Clause 1 - Funding review

Childcare Bill [Lords] – in a Public Bill Committee at on 8 December 2015.

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Amendment proposed (this day): 10, in clause 1, page 1, line 13, at end insert—

‘(2A) The review to be established under subsection (1)(a) shall examine and make recommendations about a mechanism and criteria for agreeing—

(a) an enhanced rate of funding per hour;

(b) more than 30 hours of free childcare per week;

(c) free childcare for more than 38 weeks in a year; or

(d) a combination of two or more of the enhancements set out in paragraphs (a) to (c);

in circumstances where the qualifying child has a disability.’—(Pat Glass.)

This amendment provides for a review to be carried out to establish criteria for agreeing an enhanced hourly rate of funding, free childcare beyond 30 hours a week and/or 38 weeks of the year (or a combination of two or more of these), for children with a disability.

Question again proposed, That the amendment be made.

Photo of David Hanson David Hanson Labour, Delyn

I remind the Committee that with this we are discussing clause stand part.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

It is a pleasure to serve under your chairmanship, Mr Hanson, and I look forward to doing so over the next few days. I was talking about the review outlined in the clause, which will be ongoing and in parallel with the policy, as my hon. Friend the Member for Stockton North said. There would therefore be no delay to implementation, so we are not sure why the Minister is concerned about having that review.

The review would look at the ongoing sustainability of the policy. When as a director of education I was implementing any kind of policy, I had what I used to call a Libby test: I would talk through what I wanted to do with a member of staff and she would tell me, almost immediately, everything that was wrong with it and where it would fail. That informal consultation helped me and let me know where opposition would come from. Alongside all the formal consultation, as we implemented policies incrementally I found it useful to keep going back to her to test them out, because she would tell me exactly what headteachers were saying and where the problems were. The review would be something like the Libby test. It is about the Government making sure that the policy is sustainable as we move towards implementation.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

The hon. Lady outlines precisely the idea underlying the early implementers, which we announced will happen in the second half of 2016 to test local demand, innovation and how parents respond to the offer. If she is saying that she wants to see that activity, I am certainly with her. If however she is suggesting that we should have further discussion about funding that was settled in explicit terms in the spending review, I am not with her.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

My understanding of the early implementers is that they are few: fewer than four children per authority if spread across the country. Therefore, unless the Minister can tell me otherwise, I cannot see how that is a major testing out of the policy. The review is about making sure that it is sustainable. We all want it to work; we just want it to work right.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

Five thousand children will benefit early from the policy as a result of the early implementers, but alongside that we will be testing a number of other things such as the eligibility checking system that Her Majesty’s Revenue and Customs is working on, which will be joined with tax-free child care; policy and practice around special educational needs and disability; and innovation around flexibility. Therefore, in addition to the 5,000 children who will get in early, we will look at a whole number of other things during the early implementation stage.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

We are grateful for that, but, as I said, 5,000 children across the country is not a huge number on which to test out sustainability, and funding sustainability in particular.

The Minister has talked a lot about funding, but he has not convinced me that he has filled that massive funding gap. It is not just me, their lordships or the Institute for Public Policy Research who are saying that, but the sector as a whole. There seems to be an inability to accept the true cost of childcare.

The Minister talked a lot about his review of childcare costs. There were lots of things I could not find in it, but in particular I could not find any kind of building in of future costs. We know that the sector will face costs in future such as the apprenticeship levy. We all agree with the apprenticeship levy, which is a great idea, but the childcare sector has a high number of apprentices. Therefore, whether we agree with the apprenticeship levy or not, we must accept that it will be an additional cost on the sector.

The sector has talked to me a lot about the implementation of the living wage, which is not only about implementing a minimum wage for those at the bottom, as the Chancellor seems to think. There are differentials and they are very slim, so if we implement the living wage, which will now be the minimum wage for those at the bottom, on the least wages, we have to increase the wages of those who are level 3-qualified, of graduate leads and of managers—all slim differentials. The sector is telling me that that is not built into the review.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

On the subject of future costs, I want to put something on the record. We want providers to take steps to absorb some of the future cost pressures. As a result, we have front-loaded the uplift to help providers do so, and we have done that even though the cost of  childcare review found that the average cost of delivering the three and four-year-old entitlement is £4.25, which is below our existing national average rate of £4.56. We want to work with providers to become more efficient—

Photo of David Hanson David Hanson Labour, Delyn

Order. Interventions, even from the Minister, need to be brief.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

I thank the Minister. That is helpful, because there is a lot of confusion around the funding. I will come on to £4.56 average rate in a minute.

Other future costs appear not to have been taken into account in the review, such as rising business rates or top-slicing by local authorities. The hon. Member for Norwich North talked about local authorities top-slicing anywhere from about 2% to about 9%. The budget used to be ring-fenced—it was ring-fenced in 2010, but the current Government took away the ring fence and have allowed the top-slicing to go on. It would be easy to put the ring fence back.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

The hon. Lady knows very well that the early years funding is part of the dedicated schools grant, so local authorities cannot dip into it to spend on, say, potholes. On the issue of top-slicing, we will set a firm expectation for local authorities of how much they may top-slice, alongside our review of the early years national funding formula, so that the majority of the funds goes directly to providers.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

Honestly, don’t get me started on the early years funding. As I understand it, it was ring-fenced and it was an early years grant, but in 2011 it was amalgamated with 14 other grants into the early intervention grant, which covered everything from special educational needs through early years funding to behaviour support. It was huge and now it has been rolled into something else, so it is difficult, even for local authorities that want to deliver the funding, to weave their way through to what is actually early years funding. I will come on to the funding review in a moment.

I have read the cost of childcare report; it contains massive assumptions and an awful lot of complacency. The assumptions include things such as switching; the report simply makes the assumption that because parents do not switch their provider often they are satisfied. Anyone who has talked to parents knows that there are costs to switching that are not taken into account. Most parents do not want to shift their child from one childcare provider to another when the child is settled and has built up relationships, even if they cannot afford that childcare any longer or even if they have found a cheaper provider. Parents will cut out all sorts of other things to ensure that they do not have to shift their children constantly from one provider to another. It is not the same as switching electricity supplier, and we know how difficult people find that.

Photo of Lucy Frazer Lucy Frazer Conservative, South East Cambridgeshire

Does the hon. Lady accept that 85% of the two, three and four-year-olds who receive funded education are in good or outstanding early years schools, as rated by Ofsted? That provision was supplied at a rate less than the future rate.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

Is that just three and four-year-olds?

Photo of Lucy Frazer Lucy Frazer Conservative, South East Cambridgeshire

Two, three and four-year-olds, according to the report.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

As we are talking about three and four-year-olds, I am not sure that is relevant, but I am happy to accept it.

The Minister talked about under-occupancy. He is right that there is 75% to 90% occupancy. However, occupancy is much higher on a Tuesday, Wednesday or Thursday than it is on a Monday and Friday. I know that the Minister will say that we can extend the 30 hours, but many families choose or are able to find familial childcare for Monday and Friday, so I am not sure that will necessarily provide him with his extra hours.

We have talked about the risks. The Minister and the review do not seem to accept the cross-subsidisation that is going on between the 15 hours and the rest. Childcare providers tell me clearly that they are only able to provide the 15 hours of free childcare because they charge more for any additional hours that parents want, or they charge for meals or other things, so that they can deliver the 15 hours. There is a real danger if we extend this without the right kind of funding to support it that it will come out in other areas. The squeeze will be on in other areas, and the cost of childcare for babies, one-year-olds and two-year-olds will rise sharply.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

The childcare sector has a record amount of money going into it as a result of the spending review. The hon. Lady argues somehow, on whatever basis I do not know, that is not enough. Can she tell us what she considers is the right funding rate for three and four-year-olds?

Photo of Pat Glass Pat Glass Shadow Minister (Education)

The Minister makes it sound as though I am making this up. I reached this view by talking to the sector. I spoke to all the people who contributed to the costs of childcare report as recently as last night. They told me they do not know how it came up with the results it did, given the data they input and the discussions that they had. I am not making this up; that is what the sector tells me.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

The hon. Lady should accept that the Government are negotiating with mainly private providers. Yes, I understand that a number of providers will say that this is not enough.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

And they would, wouldn’t they?

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

Of course, that is what happens when the Government go out and say we will increase the rate, and we will undertake a review to find out what the new rate will be. Do not be surprised if lots of people say the rate is not enough. This is based on evidence that we were supplied with. We have compared the rates here with the rates in their own reports that they published, and the new rate is more than adequate. If the hon. Lady disagrees, can she tell us what she thinks is the right rate?

Photo of Pat Glass Pat Glass Shadow Minister (Education)

It is not my job to answer questions; it is the Minister’s. I am simply pointing out that the sector is saying that it does not understand how the results came out of the review, given its input.

Photo of Ruth Cadbury Ruth Cadbury Labour, Brentford and Isleworth

Does my hon. Friend agree that if a political party puts in a manifesto an offer of 30 hours a week free childcare to parents of three and four-year-olds, that is what the offer is? Does she not agree that voters would therefore expect that that is funded and that the political party hoping to be in government, and now in government, is prepared to fund it to the level that delivers that offer?

Photo of Pat Glass Pat Glass Shadow Minister (Education)

That is absolutely right. The offer made in May this year was 30 hours a week of free childcare. It is not now 30 hours a week free childcare to parents who are working more than eight hours. The thresholds have increased and the numbers of people eligible have gone down. As I said on Second Reading, any parent who voted Conservative on the basis of that offer will be feeling seriously short-changed now.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

The hon. Lady cannot have it both ways. She cannot say that on the one hand the funding is not enough and on the other we have reduced the numbers for the funding to work. She has to decide which of those two positions she holds. She cannot have it both ways.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

Actually, I can, because that is exactly what has happened. In my view, the funding is not enough and it is a fact that the eligibility threshold has increased. Those are simply facts. Anyway, moving on—

Photo of Chris Matheson Chris Matheson Labour, City of Chester

There seems to be a bit of confusion. The whole point of the clause we are debating is that we sit back with the sector, private providers, to find out what the correct levels are. In view of that and given the confusion, does my hon. Friend agree that what is in the Bill, as it stands, would actually be a good idea for the sector?

Photo of Pat Glass Pat Glass Shadow Minister (Education) 2:15, 8 December 2015

That is exactly what we are arguing. There is confusion here, and we are not happy. I have listened to the Minister, but he has not convinced me that the necessary funding is there. There may be more than there was a couple of weeks ago, but the necessary funding is not there, which is why we believe that an ongoing review is a good idea.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Environment, Food and Rural Affairs)

Some of the things that the Minister has said in the past add to the confusion. He was quoted as saying that the increase in childcare entitlement by 10 hours would cost an additional £1.6 billion. He talks about £1 billion and extra money in the spending review. Numbers seem to be coming out of hats all over the place. Does anybody really know what funding is available?

Photo of Pat Glass Pat Glass Shadow Minister (Education)

I agree. I am simply confused, and I have always thought of myself as a relatively clever girl. I would like to understand it; will the Minister write to me setting out exactly how much money is available for this and where it is coming from?

Photo of Flick Drummond Flick Drummond Conservative, Portsmouth South

Does the hon. Lady agree, though, that it has to be not only affordable for providers, but sustainable for taxpayers? We are putting £2.6 billion in, and there is only a limited amount of money.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

I absolutely agree, but I did not make an offer of 30 hours of free childcare in May 2015—the Government did.

I want to move on to amendment 10. I am happy to take up the Minister’s offer of working with him to look at how we can extend the take-up of childcare for disabled children. However, I am not sure how I feel about going back to the Department for Education, given that I worked there before 2010. Perhaps we can meet in a coffee shop or something, but I am very happy to work with him.

I agree with the Minister that the issues around children and access, as regards children being able to access education in schools or childcare for disabled children, are not always about money. Some are, but in my experience, an awful lot of this is about confidence. I have worked with schools on many occasions, although not with childcare providers because that was not necessarily my area of expertise, to try and get them to the point at which they can admit a child who has a disability—who has something they have not seen before, who has something really unusual.

I remember one child, a lovely little boy; I think he is probably about 16 now. He had very little movement—a little bit of head movement, but nothing much more. Those at the school were terrified. They were really worried—it was quite a long time ago, and I think it would be fairly routine now—but we worked with the school. At that time, another child at the school had a little bit of learning difficulty and a little bit of physical difficulty, but nothing huge across the piece, and every time I spoke to the headteacher, he would mention that little boy.

Once the child who had very little movement was admitted, when I saw the headteacher again I asked how Fred—I think that was the other boy’s name—was getting on. He said, “Oh, we’re not worried about that at all. Do you know what? He’s no bother.” As soon as the staff at the school had the confidence, training and support—the support was really important—and admitted children with quite significant difficulties, they were really proud of themselves and of how well they had done, and they were looking to admit the next child with another serious disability. I think much of it is about a little bit of training. Some of it is about money, but a lot is about confidence and giving those childcare providers the confidence that they are not on their own.

The Minister talked about Government reforms and I welcome their reforms on special educational needs and disability. They are a huge step in the right direction. We wish them well. The difficulty, as he would expect me to say, is that these are being implemented at a time when local authority budgets are being significantly cut. Therefore, there is sometimes a very difficult financial circle for local authorities to square.

The Minister talked about the funding already in the system to tackle the problems that disabled children have in not getting access to the 15 hours of childcare. He talked about the higher rate of funding block, but, as I pointed out in an intervention, my understanding is that local authorities are really struggling to provide the statutory provision that they need to support statements and the education, health and social care plans that fall within the statutory sector, and very few have leeway with funding to support the non-statutory bit, which is the childcare sector.

On the review of fair funding, the Minister and I entertained each other one Thursday evening on the graveyard shift a few weeks ago. I was amazed that something like 35 Government Members turned out. One of the things that was said, to which I did not respond at the time, was that the Labour Government did nothing about this. That is not true. I was working in the DFE at the time. I am probably the collective wisdom from the DFE now, because I am not sure that many people who were there are here.

I want to put a hypothetical case to the Minister. If he were to seek legal advice on this, I suspect it would tell him that there is a direct line between those authorities—largely but not all metropolitan—that have high council tax, and those that funded education above the standard spending assessments, because this is all historical. There is still what I think ought to be referred to as a golden thread between those authorities that pay high council tax and those whose schools are highly funded.

If the Minister were to seek legal advice, he would find that there is probably a remedy for those authorities that have low council tax and low funding for schools. They can have a referendum and raise council tax and pass it on to their schools. The Minister may therefore find that his legal advice would tell him that if he were simply to transfer funds across, his chances of winning a judicial review against the big beasts of Birmingham, Manchester, Leeds and so on would not be bonny.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

I thank the hon. Lady for her advice. Does she think that it is right that Wandsworth, which has one of the lowest council taxes in the country, gets £730 more per pupil than Knowsley, with lots of disadvantaged children?

Photo of Pat Glass Pat Glass Shadow Minister (Education)

No, I do not think that is right and I would not defend it at all. However, I think that if the Minister is simply going to redistribute existing funding—to level it down—he may find he has legal problems. If he tries to level it up, there will be no problems at all.

The highest rate of funding block is insufficient to address statutory needs. I listened to what the Minister said about tax-free childcare. As he quite rightly said, this is about the Government topping up a bank account, into which the parent will put £800 and the Government will top up to £1,000 for each child. However, that is not realistic for most parents of children with disabilities.

As I said earlier, the Joseph Rowntree Foundation evidence highlighted that disabled children are most likely to live in poverty, that it costs three times as much to raise a disabled child as it does to raise a child without a disability, that families of disabled children are two and a half times more likely to have no parent working for more than 16 hours a week in paid employment, that only 16% of mothers of disabled children work, compared with 61% of all mothers, and that 83% of parent carers say that lack of suitable childcare is the main barrier to work. Most parents of disabled children are not going to be sitting around with a spare £800 per child. Some families will be helped, but the funding will not help across the piece.

Photo of Sam Gyimah Sam Gyimah The Parliamentary Under-Secretary of State for Education

To be precise, the top up is 20% of whatever the parents put in. It is not 20% of £800; it is a 20% co-payment of whatever the parents put in.

Photo of Pat Glass Pat Glass Shadow Minister (Education)

Was it £800 with a top up, or has it always been 20%?

Photo of Pat Glass Pat Glass Shadow Minister (Education)

That helps, but I do not think parents of disabled children have huge amounts of money lying around that they can use for this. However, it will help and we are grateful for that.

We remain concerned at the funding gap, despite what the Minister says. We believe that his policy is underfunded and we are concerned about the risks that could result—less provision, less choice for parents, diminishing quality and sharp rises in childcare for younger children. We remain convinced that an ongoing review would help to make the policy work and deliver what we all want, but we will not press clause stand part to a vote. On amendment 10, however, I believe that the Minister is well meaning, but nothing he has said today has convinced me that anything will change for families of disabled children, so we will seek to divide the Committee.

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 10.

Division number 1 Decision Time — Clause 1 - Funding review

Aye: 6 MPs

No: 10 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Photo of David Hanson David Hanson Labour, Delyn

We have also debated clause 1 stand part, so the question is that clause 1 stand part of the Bill. As many as are of that opinion say aye; of the contrary, no.

Photo of David Hanson David Hanson Labour, Delyn

Order. The motion is very straightforward: that clause 1 stand part of the Bill. If the Government wish clause 1 to stand part of the Bill, they vote aye. If they do not wish clause 1 to stand part of the Bill, they vote no. I will try again, for the benefit of the Front Benchers. The question is that clause 1 stand part of the Bill. As many as are of that opinion say aye; of the contrary, no.

Photo of David Hanson David Hanson Labour, Delyn

I think the Noes have it, on the basis of the Minister shouting no.

Clause 1 disagreed to.

Photo of David Hanson David Hanson Labour, Delyn

For the benefit of Members, what that means is that by your shout, Minister, you have voted with your colleagues to remove clause 1 from the Bill. If that was your intention, you have done it. If that was not your intention, I suggest you talk to the Whips’ Office in due course, because you will be in trouble.