and lay it before the House of Commons. The quarterly entitlement regime design was reached after extensive stakeholder engagement and has been welcomed by those we consulted and engaged. The Government currently have no intention of altering the entitlement period, for the reasons to which I have already alluded.

I want to emphasise that the entitlement period system, with the requirement for parents to actively reconfirm, is aimed at driving behaviour. It is reasonable to ask parents to take that small step every three months in order for them to secure continuing entitlement and for the Government to be certain that taxpayers’ money is not being paid to people who are not entitled to it. Once in the scheme, parents will receive reminders of the need to reconfirm their eligibility via their preferred communication channel—normally e-mail or text. I have touched on the walk-through of the scheme that I have had; it is straightforward and happens quickly. After that, parents will have a three-week window in which to reconfirm, allowing them the flexibility to do so at any time of their choosing.

When a parent reconfirms, all the forms will be pre-populated with their information provided at registration, so they will not have to re-upload data or personal information. That will save time and effort. We have had comments from parents when we have engaged them on the scheme, along the lines of, “If I am managing  an online account, I would expect to receive e-mails or text reminders”, because that is how many of us operate now, whether in online banking or purchasing goods online. We have also heard, “I would expect my eligibility to be checked first before I waste any time going back on the system.” In particular, parent groups welcomed the continued entitlement period for a number of reasons. They thought it would give parents the opportunity to get another job and therefore become eligible for the scheme in time for the beginning of the next fixed quarter. It was also felt that it would enable some parents to make changes to their child care arrangements, depending on their circumstances.

I remind members of the Committee that a review of the effectiveness of the scheme is already planned and is referred to in the published impact assessment. That review will take place two years after the new scheme is fully implemented and will consider the appropriateness of all aspects of the scheme rules. It is therefore wholly unnecessary to require an additional review in the Bill, as that is already covered. I therefore ask the hon. Lady to withdraw her amendment.

Photo of Lucy Powell Lucy Powell Shadow Minister (Education)

I thank the Minister for her reply. She has responded to a number of the points that I made and given clarification as to how this process will work. It seems from her comments that this will be an extremely light-touch process, and I hope that that spirit will be maintained. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.