Clause 5 - Entitlement periods

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

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Photo of Lucy Powell Lucy Powell Shadow Minister (Education) 11:00, 21 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.