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

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

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Photo of Priti Patel Priti Patel The Exchequer Secretary 2:00, 21 October 2014

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.