Clause 9 - The person and his or her partner must be in qualifying paid work

Childcare Payments Bill – in a Public Bill Committee at 2:00 pm on 21st October 2014.

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Photo of Alex Cunningham Alex Cunningham Labour, Stockton North 2:00 pm, 21st October 2014

I beg to move amendment 16, in clause 9, page 5, line 28, at end insert—

‘( ) A person is in qualifying paid work if the person has accepted an offer of work on or before the day on which the declaration of eligibility is made and the work is expected to start within 28 days of that day.”

It is a pleasure to server under your chairmanship, Mrs Main. I will speak briefly to amendment 16. As the Committee will be aware, the provisions in clause 9 relate to qualifying paid work. The Bill states that parents will not be eligible for the scheme until seven days before the start of employment, although I am pleased to read in the Minster’s letter to the Chairs of the Committee her commitment to lengthen that period to 14 days—my hon. Friend the Member for Manchester Central alluded to that earlier in the day.

As anyone who has ever had to search for a child care place will testify, identifying a suitable place is often highly time consuming and involves a careful scouring of local options. It is not uncommon for places to need to be secured many weeks in advance with a sizable deposit of an advanced payment covering several weeks of child care paid up front, all before the person even starts work. Therefore, while broadening the catchment of the scheme, the newly planned 14-day limit will continue to mean that many parents will still not benefit from the 20% top-up when they pay a deposit and any up-front fees to a child care provider. With current child care costs, that amounts to a significant additional burden for families. As I read it, if they have made the payment more than 14 days before their start date, they will lose the benefit entirely. A cash example might be someone paying £800 some three working weeks ahead of starting a new job and losing the £200 top-up simply because of the regime that they have to cope with.

While I was happy that the Minster had expressed her willingness to extend the seven-day period, I have to question whether the move goes far enough to help hard-pressed families and to encourage parents to re-enter the labour market. I repeat that I welcome the Minister’s  initial thought to extend the period from seven to 14 days, but I still have reservations that that will inevitably result in many families not being eligible for the top-up and much of the cost incurred up front when they plan to re-enter the work market. Indeed, I worry that there is in fact a continued disincentive for families to plan forwardly in that way.

Increasing the limit to 28 days would both align the scheme with universal credit and ensure the scheme is as beneficial, convenient and straightforward for parents as possible. I welcome hearing what work the Minister has undertaken in this area to determine the 14-day figure. I would also be interested to learn what analysis has been carried out to assess the extra cost associated with extending the period further to 28 days. On the face of things, I can see potential benefits to extending the seven-day period beyond that which has already been outlined. However, I look forward to hearing from the Minister to better understand exactly why she decided on 14 days and will not consider extending it further.

Photo of Priti Patel Priti Patel The Exchequer Secretary

Good afternoon, Mrs Main, it is a pleasure to serve under your chairmanship. Clause 9 sets up the fourth eligibility condition, which is that the person and their partner, if they have one, must be in qualifying work when they make their declaration of eligibility. The purpose of that condition is self-evident as the purpose of the scheme is to give parents, as we have discussed, the support they need to go out to work. It follows that the conditions of eligibility should include the requirement that such parents are genuinely working. That is fundamental to the design of the scheme. For those purposes, qualifying paid work includes both employment and self-employment.

As I explained in my remarks regarding clause 1, the availability of Government support to self-employed parents represents a significant improvement to existing schemes. It is worth stating again that less than 5% of employers currently offer employer-supported child care. That leaves more than half of all employees, not to mention those who are self-employed, unable to access any support with their child care. Opening up the new scheme is paramount and I am sure the Committee welcomes the change that has been brought forward.

It is, of course, necessary to define what we mean by qualifying paid work to ensure that support is appropriately targeted. The definition will be set out in the regulations, which members of the Committee have seen in draft. Broadly speaking, someone will be treated as being in qualifying paid work when they and their partner, if they have one, are in paid work—employment, self-employment or both—and expect in the forthcoming entitlement period to receive at least what someone who works eight hours a week would earn at the prevailing rate of the national minimum wage. At the current rate of the minimum wage, a parent would need to expect to earn £52 a week on average to meet that condition. I am sure members of the Committee will agree that that threshold is low enough, and we discussed it earlier.

The rules have been designed to have the flexibility to cater for those with non-standard working patterns. If someone divides their working week between two separate paid employments, or is both an employee and self-employed, they will be eligible for the scheme if their expected total income from all sources reaches the  minimum limit. That will ensure that a parent’s full work activities are properly taken into account when determining whether they are eligible for support. It will also mean that those who work part time will be able to qualify on the basis that they generally have income around the minimum threshold.

The reference to expected income is crucial, particularly for those who are self-employed or on uncertain contracts of employment. A parent will meet the condition provided they have a genuine expectation that their income will exceed the specified level.

The hon. Member for Stockton North asked about accessing child care costs and changing the relevant period from seven to 14 days. As I said on previous clauses, this process is very much about dialogue. We have listened to stakeholders and parents. As I said when we spoke about disabled children, we need to try to get the right balance between supporting parents on their return to work and ensuring that the scheme is genuinely targeted at working families.

On the issue of 14 days versus 28 days, stakeholders pointed out to us that, in some instances, allowing access to the scheme only seven days before parents start work is restrictive, and the hon. Gentleman highlighted some of the practical issues that arise. All parents in the room have been there themselves, and they know how challenging it is to find the time to find the right child care provider. However, stakeholders and parents broadly welcomed extending the period to 14 days.

A limit of 14 days sets the right balance between giving parents enough time to set up an account and make payments in advance of starting work and ensuring that the scheme is genuinely about supporting working families, which is the principle of the Bill. When we speak to stakeholders, they all clearly push for the best possible outcome for those they represent, and their representations are based on their membership and the organisations they represent. In the discussions we have had, 14 days has appeared to be the right balance.

Finally, I should point out that, as I have said on previous clauses, once the scheme is up and running, we will review its workings and practical implications. Naturally, if stakeholders have any views on the 14-day limit, we will want to hear back from them.

The condition set out in clause 9 makes it clear that the scheme is properly targeted to support working families. On the amendment, we have had discussion with stakeholders, and they felt that 14 days struck the right balance. I therefore ask the hon. Gentleman to withdraw the amendment, and I hope that the clause will stand part of the Bill.

Photo of Anne Main Anne Main Conservative, St Albans

Given that the Minister has spoken to clause stand part, would any other Members like to speak to clause stand part now? No? In that case, I call Alex Cunningham.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

I am grateful to the Minister for her explanation. As she said, this is a matter of dialogue. I particularly welcome her commitment to review how the scheme is operating and to consult with parents and stakeholders. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 ordered to stand part of the Bill.