Clause 20 - Payments that may be made from childcare accounts

Childcare Payments Bill – in a Public Bill Committee at 12:30 pm on 23rd October 2014.

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

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury) 12:45 pm, 23rd October 2014

Clause 20 deals with payments made from child care accounts. Subsection (1) states that the only payments authorised from the accounts will be

“payments in respect of qualifying childcare for the relevant child” for whom the account is held, and

“withdrawals made by the account-holder.”

As we have said, if parents do not need all the money in a child care account to pay for child care, they can withdraw some of it. Such payments are defined in subsection (3) as “permitted payments.” The clause allows a permitted payment to be made for an entire entitlement period, even if the account holder becomes ineligible at some point in that period. That allows parents who have, for whatever reason, become ineligible to spend or withdraw that accrued fund if they wish.

I have just one query about that provision, which is about the definition of “prohibited” as oppose to “permitted”, which is the language used. “Prohibited” means forbidden or banned and would therefore imply that such payments are not allowed under clause 20. However, the explanatory notes imply that in a scenario where, for example, a parent had two children and chose to pay for both children’s child care in a single payment out of one child care account, such payments would be permitted for the part relating to the child for whom the account was held. I appreciate that that is a bit complicated, as are the scenarios that might arise, but will the Minister clarify whether, in certain circumstances, parents will be able to pay for child care for two children with a single payment from one child care account, as the explanatory notes seem to imply? If so, will she clarify that such payments will not be prohibited, as the Bill seems to suggest, and that they will simply not attract the top-up payment?

It is important to clarify what is a permitted and a prohibited payment, and what will attract the top-up payment as opposed to transactions that are allowed and not allowed to be made out of the account. I therefore suggest that “qualifying” and “not qualifying” would be better terms to describe payments. “Permitted” and “not permitted” could cause confusion for child care account users. The Minister may not have an answer right away, but will she give some consideration to how we could clarify the legislation for parents and account users?

Photo of Priti Patel Priti Patel The Exchequer Secretary

Clause 20 sets out the rules that apply to payments made out of child care accounts. Those rules are designed to ensure that the Government top-up is spent for its intended purposes of helping families with their child care costs. There are two types of payment that account holders can make: payments for qualifying child care for the child for whom the account is held, and withdrawals of funds deposited in the account. Payments for qualifying child care do not really need  any further elaboration. When a person withdraws their money from their child care account, the amount that represents the Government top-up payments will be returned to HMRC. I will come on to that in more detail when we come to clause 22.

The ability to withdraw funds has been included in response to comments made by parents during the consultation. They said that circumstances could arise in which they need access to their money and need to take funds out of their child care account. Payments to the child care provider and withdrawals are referred to in the Bill as “permitted payments”. A payment for any other purpose is referred to as a “prohibited payment”, as the hon. Lady has highlighted. A prohibited payment could be a payment for child care for a different child or to an unregistered child care provider. Provisions exist elsewhere in the Bill for HMRC to recover the top-up element of any prohibited payment—and we will return to that point when we come to clause 39. The rules are there to ensure that the support provided by the Government under the scheme is spent properly on qualifying child care, as intended and highlighted throughout the Bill.

The hon. Lady has highlighted the fact that it is important to get the language we use right. As we discuss later clauses, we can consider that.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21 ordered to stand part of the Bill.