Mr Hague: My hon. Friend the Member for Lichfield (Michael Fabricant) spoke about the polarising aspects of this issue and there are passionate feelings about this

14 July 2014 : Column 600

and about what is happening to people in Gaza. As I said earlier, we must also remember that many hundreds of rockets have been launched indiscriminately against people living in Israel, and rather than refining our value judgments each day, are concentrating on bringing about an agreed ceasefire and urging all sides to abide by international humanitarian law. I think that that is the right thing to continue to do.

Debbie Abrahams (Oldham East and Saddleworth) (Lab): Mona El-Farra, a doctor working on the Gaza strip, has described in graphic detail the pain and damage caused to civilians in this collective punishment of Palestinian people. I agree with Members on both sides of the House that in the long term we need to tackle the underlying issues with blockades, access to justice and the settlements, but in the short term, what additional pressure can we place on the Israeli Government—particularly as regards the disproportionate and indiscriminate action that they are taking on the people of Gaza—and on Hamas? Will the Foreign Secretary reassure all Members of the House that the tone of today’s statement and the comments being made are being conveyed to them?

Mr Hague: Absolutely, and the tone that I have taken today, which I think, judging by the reaction, is shared widely across the House, is exactly the tone of our discussions with Palestinian and Israeli leaders and with others in the region over the past few days. The pressure really takes that form of trying to find the formula for the ceasefire, which other nations are involved in and which we have supported at the UN Security Council—it is diplomatic pressure that is most likely to succeed and has succeeded previously—and then we have to resume the search, as the hon. Lady rightly says, to resolve the underlying causes of the conflict.

Kevin Brennan (Cardiff West) (Lab): The Foreign Secretary has rightly condemned the rocket attacks by Hamas, but does he understand that his unwillingness to condemn as disproportionate the current response by the Israeli Government feeds into a view held by many of our constituents that the lives of Palestinians are not valued as highly as the lives of Israelis in this conflict and does very little to put additional pressure on the Government of Israel to act in a proportionate way when it is under attack?

Mr Hague: I can assure the hon. Gentleman and the constituents of all those in this House that we are clear about the equal value of lives all over the world; that applies to Israelis and Palestinians as well. I think our efforts have to be geared to trying to achieve what I set out in the statement, and I do not think it would be helpful to refine our judgment each day about the tactics of each side. We need to bring about an agreed ceasefire, and the diplomatic processes we are engaged in are the best way to do that. That is the best way to save all lives, including Palestinian lives. I do not judge that any other way of doing that would be more effective.

Mr Liam Byrne (Birmingham, Hodge Hill) (Lab): The air strikes, the commando raids and the rocket attacks have got to stop before any more children are

14 July 2014 : Column 601

killed, but may I press the Foreign Secretary on resolution 1860, on which Britain led back in 2009 and which stated that justice required

“sustained and regular flow of goods and people through…crossings”.

Does the Foreign Secretary not agree that without progress restoring the normality of trade, jobs and growth, we risk trapping the Palestinian people in a cycle of not only violence but despair from which there is no escape?

Mr Hague: Yes, I agree. That was an important resolution, and with our EU partners and the office of the Quartet we will continue to press the Israeli Government at ministerial and official levels to ease the restrictions on Gaza. This is an argument that we have never won—that no British Government have won—with Israel, but we will continue to make it. Israeli restrictions on movements of goods and people do tremendous damage to the economy in Gaza and to the long-term prospects for peace.

Mr Andrew Love (Edmonton) (Lab/Co-op): The bleak situation facing the middle east so adequately reflected in today’s exchanges calls for an enhanced role for the United Nations Secretary-General, at least in the context of de-escalation and achieving a ceasefire—it may be that other parties would want to carry the peace process forward. Does the Foreign Secretary agree with that summation that there is a role for the UN Secretary-General, and will he support that at the Security Council and in other forums?

Mr Hague: Yes I do. The UN Secretary-General has made clear statements about the need for bold choices on both sides, and the Security Council agreed a statement on Saturday calling for an agreed ceasefire. The UN Secretary-General has to judge what he can achieve in any conflict in the world, but this is certainly an area where we support a strong role for him, as well as for the work of others behind the scenes in trying to lay the groundwork for an agreed ceasefire by both sides.

Jonathan Ashworth (Leicester South) (Lab): Like all Members I condemn the rocket attacks, but like many Members I consider the bombings and aggression that have led to the loss of many innocent children’s lives, damage to schools and destruction of homes to be disproportionate—indeed, many of my constituents feel that they amount to collective punishment. I am sure the Foreign Secretary agrees that there is an urgent need for increased humanitarian assistance. The United Nations Relief and Works Agency thinks that there is a shortfall in its emergency appeal. What representations can the right hon. Gentleman make to his counterparts to ensure that UNRWA has all the resources it needs?

Mr Hague: My ministerial colleagues from the Department for International Development were here earlier, and of course I will update them on all other comments made in the House. The scale of our support through DFID for UNRWA will continue, and DFID stands ready to increase that support, as I made clear in my statement, so if the situation continues to worsen, we will intensify our efforts to get humanitarian supplies through to the people of Gaza.

14 July 2014 : Column 602

Andrew Gwynne (Denton and Reddish) (Lab): I add my voice to those of all the Members who have unreservedly condemned the violence in all the forms it takes in this tragedy. Looking towards the ceasefire, which cannot come quickly enough, will the Foreign Secretary please tell the House what support the British, the EU and the UN will give to projects that foster co-operation and co-existence between Palestinians and Israelis, to build that capacity for a new generation of leaders who are committed to dialogue, peace and the two-state solution?

Mr Hague: This is a very important point. The hon. Gentleman will know that our embassy in Tel Aviv and our consulate-general in Jerusalem support such projects, with the encouragement of Members of Parliament on all sides. They are often difficult to bring about because of such a tense and acrimonious situation, but we will continue to do that and we will look at how we can broaden such work in the future.

Nia Griffith (Llanelli) (Lab): We understand the immediate need for a ceasefire and for humanitarian aid, but we must look at the underlying causes, with Gaza under siege and 60% of the west bank now under direct military rule and a seemingly complete failure to halt the continuing expansion of the Israeli settlements. The Foreign Secretary has mentioned how difficult it is to influence Israel in the treatment of Gaza, but those settlements in the west bank are illegal, so surely more could be done there. Can he explain what more could be done to put pressure on Israel in order to deal with the way that it is behaving and therefore to bring forward the peace process?

Mr Hague: This, too, is a very important point. Illegal settlements on occupied land are a major obstacle to peace. We believe they should stop. We have our own guidelines on settlement produce in this country, as the hon. Lady knows. We have recently agreed across the European Union a common statement of guidelines on doing business with settlements. This reflects increased international pressure, but of course the ultimate answer to the issue of settlements is a two-state solution; it is to resolve the final status issues. That is the only way in which the issue of settlements will be resolved in the end, and that is why the work led by Secretary Kerry on this is so important.

bill presented

Data Retention and Investigatory Powers Bill

Presentation and First Reading (Standing Order No. 57)

Secretary Theresa May, supported by the Prime Minister, the Deputy Prime Minister, Secretary William Hague, Secretary Philip Hammond, Secretary Theresa Villiers, Danny Alexander and James Brokenshire presented a Bill to make provision, in consequence of a declaration of invalidity made by the Court of Justice of the European Union in relation to directive 2006/24/EC, about the retention of certain communications data; to amend the grounds for issuing interception warrants, or granting or giving certain authorisations or notices, under part 1 of the Regulation of Investigatory Powers

14 July 2014 : Column 603

Act 2000; to make provision about the extra-territorial application of that part and about the meaning of “telecommunications service” for the purposes of that Act; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill73) with explanatory notes (Bill 73-EN).

Chris Bryant (Rhondda) (Lab): On a point of order, Mr Speaker. In relation to the Bill which has just had its First Reading, if all the motions on the Order Paper today and tomorrow are agreed, the vote on Second Reading will take place in 24 hours and six minutes. If the motion is carried later tonight, we will not be able to table any amendments to the Bill until late tonight. Can you clarify whether you will therefore allow manuscript amendments to be considered tomorrow afternoon?

Mr Speaker: Yes. My purpose is to seek to facilitate the House, not to be an obstacle to effective scrutiny. In the circumstances which the hon. Gentleman has pithily summarised, I do not think the normal rules of engagement apply. The House is being confronted, for better or for worse, rightly or wrongly, with a particular arrangement which places very great demands on Members, so yes, I will be very open to the receipt of manuscript amendments. I hope that that assuages the hon. Gentleman’s concerns.

14 July 2014 : Column 604

Childcare Payments Bill

Second Reading

4.54 pm

The Financial Secretary to the Treasury (Nicky Morgan): I beg to move, That the Bill be now read a Second time.

Hon. Members will be aware that, as we sit in the Chamber this afternoon, not only is overall employment in the United Kingdom at record levels, but female participation in the work force is at an all-time high. That means that across the country more people than ever before have jobs to wake up for at the start of the day, and pay cheques to take home at the end of the month. That is something that this Government can be proud of having helped to achieve.

However, we are by no means complacent, and we know that we can do more to remove the barriers that still prevent people who want to go to work from being able to do so. That is where the Bill comes in. Tax-free child care will be a simple scheme that is responsive to the needs of working families, whatever their work arrangements. The Bill will provide greater support to parents and, in turn, open up greater opportunities for them.

I would like to use my time at the Dispatch Box this afternoon, first, to remind Members why we are introducing these changes; secondly, to talk through exactly what form these changes will take; and finally, to explain how the changes will differ from, and improve on, the employer-supported child care scheme currently in place.

Hywel Williams (Arfon) (PC): I am grateful to the Minister for giving way so early in her speech. I am concerned that the Bill does nothing about the supply of child care, particularly in rural and disadvantaged areas. How confident is she that the measures she proposes will indirectly stimulate greater provision?

Nicky Morgan: I thank the hon. Gentleman for that point. As I am sure he will be aware, my colleagues in the Department for Education, and particularly the Under-Secretary of State, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), have been working to encourage the provision of more places, including by providing £500 to enable child minders to set up new businesses, and through schools and a wide variety of places. He is absolutely right that in order to tackle the issues of child care, we need to think about not only the costs but the supply side. We are confident that there will be places available for all the families who want them.

Let me turn first to the “why”. As hon. Members will know very well—many from their own experiences—every year millions of families across the country are faced with a difficult decision: whether it makes greater financial sense to stay at home and manage child care themselves or to go to work and arrange for someone else to do it.

Neil Parish (Tiverton and Honiton) (Con): I very much welcome the Government’s approach to tax-free child care, especially for the self-employed. In the past they have been ruled out of help, so the sooner we can put that right, the better.

14 July 2014 : Column 605

Nicky Morgan: My hon. Friend is entirely right. I will move on to talk about the importance of the scheme for the self-employed and for those setting up or growing their own businesses. I am very pleased that he has raised that at this stage in the debate.

Charlie Elphicke (Dover) (Con): This measure will be welcomed by my constituents in Dover and Deal who work hard but do not get paid a lot of money. How many working families with children will benefit from this important measure?

Nicky Morgan: I am grateful to my hon. Friend for that question. Some 1.9 million working families will have access to the scheme. Of those, 1.25 million will have qualifying child care costs and will benefit under the scheme. As I will explain, more families will benefit under this new scheme than currently benefit from employer-supported child care vouchers.

Of course, for some families there is no choice about who should look after the children, because the parent or parents have to go to work, and must therefore arrange child care. It is worth reminding Members that the research shows that this issue has had, and continues to have, a disproportionate impact on women. The Women’s Business Council, which has done an excellent job in its first year in drawing attention to the barriers women face and suggesting changes to help remove them, has frequently pointed to the way in which child care costs can have an undue impact on women’s careers. Recent survey data from the Department for Education show that more than half of mothers in the United Kingdom who are not in paid work would prefer to be in paid work if they could arrange reliable, convenient, affordable and good-quality child care.

We need to think about what is at stake, not just for the mothers whose careers are held back, and not just for the many fathers who are primary carers and experience the same problems, but for our economy. If we can equalise the labour force participation rates of men and women, the United Kingdom can further increase growth by 0.5% per year. That will be a huge change which could make a real difference to our families and our economy.

Hon. Members will know that the Government have already taken action on this matter. We have funded 15 hours a week of free child care for all three and four-year-olds, which is available to all families, including those where a parent is not working. We have funded 15 hours a week of free child care for the 20% of two-year-olds who are most disadvantaged. From this September, we are extending that offer to about 40% of two-year-olds.

Jonathan Ashworth (Leicester South) (Lab): I apologise for the fact that I am going to have to leave to pick up my own children from child care. Will the Minister confirm that a lot of parents who need access to child care help need it now, and that it was a mistake on the part of the Government, back in 2011, to reduce the child care support that was available when they made cuts to working tax credit?

Nicky Morgan: I entirely agree that families need support now. I have been setting out exactly what we have done in extending to 15 hours a week the free child

14 July 2014 : Column 606

care available for all three and four-year-olds, as well as for disadvantaged two-year-olds. On working tax credit, let me point out that the Government are spending £1.1 billion on the child care element of tax credits each year, so many families are still, rightly, receiving a huge amount of support through the tax credit system. We are proposing an enhancement of the child care offer that we already have.

We are taking action to drive up the supply of high-quality child care provision by legislating for childminder agencies, encouraging primary schools to open for longer, and reducing bureaucracy and red tape for providers—all steps that should help to drive supply up and costs down.

The Bill represents a further step towards helping hard-working families. We are committed to launching the scheme next autumn and rolling it out to all eligible families with children under 12 within the first year of its operation.

Ms Margaret Ritchie (South Down) (SDLP): There is a concern that while single parents can access the new system, families with one parent in work and one not in work would not be entitled to anything. What can be done to assist people in such circumstances? From a Northern Ireland perspective, I know that there will be a legislative consent motion to deal with this legislation, but what advice can the Minister give now, in advance of such an LCM and in advance of the Bill’s implementation?

Nicky Morgan: I thank the hon. Lady for making that point, which is certainly of interest to everybody concerned with the issue of child care and who should look after children. I want to be very clear that this is about a choice, for those families who can afford it, in that they can decide that one parent will not be working, at least for a certain period. Of course, however, some families do not have that choice, with both parents needing to work, and there are lone parents who will need to work. For families where one parent is not working, we have introduced the married couples tax allowance, which has been legislated for in the Finance Bill, and those families will be receiving a tax benefit of just over £200 a year. This proposal is very much about enabling parents to play a full part in the labour market. That is why we have brought this Bill forward at this time.

Ms Ritchie: I am looking at this issue in a Northern Ireland context, and I am sure that there are many regions in Britain with similar circumstances. What happens if the other partner cannot access full-time or even part-time occupations, which is a reality for many families throughout the UK?

Nicky Morgan: Employment levels have gone up substantially under this Government. More people are getting jobs and more hours. As I say, the Bill is about a choice. With more people securing employment, this is about enabling families to make a choice if both parents need to or want to work, or, in the case of lone-parent families, providing support that is more generous than the current employer-supported child care voucher scheme.

The scheme, which launches next autumn, is to be rolled out to all those eligible families with children under 12 within the first year of its operation. The real

14 July 2014 : Column 607

triumph of the scheme is that it will make hundreds of thousands of parents who are currently excluded from support eligible for it.

The scheme has been designed so that support is available to the self-employed, who play a crucial role in our economy but are currently excluded, and so that it suits the needs of part-time workers, who are very often parents staggering their way back into full-time work, and those parents who are temporarily absent from the workplace—for example, during statutory parental leave. It is also designed to support those couples where one member is in work and the other is in receipt of carer’s allowance or employment and support allowance, by making them eligible for the new scheme.

Barbara Keeley (Worsley and Eccles South) (Lab): The Minister is reading out a list, but on the question of future roll-out, Opposition Members are very concerned about universal credit, the future of which we spent much time discussing in the Chamber last week. When will additional support be made available for those low-income families, who deserve help with the costs of child care? Is it really the case that 4 million low-income families could be waiting until 2017, and why is there still so much uncertainty around funding this part of the programme for universal credit?

Nicky Morgan: I do not think there is uncertainty around that, but there is uncertainty among Opposition Members and I find it staggering that they are criticising and querying universal credit when it is absolutely needed. I think that all Government Members and most people in the Chamber will agree with that. From April 2016, working families will be able to recover 85% of their actual child care costs under universal credit.

Barbara Keeley: Where will that be funded from, because there is also a lack of clarity about how it will be funded?

Nicky Morgan: I do not think there is a lack of clarity. We have published regulations today and there will be further debate during the Bill’s Committee stage, so may I suggest—[Interruption.] More information and plenty of guidance will be made available to families who might move from universal credit to tax-free child care and to those who might have to move back again. That will be available online and there will be a provision to enable people to get guidance from Her Majesty’s Revenue and Customs as to which scheme is most suitable for them.

Barbara Keeley rose

Nicky Morgan: I am not going to give way again. The point is that, under universal credit, families will get support for 85% of their child care costs. In short, this is a system that recognises and adapts to the complexities of modern working patterns. It also goes a long way towards providing the simplicity sought by many parents.

Someone with a screaming child in one arm and a BlackBerry with a screaming boss on the end of it in the other hand does not want to spend their time negotiating a complex and rigid child care scheme. We have therefore been working incredibly hard to ensure that the scheme will be simple, responsive and flexible. It will be easy for

14 July 2014 : Column 608

parents to register and open a child care account and to access the scheme through online portals. It will be flexible to the changing demands of child care they face. It will allow them to pay in money when they want to, and it will also allow other people to pay in, such as grandparents or an employer. In many cases, it may well be a family member who is keen to support the child’s upbringing. The scheme will also allow parents to spend money on qualifying child care at a time of their choosing, by allowing them to use their vouchers on, for example, summer holiday clubs, not just during the school term.

Hywel Williams: The service will be provided online. How confident is the Minister that parents in rural areas such as mine, where broadband is either very slow or non-existent, will not be disadvantaged?

Nicky Morgan: That is why this Government are providing a huge amount of money—more was announced last week—to enable communities to get online, including broadband. Many families are already able to access services online and via broadband. Rather than look for problems, it would be helpful if everyone in this House went out and sold the scheme to families, so as to enable them to register and make it a reality.

Hywel Williams rose

Nicky Morgan: I want to make some progress.

On flexibility, parents and families will be able to build up balances in their accounts, to meet the cost pressures of expensive times of the year. The scheme will also provide rigidity where parents need it. Once eligible for the scheme, parents can rest assured that they will continue to be entitled to support for three months, regardless of any changes in circumstances they may experience.

Hon. Members with further questions about the scheme’s practicalities may wish to note that we have today published the draft regulations for consultation. They contain the detailed rules concerning eligibility for the scheme—for example, what qualifying paid work means—and its operation, such as how and when a declaration of eligibility might be made.

Bridget Phillipson (Houghton and Sunderland South) (Lab): In relation to the transparency of the regulations and the clarity of the scheme, will the Treasury publish a distributional analysis so that we can understand how families will benefit? How much will the average family benefit per year from the new scheme?

Nicky Morgan: We already have figures showing that for the 1 million families who will gain from the introduction of the scheme, the average additional support will be £600 a year. Obviously, the Government top-up very much depends on how much families put into the accounts for themselves. For example, a working single parent with one child who has child care costs of £5,000 will receive £1,000 of support from the scheme. I will certainly take away the hon. Lady’s suggestion, but the figures are already fairly clear. The level depends on families’ contributions, which will then be matched by the Government.

14 July 2014 : Column 609

As hon. Members will be aware, when the tax-free child care scheme is introduced, employer-supported child care will be closed to new entrants. Parents who already receive support through that scheme can continue to receive it in exactly the same way as long as they continue to work for their current employer and the employer continues to offer the scheme. Workplace nurseries will not be affected by the changes.

Those who favour the current arrangements need to remember that under the present system less than 5% of employers offer employer-supported child care, leaving more than half of all employees—as well as all self-employed parents, and most employees on the minimum wage—without support. In contrast, tax-free child care will be available to all working families provided that they meet the eligibility criteria. As such, we expect the scheme to be open to at least twice as many families as the current one.

We expect the new scheme to be much fairer. One of the main failings of existing employer-supported child care is that it disadvantages lone parents by providing twice as much support to couples in which both partners work for employers offering the scheme than it does to single parents. To be completely frank, that does not seem right, so the Bill addresses that unfairness. It will ensure that the level of support provided is determined not by the number of parents in work, but by the number of children in the household. That means that for a family with two children, the maximum level of child care costs supported by tax-free child care will be three times the maximum level supported by employer-supported child care.

It is worth reminding the House that the existing scheme is an inefficient one. At present, employers receive a national insurance contributions disregard of up to 13.8% for operating an employer-supported child care scheme, despite the fact that it generally costs them significantly less than that to run their scheme. We should remember that that taxpayer money is not actually spent on child care support. There will therefore be no employer’s national insurance contributions breaks in tax-free child care once the new scheme becomes available.

We know that many employers value the role they can play in supporting their employees, including by helping them with their child care costs. We hope that such employers will continue to take an active, voluntary role in the new scheme. In fact, many have told us that they intend to do so. Although it may disappoint some hon. Members that the Government have no intention of making any form of employer role mandatory, they should remember that that is because we want to minimise the burdens on small businesses. We also want to maximise the scheme’s fairness so that it is the same whether people are self-employed, employed by a small shop or employed by a huge multinational.

We want to increase the support available to hard-working families with their child care costs as soon as possible. We especially need to support the women of the United Kingdom, who are disproportionately impacted by the complexity and unfairness of the current child care arrangements. The more women we can help back to work—if they want and need to work—then the more people we can get back to work, the more we can drive growth in our economy, the more we can reduce

14 July 2014 : Column 610

some of the inequalities that still blight our workplaces and the more we can raise the quality of life not only for millions of parents but, crucially, for their children.

I was tempted to say that the Bill represents a baby step in the right direction, but it represents so much more. This is a hugely important change for mothers, fathers, children, families and employers. As such, I am incredibly proud to stand at the Dispatch Box and to commend the Bill to the House.

5.14 pm

Catherine McKinnell (Newcastle upon Tyne North) (Lab): I want to begin by saying that the Opposition welcome any new investment in child care and any extra support for the millions of hard-pressed people—parents and families—up and down the country who are battling to juggle their work and family lives. We are the party that, in government, set the precedent for investing in early years and supporting the families that needed help the most and, as a result, tackling disadvantage and improving the life chances of children. Of course, those are aims and priorities that all political parties now accept, thanks to the progress that was made in that area under the last Labour Government. Welcome though any support is, however, the Bill still falls far short of the mark when it comes to making up the ground that has been lost under this Conservative-led Government in regard to meeting and furthering those goals.

Since 2010, all parents have seen reduced support, fewer child care places and spiralling child care costs. We know that families up and down the country are struggling with this. Investing in early years and focusing support on those families that needed help the most are among the greatest legacies of the last Labour Government, and those principles are now universally accepted by all parties of government. Under Labour, parents benefited from a range of policies and investments that helped more parents, but particularly single mothers, into work and lifted more children out of poverty. As a result, more children were given a better start in life.

Charlie Elphicke: Does the hon. Lady accept that, according to the measure adopted by the previous Labour Government, child poverty actually rose under that Administration, and that it has fallen under this Government?

Catherine McKinnell: No, I do not accept that. It is tempting for Government Members to quibble about measures and markers, and I know that a lot of time has been spent arguing about how to measure child poverty instead of recognising the desperate increase in it. The Institute for Fiscal Studies has projected that there will be 1 million more children in poverty by 2015 than there were in 2010. Government Members need to be careful when obsessing and arguing about those measurements while ignoring the reality, which is that hundreds of thousands more children are now living in homes that their parents cannot afford to heat, and struggling in households where their parents cannot afford to put food on the table and are using food banks.

When we look back on Labour’s record in government, we are proud of the introduction of the Sure Start local programmes and the subsequent huge expansion of

14 July 2014 : Column 611

Sure Start centres up and down the country. We are proud of the free part-time nursery education that we introduced for all three and four-year-olds. We are proud of the more affordable and higher-quality child care that we brought in through the employer-supported child care voucher scheme, and of the child care tax credits and the introduction of the early years curriculum. We are also proud of the increased financial support for families with children, including the introduction of tax credits and the increases in child benefit and maternity pay and grants. Those policies and changes were aimed at giving every child the best possible start in life but, perhaps more importantly, they lifted 1 million children out of relative poverty and more than 2 million children out of absolute poverty.

Chloe Smith (Norwich North) (Con): Does the hon. Lady now recognise measures, then?

Catherine McKinnell: I genuinely do not understand the hon. Lady’s intervention. Obviously, we recognise that there are measurements of child poverty. The point I was making was—[Interruption.] No, I did not say that I did not recognise measurements of child poverty; we introduced them. What I find unacceptable is that the Government quibble and argue about how to measure child poverty rather than taking the necessary action to deal with a problem that is staring them in the face—namely, an increasing number of children in poverty. As the IFS concluded in 2011, the reduction in child poverty during the first two terms of the Labour Government was

“by far the largest and most sustained since”

figures began in 1961. As UNICEF pointed out when it compared child poverty levels internationally in 2010,

“without UK Government intervention in the form of cash transfers, tax credits and services for children and families, the UK would see a child poverty rate three times higher than its current levels.”

Government Members seem to be quite vexed about this issue, but I think that that is because they have a shameful record. Unfortunately, the story under this Government has been very different from that under the Labour Government. That is the case despite the promise in the Conservative manifesto in 2010 to

“make Britain the most family-friendly country in Europe”.

It added:

“We will help families with all the pressures they face: the lack of time, money worries, the impact of work, concerns about schools and crime, preventing unhealthy influences, poor housing.”

Let us not forget the Liberal Democrats—I am pleased that one of them is here today. Their 2010 manifesto claimed:

“Liberal Democrats believe every family should get the support it needs to thrive, from help with childcare through to better support for carers and elderly parents. Liberal Democrats will improve life for your family.”

Have those promises been translated into reality? We know that parents are facing a child care crunch because child care costs have spiralled, the number of places has fallen and the support that families receive from the Government has been slashed. One consequence is that progress on reducing child poverty has stalled.

Hywel Williams: Does the hon. Lady agree with Plaid Cymru that the answer to the child care problem, particularly in areas where there is little or no provision,

14 July 2014 : Column 612

is a child care guarantee for all, based on the Nordic model that has operated very successfully in Sweden for a long time? Does she agree that she has a role in persuading her Labour friends in the Welsh Government to adopt that model?

Catherine McKinnell: We all want to see more child care places. We recognise not only that there is a challenge in meeting the costs of child care, but that we need to do something on the supply side if we are to see the costs come under control. That is why I will set out exactly how Labour has proposed to deal with that issue. Although we support the measures that are being proposed, despite having quite a number of questions to raise about them, we suggest that there are actions that the Government could take today on the supply side to increase the number of child care places that are available, which has been falling.

Sarah Newton (Truro and Falmouth) (Con): I take issue with what the hon. Lady is saying because of my experiences in my constituency. I have just looked at the data and there are 100,000 more places in nurseries today than there were in 2009. Of course, with that increase in supply, prices are falling.

Catherine McKinnell: I do not recognise what the hon. Lady is saying. If she is saying that that is happening in her area, I would be interested to see the data to back that up. We know that 35,000 fewer child care places are available and that prices are rising. Parents out there are struggling with the cost of child care—indeed, the Government accept that it is a challenge for many households up and down the country—and I think that they would find it deeply disconcerting to hear an hon. Member suggest that prices are falling and that everything is fine. Government Members seem to be very detached from the reality that families are facing up and down the country.

Charlie Elphicke: Will the hon. Lady tell the House how the number of childminders changed under the previous Government? Does she accept some responsibility for what amounted to a war on childminders by the Labour party?

Catherine McKinnell: Perhaps the hon. Gentleman is reading that argument from a Whip’s handout, although I know it is one that Government Members like to quote. The Professional Association for Childcare and Early Years, which I would trust more than I would trust the hon. Gentleman on this subject, has commented specifically on that issue, stating that that statistic has often been quoted in the past few months but it is not one that it recognises. The association does not recognise the statistics that the Government are trying to use to establish the case that Labour let the country down on child care. The reality and experience of households and families up and down the country is that Labour has a proud record of supporting families with children to get into work and with the costs associated with child care, and of ensuring there are enough child care places—certainly not the reduction of 35,000 places that we have seen since the Government took office.

Charlie Elphicke rose—

14 July 2014 : Column 613

Catherine McKinnell: Does the hon. Gentleman wish to come back and dispute again what the Professional Association for Childcare and Early Years says?

Charlie Elphicke: For clarity, I did not speak from some handout. I have been concerned about this issue for a long time, and I garnered research from the House of Commons Library which sets out the official statistics on numbers of childminders. Those numbers were massively reduced under the previous Government, which caused a lot of difficulties for families that I represent in Dover and Deal who are hard pressed and find it hard to afford more expensive child care options.

Catherine McKinnell: Perhaps the hon. Gentleman will look again at his House of Commons Library note and explain in his contribution why we have seen 3,000 fewer childminder places since the Government took office. Overall, there is a worrying trend of reducing child care places and rising child care prices, and he will understand that basic economics mean that households up and down the country are struggling to deal with the cost of child care. Many households—particularly women—are making the choice to stay at home because it is simply unaffordable to go out to work.

The Minister spoke passionately about the increasing number of women in work, but she will acknowledge that there is a lot more work to do on that and we still fall behind on maternal employment in OECD comparisons. We need to make progress on that so that parents who want to work can do so and so that child care is affordable.

Sarah Newton: There is no complacency whatsoever on the Government Benches about helping those hard-working families who are struggling with the costs of child care. The hon. Lady asked where I got my numbers from. I have just looked, and the Department for Education website’s annual survey of child care and early years providers clearly shows that the number of child care settings has increased and that prices are coming down, although there is still more work to be done. This is not the first time the Labour party has got the numbers wrong so I am not surprised, but she should have the good grace to acknowledge when she is wrong.

Catherine McKinnell: I thank the hon. Lady for her clarification, but we know that over the course of this Parliament we have seen a reduction in the number of child care places and an increase in the price of child care. Part-time nursery prices have risen five times faster than pay, and in the past four years alone in my region in the north-east prices have risen by a staggering 50% for households that are already struggling to make ends meet. The average bill for a part-time nursery place of 25 hours a week has gone up to £107, and the average weekly cost of a full-time place has risen to £200 or more. It is hardly surprising that the Family and Childcare Trust has calculated that families are paying more on average for part-time child care than they spend on their mortgage, with some handing over a staggering £7,500 a year more for child care for two children—around 4.7% more than the average mortgage bill.

Hywel Williams: What does the hon. Lady make of the argument put forward by the Institute for Public Policy Research that a similar scheme introduced in

14 July 2014 : Column 614

Australia led to the doubling of child care costs in 10 years, and that the basic flaw of the scheme is that it is regressive?

Catherine McKinnell: The hon. Gentleman raises a very important point. We need reassurance from the Government that they have considered the data from experiences in other parts of the globe. Examples show that dealing only with the demand side, supporting parents with child care costs, simply increases the price of child care for families rather than bringing it down. Ultimately, that costs parents and the Government more, because they end up forking out more for a smaller number of child care places.

There seems to be a huge debate about the figures, but official figures show 35,000 fewer child care places across the country. In my region of the north-east alone, we have lost more than 5,000 places. Even the coalition’s flagship offer for two-year-olds, which is due to be extended in October, has floundered, with the child care Minister, the hon. Member for South West Norfolk (Elizabeth Truss), admitting last November that 38,000 of the 20% most disadvantaged two-year-olds—38,000 out of 130,000—did not have the places to which they were entitled. In May 2014, she updated the House on progress, with 10% of the most disadvantaged two-year-olds still without places. Perhaps most worrying of all is that there are 536 fewer Sure Start children’s centres than there were in 2010—an average loss of three a week. That is the figure we have, but the Minister removed the online database last autumn. Perhaps she will comment on this. I would have thought that, given her professed interest in supporting families and dealing with these issues, there would be a desire to continue to monitor the number of child care and Sure Start places available. It is alarming that we can no longer keep track of the figures on the Government website.

In addition to all that, parents have seen the Conservative Government give a £3 billion tax cut to the top 1% of earners, more than three quarters of whom are men. At the same time, parents have seen cuts of £15 billion. Support to families to balance their work and family life, such as tax credits, child benefit, maternity grant allowances and statutory maternity pay, has been reduced. The reductions to tax credits alone have meant that some families have lost up to £1,560 a year, while the House of Commons Library estimates that families with newborn children could be up to £1,725 worse off over the initial two years.

New analysis of the households below average income statistics published earlier this month shows that under this Government it is families with children who have seen the biggest falls in their income, relative to those without children. Since 2009-10, a couple with two children aged five and 14 are on average £2,132 a year worse off in real terms. In contrast, a couple with no children are £1,404 a year worse off. A single person with two children aged five and 14 is on average £1,664 worse off, compared with a single person with no children, who is £936 a year worse off. We know that everybody is worse off, but families with children in particular are bearing the brunt. These figures only reflect tax and benefit changes, and the impact of wages falling relative to prices has left working people on average £600 a year worse off since 2010.

14 July 2014 : Column 615

Even more worrying is that new research published last week by the Resolution Foundation suggests that the official statistics may well have underestimated the fall in living standards, because they take no account of the wages of the self-employed. The fall in wages could be between 20% and 30% greater than originally thought. As we know, this could prove particularly relevant to women’s experiences, because according to the Office for National Statistics, women have made up more than half of the growth in the number of self-employed since 2008.

We must not forget that the true impact of this coalition Government’s failure is felt not just by parents, but by their children. The latest HBAI figures show that the progress Labour made in lifting more than 1 million children out of poverty has ground to a halt. Equally worrying, the number of children living in what is deemed to be material deprivation is on the rise, with 300,000 more children living in families that cannot afford to keep their house warm, 400,000 more children living in families that cannot afford to make savings of £10 a month, and half a million or more families unable to afford to replace broken electrical goods. Worst of all, a forecast by the Institute for Fiscal Studies indicates that while Ministers and, clearly, their Back Benchers squabble over how to adequately define child poverty, which seems to be a distraction from their failure to deal with it, almost 1 million more children will be living in poverty in 2020.

Charlie Elphicke: The hon. Lady challenged me on my figures. In a House of Commons Library note, taken from the Department for Education and Skills statistical volume, there were 365,000 childminder places in 1997, but by 2010 that number had fallen to 280,000. Does she recognise that that is a really poor record on child care with childminders?

Catherine McKinnell: The hon. Gentleman seems to have gone off the subject of child poverty, which is what we were dealing with. Going back to childminders, there was some movement in respect of the database of those registered when the Ofsted registration system came into place. If he is suggesting that he does not support Ofsted registration, I would be interested to hear more of his views.

Ms Ritchie: My hon. Friend talks compellingly about properly funded child care and the growing levels of child poverty, and she is characterising the position well. In that regard and in view of the volatility in the labour market, the slight economic upturn and the number of temporary or freelance-type workers, could she explain how those people will be impacted by the Bill’s provisions? Will they find themselves in a more difficult position?

Catherine McKinnell: I thank my hon. Friend for that intervention, which brings us back to the issue of child poverty and the importance of child care in supporting families and particularly children in getting out of that situation. She raises an important point, and I shall be coming on to ask some questions about the Bill’s implementation in that regard. Contrary to the impression given by the Minister, there is still a lack of clarity about who will and will not benefit from the changes. I shall reflect only momentarily, Madam Deputy Speaker, on

14 July 2014 : Column 616

the wider point that my hon. Friend raises. Our very flexible labour market can make it difficult for many parents to manage their child care arrangements. We know that many women, for example, are subject to zero-hours contracts, which can make it very difficult to plan for child care and the costs and availability of child care, when they might not know what hours they will be working from one week to the next. I hope that the Minister will take all those issues into account, particularly in respect of supporting families, which could be dependent on the interaction between the implementation of this policy and universal credit.

Dr Thérèse Coffey (Suffolk Coastal) (Con): The hon. Lady mentioned universal credit. Earlier, she was saying how difficult it was to plan for child care. Government Members were surprised that the Leader of the Opposition did not condemn last week’s strikes, because those are exactly the kind of issues that are a nightmare for parents.

Catherine McKinnell: I think that the hon. Lady is straying somewhat from the subject of the debate, but I also think that a number of the workers who were involved in Thursday’s strikes were among the very lowest paid, who we know need this child care support and who are struggling to make ends meet. That was one of the motivating factors in the action that they took last week. I therefore do not think that the hon. Lady’s point was entirely irrelevant, but let me now return to the issue that is under discussion, which is child poverty.

There is concern about the fact that much of the progress that has been made has been either halted or, even worse, reversed by the Government’s policies over the last four to five years. The Government are absolutely on track to miss spectacularly their statutory obligations in terms of eradicating child poverty. As their own child poverty adviser Alan Milburn said recently,

“The Government’s approach falls far short of what is needed to reduce, let alone end, child poverty in our country.”

Madam Deputy Speaker (Mrs Eleanor Laing): Order. I must draw something to the hon. Lady’s attention. Child poverty may be ancillary to the Bill that we are discussing, but she said that the matter before us was child poverty, and it is not; the matter before us is the Bill. However, I am sure that the hon. Lady is illustrating her remarks by referring to child poverty, and that she will soon return to the subject of the Bill.

Catherine McKinnell: Indeed, the next sub-heading in my speech is “The Bill”, so thank you, Madam Deputy Speaker. My point was that child poverty was the issue—the issue in front of us—with which I was dealing before I took a number of interventions. That issue is very pertinent, because we know that the provision of affordable child care is one of the key measures that will help children to be lifted out of poverty. We know that enabling parents to go to work and to be in stable, secure employment is the primary way of enabling them to bring their families out of poverty.

Let me reiterate—in the context of today’s debate and the Bill—that we support any Government action that will help families who are struggling with the child care crunch. However, as we know, this additional support

14 July 2014 : Column 617

does not do nearly enough to make up some of the ground that has been lost over the past four years. For a number of reasons, there is doubt about how effective it will be even when it arrives, in about a year’s time, and about how much better off families will be. The bottom line is this: the Bill confirms that there will be no help for parents who are facing a child care crunch until after the next election, which means that there will be virtually no help with child care for an entire Parliament under the Conservatives and the Liberal Democrats.

Ben Gummer (Ipswich) (Con): I am glad that the hon. Lady has now returned to the issue that is before the House. She has talked about lost ground. In every single year of the previous 13-year Labour Government, child care costs went up. Last year, for the first time, they went down. Where was the lost ground in those two Parliaments?

Catherine McKinnell: Of course child care costs will rise with inflation, but we have seen a spiralling increase. Child care costs have risen much faster than wages, and the increase has been much faster than previous increases in terms of the natural economic cycle. When I talk about lost ground, I am talking about the support that is available to families across the board, which we know has been reduced on a range of fronts—not to mention the reduction in the working tax credits and child care tax credits that are available to working parents. I think that, in introducing the Bill, the Government have recognised that they have a problem, namely that there is not enough support out there for working families. We need to ensure that this Government support, although welcome, goes further. We need to ensure that it goes far enough, and is implemented properly. That is the basis of the questions that I now wish to put to the Minister.

Bridget Phillipson: Is it not right that before 1997 child care was simply not regarded as an issue worthy of debate in the way that it is now? The action that the Labour Government took over 13 years brought this issue to the fore for the very first time. Previously people who raised this as a matter for Government to deal with were simply laughed at. For the first time, the Labour Government brought this issue to the fore and regarded it as a matter for Government action, not just for families to deal with on their own.

Catherine McKinnell: My hon. Friend makes a powerful and important point, and I think we should celebrate on a cross-party basis the fact that we now have consensus that the Government need to take on board this issue and that addressing it can improve the life chances of families, in particular children. That is a huge credit to the last Labour Government who pushed this issue forward and raised it up in terms of political acceptance and cross-party agreement and as an issue that Government cannot simply turn their back on.

None the less we have seen soaring costs, falling numbers of places and cuts in tax credits for thousands of families and, as a result, in 2015 families will be worse off than they were in 2010. Even when the help arrives, it is unclear who exactly will benefit from this scheme, and even then it is unclear how much better off some people will be and many might legitimately ask

14 July 2014 : Column 618

whether they will actually be better off. In the Government’s original consultation last August, they estimated that 2.5 million working families would be eligible for support under this scheme, but in their revised consultation, set out in the subsequent consultation response in March, that number was reduced to 1.9 million families, and therefore around 2.6 million children. However, the Government estimate that only two thirds of those 1.9 million working families—so, about 1.25 million—will have qualifying child care costs. As far as I can tell, however, Ministers have never properly explained what that crucial difference is, because clauses 1 and 2 of the Bill define qualifying child care based on two criteria—first, whether the child care is provided by a registered and accredited provider, and, secondly, where one of the main reasons for the child care is to enable parents to go to work—but that does not explain why 1.9 million families are eligible, yet only 1.25 million such families have eligible child care costs. In fact, as far as I can tell, the Bill does not specifically refer to qualifying child care costs anywhere. I see the Minister shaking her head and I am sure she would like to clarify this point.

Nicky Morgan: First, I said in my speech that qualifying child care costs would be defined in the regulations that have been published today and that, no doubt, we will be discussing in Committee. In relation to the other two points the hon. Lady raised, first I am sure she welcomes the fact that, as part of the announcements in March, we said tax-free child care must be rolled out much more quickly, which partly accounts for the change from 2.5 million to 1.9 million, as we are much better able to estimate because we are rolling it out over a period of 12 months. Secondly, we must appreciate that some families will want child care but it will not be for the purposes of going to work and therefore the taxpayer will not be paying for it. There is also the element of child care having to be Ofsted registered, and, again, many families will decide that they do not want to access formal child care which is Ofsted-registered as they instead have other child care arrangements. Again, that is something the taxpayer is not going to cover at this stage.

Catherine McKinnell: I thank the Minister for that clarification, but I am surprised she thinks it is acceptable that on the day we are debating this Bill on Second Reading we should be able to debate these regulations that have only been published today. I am also very surprised by the comments she makes about the timetable. The Government have obviously had to re-consult on this issue so they are far behind their original timetable anyway, so I am not—

Nicky Morgan: Will the hon. Lady give way?

Catherine McKinnell: In a moment I will. First, I will finish what I am saying, which is that this is far too little, too late, and no child care support is available from this Government for this entire Parliament, but I would be happy for the Minister to correct me on that.

Nicky Morgan: The regulations were published today for this Second Reading debate, earlier than might otherwise have been the case, because I wanted the House to be informed. Moreover, the consultation that we have launched in relation to the delivery providers in

14 July 2014 : Column 619

no way affects the Bill’s timetable. I would not want the hon. Lady to let the House think that the timetable is affected. It certainly is not. We intend that the scheme will be launched and ready for families to access from autumn 2015, as we have always said.

Catherine McKinnell: I was referring to the Government’s original timetable that they are already behind on, but I appreciate that it is intended this offer will be implemented in autumn 2015, as she says. We hope that that will be the case. However I do have a number of questions about the implementation. Unfortunately, Ministers have repeatedly refused to set out the specifics of who will be better off and by how much, or whether people will be better off as a result of these measures. I have tabled a series of written parliamentary questions to try to gain clarity on those points, but disappointingly, although not surprisingly, the answers from the Financial Secretary have not been helpful in the slightest. In many cases, the right hon. Lady has simply failed to answer the questions. It would appear from her responses that the Department is simply not aware of what proportion of families paying for child care will benefit from the Bill, how it will benefit different income groups proportionally, and what the average top-up will be per child once the scheme is up and running. It is hard to believe that the Treasury is not in possession of such data. Surely it is fundamental to understanding what the Bill’s impact might be on the Exchequer, and on children and families.

The only indication that we have about how the Bill will impact on different income groups is from work undertaken by the Resolution Foundation, which suggests that the scheme could be skewed towards higher earnings, which might go some way to explain why the Minister has been so unforthcoming with responses to the various questions put.

Mark Durkan (Foyle) (SDLP): On that very point, has my hon. Friend noted that the Family and Childcare Trust has made it clear that the 1.25 million families that will benefit from this, are only about half or slightly over half of those who are paying for child care costs, and 80% of those who will benefit under this measure are in the top 40% of the income distribution?

Catherine McKinnell: My hon. Friend raises an important point and puts forward compelling evidence as to why we need to question the details on this. [Interruption.] The Minister says that it is not true, but if it is not true, why is she not forthcoming with the Treasury data on this issue?

As Gavin Kelly, chief executive of the Resolution Foundation, pointed out, the Government’s decision to increase the spending cap is likely to benefit those on the highest incomes, despite the fact that it is low and middle-income families who are struggling the most with the rising costs of child care, for whom it is acting as a barrier to taking on more work. He said:

“About 80 per cent of the gains from this will flow upwards to those in the top half of the income distribution.”

Throughout the Bill’s passage in the House, we will continue to press for some clear, transparent information from Ministers so that parents can be clear about what they can and cannot expect to receive in support. At the moment, the Bill is completely devoid of any of this information.

14 July 2014 : Column 620

None the less, despite a lack of answers from the Minister, there is a curious line in the Bill’s impact assessment, which states that, of those families that the Government say will gain as a result of the new scheme,

“the average additional support they will receive is £600 per year”—

£600 per year on average. That stands in complete contrast to the claims of Ministers who have implied that working parents are all in for a £2,000 child care subsidy. Indeed, the Financial Secretary’s own website, summarising her week of activities when she announced this revised child care scheme in March this year, suggested this was the case. She said:

“The new Tax-Free Childcare scheme which I am guiding through Parliament will provide 20 per cent support on childcare costs up to £10,000 per year for each child via a new simple online system. This will mean an average saving of £2,000 a year per child.”

I hope that she will set the record straight on that point, because her Department’s own impact assessment suggests a very different reality.

I would also like to take this opportunity to probe the Minister on the Government’s plans to support 85% of child care costs for all universal credit claimants. Under the Government’s original plans, only those universal credit claimants who paid income tax—the highest earning claimants—would be eligible for 85% of support. Everybody else would be covered for only 70% of costs. We welcomed these changes as they signified a reversal of the Government’s decision to cut the child care element of working tax credit from 80% to 70% in 2011, a move that we opposed because we recognised that it simply served to hit those parents who needed the support the most. But it would seem that this could be yet another example of the coalition Government giving with one hand and taking away with the other.

As Alan Milburn, chairman of the Government’s Social Mobility and Child Poverty Commission, has made absolutely clear, low-income families could still lose out despite the increase in support for those most in need. He told The Independent on Sunday:

“The Government has taken half a step forward. The announcement that 85 per cent of childcare costs will be met under universal credit from 2016 will help work pay for low-income families. This is very welcome. The sting in the tail is that this £200m expansion in childcare support will come from within the universal credit programme. This risks robbing Peter to pay Paul.”

The Minister did not provide any clarity when my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) probed earlier in relation to this, but there needs to be some upfront response. How exactly do the Government intend to pay for this increase in support?

There is another key concern. We now know that the universal credit programme is in complete disarray under the Secretary of State for Work and Pensions, and the Treasury is refusing to sign off on the programme’s business case, and there are concerns that low-income parents may now be waiting until 2017 at the earliest to receive this welcome additional support. Again, I have tabled a number of written parliamentary questions to ascertain whether this will be the case, and, again, disappointingly but perhaps not surprisingly, the Minister has failed to answer any of these questions. I put it to the Minister today: when can the 4 million low-income families who will be eligible for universal credit expect to receive support to cover 85% of their child care costs? [Interruption.] The Minister says she has said it,

14 July 2014 : Column 621

so will she give a cast-iron guarantee today that they will be in receipt of these payments by 2016? Will she confirm that at the Dispatch Box? No.

Mark Durkan: Does my hon. Friend recognise that whereas the new scheme seems to offer up to £2,000 per child, with no limit on the number of children, child care support under universal credit is capped, so anyone with more than two children is effectively losing out when compared with those who benefit from the new scheme? Would child care accounts not be a fairer way in universal credit as in this scheme?

Catherine McKinnell rose—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. Before the hon. Lady replies to the intervention, I simply draw it to her notice that she has now spoken for 44 minutes, which is more than twice as long as the Minister. I am not stopping the hon. Lady speaking because I appreciate that she is making some very good points and putting questions that have to be put. But before she considers taking other interventions, she might consider that other Members are waiting to speak.

Catherine McKinnell: Thank you, Madam Deputy Speaker. I am grateful for your guidance.

The final point I want to make concerns the delivery of this scheme. We are now some 14 to 16 months away from when the scheme should be up and running, according to the Government’s revised timetable, yet the Government still have not made a decision—at least publicly—about who will deliver the child care accounts through which parents will access Government top-ups and pay for child care. They originally announced in their consultation response that National Savings & Investments would be their delivery partner, but after ditching that decision and the preceding consultation process, they have backtracked and reopened the consultation process.

Will the Minister tell us why the Government commissioned a £38,000 cost-benefit analysis report by Economic Insight, which recommended an open, competitive market model for delivering child care accounts, and then simply ignored the report’s recommendations and chose an in-house provider, NS&I, instead? Will she clarify who will be delivering the child care accounts under this in-house option, as it is my understanding that the former Economic Secretary to the Treasury, now Secretary of State for Culture, Media and Sport, awarded a seven-year outsourcing contract to Atos in May 2013 to deliver all customer-facing and back-office services to about 25 million NS&I customers? If the Government continue with the previous plan to have NS&I deliver child care accounts, will the Minister clarify whether it will in fact be Atos delivering them? If that decision is taken, does the Minister plan to renegotiate, or at least revisit, NS&I’s contract with Atos to ascertain whether the company is up to delivering and maintaining accounts to potentially 2 million parents, considering that this would be significantly different from NS&I’s current activities?

Hywel Williams: Does the hon. Lady share my concern that National Savings & Investments was only recently held to be in breach of its responsibilities to provide

14 July 2014 : Column 622

services in Welsh and had to change its services very quickly to conform to its legal requirements? Does that dent her confidence that NS&I might not be able to deliver services to everyone in Wales?

Catherine McKinnell: The Government need to reassure us over NS&I’s ability to provide this contract and to tell us whether services will be provided by Atos, especially as Atos’s delivery of universal credit and personal independence payments has been such a shambles. With just a year to go, it is important that Ministers get a grip and make some decisions. As with universal credit, any further delays in implementation will only hurt hard-pressed families who are already struggling with the cost of child care bills.

Let me turn briefly to our proposals for investing in child care which, on top of what the Government are providing today, would deliver a real difference to hard-pressed families who are struggling with the child care crunch. We have said that we will build on previous efforts and extend free child care for three and four-year-olds from 15 to 25 hours a week for working parents. We will give parents peace of mind by setting down in law a guarantee that they can access wrap-around child care—from 8 am to 6 pm— through their local school, if and when they want it.

As with the 15-hour early years entitlement, introduced under the previous Labour Government, the new 25-hour offer would be for 38 weeks of the year, which would mean more than £1,500 of extra support per child per year. It would not demand that working parents spend more and more of their own money on child care in order to receive some cash back from the Government, as this Bill will demand of them. Regardless of what working parents of three and four-years-olds choose to spend on child care, they will be entitled to 25 hours a week for 38 weeks of the year.

We know that having school-age children can be a logistical nightmare for many parents, and that too many of them find it increasingly difficult to find after-school and before-school child care. According to a Department for Education survey last year, 62% of parents of school-age children said that they needed some form of before-and-after school care or holiday care to combine family and work, but of these, nearly three out of 10 of them were unable to find it. That is why Labour will introduce a primary child care guarantee to benefit parents of primary age children, because that is when families most require child care support.

Charlie Elphicke rose

Catherine McKinnell: I will not give way, as I must make progress.

In conclusion, while we welcome any extra investment in child care, the Bill does not make up for how much more families are paying for child care under this Tory-led Government, and it confirms that no help will arrive for parents facing a child care crunch for at least another 14 months. Families have already seen their child care costs rise five times faster than pay. Many already spend more on their child care than on their mortgage. Parents have seen the number of child care places fall by the thousands, and, despite the Prime Minister’s promises to the contrary, too many communities have seen their local Sure Start children’s centres close.

14 July 2014 : Column 623

Most stay-at-home mums, as well as working parents, have already said that child care costs are the biggest barriers to their either going back to work or increasing their hours. Working parents and families need help now, not in 14 months’ time. But equally importantly, Ministers need to come clean over who will benefit from this scheme and by how much, so that parents can make an informed decision about which form of support will be most appropriate for them.

We will support the Bill’s Second Reading as we welcome the additional support for families because we know how much they are struggling, but we will scrutinise every detail to get the answers to the questions that we put today, as there are many areas in which the Government are not being up front. Critically, this Bill falls far short of what is needed to make up for the last four years of spiralling costs, falling child care places and cuts to vital support for families. Parents deserve better than that, which is why the next Labour Government will extend free child care for all three and four-year-olds as well as introducing a primary child care guarantee to give parents peace of mind.

6.6 pm

Priti Patel (Witham) (Con): May I say what a pleasure it is to speak in support of this Bill, which I welcome for many reasons, but predominantly for the long overdue support it provides to hard-working parents up and down the country. It shows parents that the Government are on their side as they return to work, fulfil their career aspirations, provide better futures for their families and their children and encounter new opportunities. It is incumbent on the Government to play a positive role in that regard.

I am a parent; my son is five years old. Like so many Members from all parts of the House, I understand the challenges of child care and work-life balance. I also understand that the costs of child care are far too high—to be fair, that was true under the previous Government as well. It is about time that we all faced up to that. Rather than throwing political brickbats across the House, we must start putting across a positive message about supporting hard-working parents and facilitating affordable child care so that everyone benefits, including children. Rather than being partisan and party political, we should realise that this is about children and ensuring that their futures are secure and that parents have access to good-quality, affordable child care. Parents need to feel comfortable that they are putting their children in the right environment—one in which their children will flourish, feel safe and be stimulated.

Mr Robert Buckland (South Swindon) (Con): My hon. Friend is making a powerful point about the need for flexibility. Does she agree that for parents with disabled children, the need to extend that provision through to late teens is very important? The provision to extend the scheme up to 17 is particularly relevant for those families.

Priti Patel: I welcome my hon. Friend’s intervention. He makes a powerful point. When we consider child care and child care payments, it is important to understand that this one size does not fit all—we all have different child care needs. All our children are different; every family is different. The Bill moves us away from the notion that everybody’s situation is similar. We must

14 July 2014 : Column 624

support families through all sorts of personal circumstances, some of which are challenging and very difficult. We know that both as constituency MPs and as parents.

One of the biggest challenges and choices that parents face is how to raise their children, so the Bill is not only timely but politically significant—we have not had such a measure before. We live in a society in which the pressures on parents are absolutely enormous, whether because of employment, changing jobs, the labour market, social mobility or the fact that we live in an international and global world. Many companies have different expectations of their employees, but employees are parents, too.

Sarah Newton: Does my hon. Friend agree that caring for older relatives is another huge pressure on families? It is so important that the benefits of this Bill will be available to those on carer’s allowance. So many people fall out of work because it is too difficult to work while managing caring responsibilities.

Priti Patel: My hon. Friend makes a powerful point, which relates to my earlier comments on everybody’s circumstances being different and the flexibilities outlined in the Bill. The ability to reach out to those with different circumstances and backgrounds is paramount. The Bill demonstrates a depth of understanding of the challenges facing families and households. When both parents work, they find it difficult to decide between the costs of child care, which can be in excess of £10,000 a year, and spending time raising children themselves.

We should remember that child care costs vary across the country and that no generic or standardised level or rate exists. Costs are naturally high in London, the south-east and the east. Many working households spend a lot of their income on child care, partly because people do not necessarily live in the conventional family set-ups in which grandparents might be around the corner and able to offer support. I must be perfectly honest that I rely on such a situation. I tell everybody that I am blessed and that I can do this job only because I have outstanding family support to look after my son.

Child care decisions are often made on cost grounds and the Bill goes a long way to reflect that. Over the past decade, the average hourly cost of child care has increased by more than 67%, which is almost two and half times higher than the CPI rate over the same period. The pay of parents in England will vary depending on what they do. In London, pay levels are slightly higher than elsewhere, but many parents pay hundreds of pounds a week to some child care providers, which means that their families are under pressure and more often than not—we have not discussed this—that pressure ends up on working mothers. They are the ones who sacrifice their careers or put them on hold because child care costs can be so high that they have to decide whether going out to work or staying at home to look after their children is more financially expedient. I have much sympathy with those mothers. Many of my constituents with successful professional careers that they want to continue inform me of the pressures and challenges that they face, including the high costs of child care and commuting costs. Essex is not that far from central London, but most of my constituents and others across the county work in London. They are on a treadmill day in, day out. They face pressures and costs

14 July 2014 : Column 625

and feel as if they have no choice. If people feel that they have to stay at home, it becomes harder for them to re-enter the work force, which is another reason the Bill is so important. It helps mothers in particular to meet their aspirations, which we should all welcome and support.

The Government deserve credit for recognising the pressures, in addition to soaring child care costs, that families and mothers face and the impact of those pressures on families. As with so many other issues, the Labour party ignored that when it was in government. We have heard lots of rhetoric today, but the reality is that it is difficult, a challenge and a balance. It is easy for the Opposition to talk about the Government today, but we have to remember that the economic policies of the past—uncontrolled public spending—hampered the economy instead of helping families. When families needed help, they were hurt. We know about the negative impact that the downturn and its economic legacy has had on households, so now is the right time to focus on support for hard-working families. The Bill is about support for child care costs, but we want to put an end to the shameful past and what parents had to deal with, and to look forward.

As we heard from the Financial Secretary to the Treasury, the Government have gone a long way to bring in positive and proactive measures to help hard-working households: cutting income tax bills, abolishing Labour’s jobs tax; reducing fuel duty; and supporting private business. That applies particularly to my constituency, where SMEs employ 85% of my constituents. We need the private sector and SMEs to be successful to continue to create more jobs. A million new jobs have been created since 2010. The measures are positive and bring a new dynamic to the employment market. At the same time, low earners have been given support with child care costs, including free child care places for some 40% of two-year-olds. Those are the proactive measures that make a difference to middle and low-income families.

As a Conservative, I instinctively believe that the Government should not only support families, but also help parents to make choices about working arrangements, which is why the Bill is so positive and proactive. Families want to be empowered by Governments to make the right choices for themselves. The Bill helps families to make such choices by alleviating some of the financial pressures caused by child care costs. This package of support will help women who want to continue to work to do so. We are already seeing record numbers of women in work and the Bill will help those who have established a career—or those who are just starting out after having taken time off to bring up their children—to continue to develop and to advance in their profession.

The £2,000 a year of support for families is a substantial amount for the Chancellor to find and should be put in the right context. It has been made possible only because of the controls that have been placed on spending and the reductions in the deficit, which the Labour party has opposed. This Government is on the side of hard-working families. The Bill will benefit not only my constituents but working families across the country through sensible and practical measures. I welcome it as a positive way of supporting families and working women.

14 July 2014 : Column 626

6.17 pm

Dr Thérèse Coffey (Suffolk Coastal) (Con): I had assumed that my hon. Friend the Member for Norwich North (Chloe Smith) would speak ahead of me, but it is a great pleasure to be called today. You are right to looked puzzled, Madam Deputy Speaker. Why is there nobody on the Opposition Benches? We all know that the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) spoke for 52 minutes to mask the fact that no one else on the Opposition Benches would be speaking. That contrasts with 19 and 20 November 2013, when we debated child care in the Chamber. I am slightly disappointed, because I had a good exchange with the hon. Member for Houghton and Sunderland South (Bridget Phillipson) and I am sure that we could have had a similar debate about statistics and measures. Nevertheless, it is great news that we are finally getting to the Childcare Payments Bill and I am pleased to support it today.

One of the big things about the Bill is that it puts matters into the hands of parents. Instead of having to rely on employers setting up schemes, which I believe only 5% of employers actually set up, we will have a system that is effectively direct. Families with two working parents who earn at least £50 a week will benefit in one way or another from Government help towards child care, recognising that we will not double-subsidise those who receive tax credits or universal credit.

On that note, it is my understanding that we will provide an extra £200 million to support those families claiming universal credit, so instead of having 70% of their child care costs paid, as they do today, they will receive 85%. I am sure that will be very welcome to all working families.

Of course, the very richest in our society—those who earn more than £150,000—will not benefit, but I am sure that they will recognise that we must target a welfare system at the broadest number of people.

Hywel Williams: Is the hon. Lady confident that when parents in deprived and rural areas are enabled as proposed, the market will deliver the places?

Dr Coffey: I do not pretend to know much about Welsh schools, although my cousin goes to school in Wales and I have many relatives there. I am not necessarily aware of the provision that exists, but I know that this Government are keen to work with schools in England to increase the number of schools choosing to make provision for young children. I do not know what the Welsh Assembly Government are considering, but the Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), has consistently tried to introduce reforms that will make child care provision an attractive career. We are right to press ahead with some of the childminder agencies we are introducing, not through this Bill but separately, to remove some of the administrative burdens that might be deterring people from entering that career. I hope that the hon. Gentleman will encourage such agencies to set up in his area of Arfon, bringing new employment opportunities for both men and women and making provision for working parents.

It is great news that under this Government more women are working than ever before, yet we would like to see even more women—and even more parents—going

14 July 2014 : Column 627

into work. This scheme is part of our long-term economic plan. We recognise that the cost of our child care is the second highest in the OECD as a percentage of family income; only Switzerland’s is higher. I think that it is fair to say that under Labour the number of childminders decreased significantly and costs went up. Before the hon. Member for Newcastle upon Tyne North springs to her feet—if she is not following the latest reshuffle news on Twitter—let me say that I recognise that that trend has continued, but it is not going on at the same level.




I thank the hon. Member for Manchester Central (Lucy Powell) for referring to my haircut. It was nothing to do with the events that seem to be unfolding on Twitter. I merely got a phone call from my own mother complaining that my hair was too long and, as we know, in these situations mothers know best. I am not a mother, so I have to stick with what my mother tells me.

Let me give a few of the reasons why these things matter. A couple of years ago, the Conservative Women’s Forum undertook an inquiry, in which I think you might have participated, Madam Deputy Speaker, into the executive pipeline of talent. It focused not only on the number of women on boards, but on how we encourage women to get up the executive ladder and, more importantly, on what women can do for themselves, what Government can do and what companies can do. The issue of child care was a running theme throughout the inquiry, particularly for those in junior management. Once people are at a certain level, they probably receive a salary that means they do not have to think about the issue; they can pay for a nanny and even though it might be painful, the costs are not quite so prohibitive. We consistently received evidence that the voucher system was inadequate. It did not cover enough of the cost, it was very limited or, as my hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned earlier, it did not help people such as the self-employed. I am pleased that the Bill extends the provision to almost anyone in work and it is right that we should do that.

It is also fair to say that no one magic bullet emerged as a result of the inquiry to solve some of the challenges in the pipeline of talent or in how we tackle child care, but nevertheless the discussions before the Budget announcements on how to help with tax relief were exactly the issues being brought up by senior executives. I was glad that the subsequent announcement was made in Budget 2013.

The proposals in Budget 2013 were limited to £6,000 of child care costs, which would have meant a maximum benefit of £1,200. I was pleased that after the consultation, to which significant contributions were made, we were able to change the age limit to 12 and, as my hon. Friend the Member for South Swindon (Mr Buckland) has pointed out, to change the age limit for children with disabilities. We also increased the limit to £10,000, with a maximum of £2,000 support. That was the right thing to do, because it recognised the costs of child care. Nevertheless, it is important that we have retained the choice for parents who are in employer-supported child care schemes to stay in that system while recognising that we will close it to new entrants, so to speak. I support that because, understandably, companies have gone to some expense to set up these schemes and they are popular. We should not withdraw one thing simply for the sake of simplicity for the Government.

14 July 2014 : Column 628

The hon. Lady from Northern Ireland—I have forgotten her constituency—

Mark Durkan: South Down.

Dr Coffey: Thank you. The hon. Member for South Down (Ms Ritchie) referred to the situation in which one parent was not working and asked why they would not get support with child care costs. As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) has accurately pointed out, the consultation raised those points and we have extended the provision when there is a working person and somebody on carer’s allowance or employment and support allowance. When people are enjoying parental leave after having children, they should not be penalised if they have children in child care. We do not want any unintended consequences.

I am a strong supporter of the traditional family. I am sure that I am not the only person whose mother did not work initially after having me, although she did start to go back to work as a supply teacher. It is fair to say that although the Government have scarce resources, they are offering both parents the choice to get back into the workplace, as opposed to one person having to choose, for perfectly good reasons, not to return to the workplace. I therefore support the gist of what the Government are saying about restricting support to cases in which both parents are working or the other cases that have been alluded to.

I am surprised that there are no Members in the Chamber from the Scottish constituencies, because, of course, this is a United Kingdom measure, although I am delighted that we have had contributions and interventions from Members from Wales and Northern Ireland. Much has been made of the fact that National Savings & Investments will initially be providing the child care account. You may have read in the weekend press, Madam Deputy Speaker, that if the people of Scotland choose to go ahead with separation, NS&I will not be able to provide accounts to people living in Scotland, as they will effectively become foreign nationals. They might wish to consider that as another element of the question. I am sure that if somebody from the Scottish National party were here, they would leap up and say, “We will have an even better scheme and it will cost less than yours.” Nevertheless, I am sure that the good people of Scotland recognise that that is unlikely to be the case. The Minister might want to consider the issue in her regulations for this provision, but let us not prejudge the outcome of the referendum. I strongly believe that the people of Scotland will recognise that staying together is better for us all.

Hywel Williams: Shall I indulge in some karaoke and repeat the words that the hon. Lady used herself? I am sure that Scotland will provide a much better scheme when it is independent.

Dr Coffey: The hon. Gentleman would say that, and he has been very loyal to his nationalist friends. I recognise that.

On the timing, I am sure that my hon. Friend the Minister agrees that if we could bring in the scheme tomorrow, we would do so. However, we do not want to repeat—[Interruption.] Does the hon. Member for Manchester Central want to intervene? I think she said

14 July 2014 : Column 629

that we have been in power for four years, and I recognise that we are bringing this into play rather late in our parliamentary term, but she will know some of the challenges of government from her previous experience. Nevertheless, I would rather we got this right than end up with the fiasco we had over tax credits, which were brought in in quite a rush, with all the accompanying problems. The hon. Member for Manchester Central might be slightly bemused by that, but overpayment of tax credits and trying to reconcile figures and help people out with that is one of the biggest issues in my constituency casework. She will, I think, recognise some of the challenges of bringing in a new system.

The Bill rightly provides that the connections between the different agencies will be updated quarterly. We are not going to get into penalties and going back and forth, but provision is made for recovery. It is important that parents recognise that they should anticipate the potential impact if their conditions change. To be frank, I think the biggest change will occur when people move from one salary bracket to another, or decide to stop claiming universal credit and simply to claim this instead. At least the hurdle or cliff edge when people have to change is fairly black and white.

Mark Durkan: Would the hon. Lady like to see a strong information and advice offer built into the scheme, so that people who are having to decide how to navigate between universal credit and the scheme will get advice and without-prejudice, better-off calculations?

Dr Coffey: My expectation is that that would happen naturally. I do not want to overplay it, but I think it would be a natural consequence when people say, “I’m coming off universal credit to get this.” It will be a straightforward calculation, which should be readily understandable.

Hywel Williams: I wish I could share the hon. Lady’s confidence. I remember when the tax credit was brought in warning the Government at the time that it was complicated. It was to be administered by HMRC, which was not good at giving people money instead of taking money off them. Despite the confidence displayed at the time, HMRC included in its letters such sentences as, “Even though we told you your assessment was correct, it was not reasonable for you to believe this.” That is a direct quote from a tax credit letter. I am afraid I do not share her confidence that HMRC or any agency of Government is completely competent to administer this scheme.

Dr Coffey: I understand what the hon. Gentleman is saying, based on the experience of tax credits. That is why I think the Bill deals with it rather well: the period of entitlement is three months. As it is split up quite well into quarters, it should be quite straightforward for parents to make that assessment of what is better for them to get support. Of course, I am sure we all share the aspiration of reaching a stage where everybody is earning over a certain threshold and does not need to make those calculations.

I will not repeat everything my hon. Friends have said about the excellent work being done through nurseries for three and four-year-olds. I will simply reiterate my

14 July 2014 : Column 630

view that the Bill brings the balance back into the hands of parents and recognises that child care is normally needed all year round. Something that will need to be tackled with child care provided through primary schools by extending their playgroup is how to ensure that continues through the school holidays, but instead of trying to devise a perfect scheme that meets the demands of every single scenario, which is rather difficult when dealing with millions of children and parents, the Bill simplifies and gives people, through the child care account, the ability to build up balances and use the money as and when they need it. What is important is that parents will not pay fees for the accounts. I heard what the hon. Member for Arfon (Hywel Williams) said about online access, but there will be assisted approaches available for those who cannot access the internet. Internet access is the general default in our efforts to get people on to digital services.

I have not been able to speak for quite as long as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), but I am delighted to say that there are other Conservative Members here, and I did not spend 27 minutes talking about stuff that is not connected to the Bill. It gives me great pleasure to support the Bill. Today is an historic day in Parliament, as we embark upon a piece of legislation that will affect many working families. I hope the Bill has the unanimous support of the House.

6.34 pm

Chloe Smith (Norwich North) (Con): Mr Deputy Speaker, I am sure it took you many minutes to work out who the next speaker would be in this balanced debate that demonstrates that it is the Conservatives who are on the side of carers and hard-working families.

Child care is an important issue for the many working families I represent. I have been talking to lots of mums and dads, nurseries and pre-schools in Norwich, and I have already had the privilege of raising in Westminster Hall and this Chamber points they made about quality and affordability of child care. Too many people are prevented from being able to earn to support their family or to fulfil their career ambitions by the high cost of child care. As we all know, even part-time nursery places can cost thousands of pounds a year—indeed, child care costs have now overtaken mortgage interest payments to become the most significant monthly outgoing for many British families.

Charlie Elphicke: I was wondering whether my hon. Friend has noticed the complete absence of any Back Benchers on the Labour side of the Chamber? Increasingly it seems that the Conservative party is not only the party of the workers, but the party of child care as well.

Chloe Smith: My hon. Friend puts it extremely well, and perhaps makes my next point for me, which is that the previous Government failed to deal with the problem of child care costs, and it is the present Government, in particular the Minister for Women, my right hon. Friend the Member for Loughborough (Nicky Morgan), who are doing so.

The Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), who is responsible for child care, has rightly said in the past that a changing economy means that parents

14 July 2014 : Column 631

need affordable and available child care more than ever, and a changing world means that children need a rigorous, rounded education more than ever. We have before us an opportunity to do both things at once. The context is the tax and benefit changes that came into being this financial year. The biggest reforms in a generation, they will create more jobs—indeed, they have already done so—and they are getting more people off welfare and into work. Child care follows from that, so let us see it in perspective. It is only by sticking to those kind of economic actions—a long-term economic plan, in fact—that we will build a more resilient economy and a more financially secure future for hard-working people and their families.

The cost of living cannot be seen in isolation. The British people cannot be flannelled with phony figures. There can be no economic or household security without the honesty and courage to control the public finances. Labour’s old way has failed—Labour Members would argue with that, if they were here to do so. More public spending led to more welfare bills and more government jobs that the country could not afford. They propose in this debate to use a levy they have already spent 10 times over. Why can they not afford parents the respect of some honesty? This Government, on the other hand, are backing businesses by cutting their taxes, so they can create jobs; cutting tax for individuals, so that their job pays; and controlling welfare, so that getting a job pays more. Universal credit is of course crucial and will be one of the most important reforms this Government make. By replacing working tax credit, it should help my female constituent who wrote to me last week to say:

“When I did work we were over the threshold for working tax credits by around £300 yet I would have to pay £12,000 in childcare cost to continue working.”

Let us look at some other current figures. I am drawing now on the Mumdex—the helpful piece of work that Asda does every month. The latest report shows a rise in spending power for the eighth consecutive month, leaving families £4 a month better off than last year. The main cause is a slowdown in essential item inflation, particularly food, clothes and mortgage interest payments—another sign of a sounder economy. Petrol costs fell again, which eased the pressure on household finances—indeed, under this Government, fuel duty is now more than 13p a litre lower than it would have been without our action, so that the average family saves £7 every time they fill up the tank.

Such results in family finances can only come about with control of the public finances, which has entailed serious decisions by the Government about what to spend hard-earned taxes on. Voters have serious decisions to make as well, as the Conservatives appreciate. As a previous Conservative election poster said,

“Don’t just hope for a better life. Vote for one.”

I am delighted that the Chancellor has put public money towards the tax-free child care scheme that we are discussing. It stands to ease costs for families even more, and here are five good reasons why I support it. First, it will be bigger and faster than first outlined, opening sooner and benefiting in its first year 1.9 million working families with children under 12. That is good progress already in the work that has to be done to bring the scheme forward. Secondly, it will be simple, flexible and easily accessible online. Thirdly, for the first

14 July 2014 : Column 632

time self-employed parents and those working for the great majority of employers who do not offer the existing employer-supported child care scheme will be able to take part.

Fourthly, the scheme will also help those working part time and on the minimum wage because of the low minimum earnings threshold of £50 a week. Fifthly, as my hon. Friend the Member for South Swindon (Mr Buckland) said, it offers more help for parents of disabled children by recognising that assistance ought to continue until the child is aged 17, rather than 12. I know from experience in my constituency how welcome that will be.

This all means that all working families where the parents earn at least £50 a week will have access to Government support for child care costs unless one of the parents earns more than £150,000 or receives support from tax credits, universal credit or ESC. All told, this gives families greater stability and more flexibility to make their own choices about their family picture. A male constituent told me:

“I’m now on £10K a year, at 39 years of age. My wife, an amazing mother, has to stay at home to look after two of our children, as we cannot afford the child care or would be worse off if my wife went to work.”

The personal allowance will rise in April next year to £10,500. My constituent then may be one of the 400 people in Norwich North who will be taken out of tax entirely by the actions of this Government. He will certainly be one of the more than 38,000 people in my constituency who will benefit from our tax changes. Universal credit will address the abhorrent benefits trap, which is reflected in the quote that I just gave. My constituent and his wife may also benefit from the scheme before us today. I welcome the targeted provision of taxpayer-funded child care for families on the lowest incomes.

Mark Durkan: On universal credit, does the hon. Lady recognise that there is a disparity, in that child care support under universal credit will not be paid through the sort of child care accounts that are available under this scheme; they will be only for costs that are already paid out, unlike under this scheme.

Chloe Smith: I do recognise that difference, and I am confident that the Minister will look at that carefully. I wonder whether we might deal with it in Committee, and whether Labour Members will be there to do so, as they are absent from the Chamber today. I recognise the point that the hon. Gentleman makes. I do not have the answer, but I am confident that the Minister is working on it.

The new provision, however it is implemented, will be targeted. It is important to add it to the provision that this Government have extended for families on the lowest incomes, beginning with all three and four-year-olds receiving 15 hours a week of free child care, and going on to target this offer to the 240,000 poorest two-year-olds. If that is how the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) defines doing nothing in our years in power, I cannot wait, and I am quivering in my boots, to see what she will do when she marshals some Back Benchers to help her into government.

Let me turn to a couple of points about the quality of child care that we all wish to see as we put the Bill through. I want more great child care to be available

14 July 2014 : Column 633

and to offer parents more choice and flexibility. I would also like it to be easier for new providers to enter the market and for good existing providers to expand, with consequent benefits for affordability and quality. The Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk, has said that we know that other countries, such as France and Germany, have excellent systems for comparable amounts of Government spending, while also paying staff good salaries and keeping parents’ costs affordable. I hope my hon. Friend the Economic Secretary to the Treasury will reassure us that the implementation of the child care payments scheme will be simple and cost-effective, will work with other Government systems such as universal credit, and will give parents the confidence that they need and deserve in affordable, achievable, good quality child care in this country.

6.44 pm

Charlie Elphicke (Dover) (Con): May I strike a blow for working fathers, who are also parents, in a joint working household, which is the norm in this country? Sharing the child care responsibility and engaging in that work-life balance—that juggle—is increasingly the norm. I welcome the Bill. Tax-free child care will help all working parents, including fathers like me, with child care costs so that they can go out to work and provide greater security for their families.

That matters because it is important that we help all hard-working people who go out, work hard and do the right thing. Providing 20% support for child care costs up to £10,000 is important to help to make that happen. It is a key part of our long-term economic plan. I welcome the fact that the hon. Members for Foyle (Mark Durkan), for South Down (Ms Ritchie) and for Arfon (Hywel Williams) were here today, whereas no Labour Back Benchers whatsoever were present. That says that the Conservative party is not just the party of the workers, but the party of child care, and the party that is modern, forward-looking and concerned about the kind of future we can build for this country and the hard-working families who do so much to make this country great.

6.46 pm

Lucy Powell (Manchester Central) (Lab/Co-op): I am pleased to speak in the debate. The contrasting numbers of Members on the Government and Opposition Benches may reflect our relative ambitions in this place, with those on the Government Benches sporting their new haircuts and trying to get the party strapline in at every opportunity, while my hon. Friends are enjoying drinks with the Leader of the Opposition this evening. Although we have made much progress in this place towards being more family-friendly, perhaps a Monday evening late night debate on child care is not the best timing.

As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said earlier, we welcome any investment in child care. Families up and down the country are crying out for better access to child care and more affordable child care. For these reasons it is good that Ministers have finally realised, even if it is a little late in the day, the impact that child care affordability has on family lives. We on the Labour Benches believe

14 July 2014 : Column 634

that high-quality flexible child care is part of the solution to some of the key challenges facing our country. On the economy, our maternal employment rates, particularly for mothers with children aged between one and four, are poor compared with other OECD countries. Child care is a barrier to growing the economy and boosting maternal employment rates. It is unacceptable that in 2014 women still have to choose between looking after their children and having a career.

Over a third of mothers want to work but are unable to do so as a result of high child care costs. Two thirds of mothers would like to work more hours but are unable to do so because taking on more hours would mean higher child care bills. Improving child care will break down barriers for women and help our economy to grow. For families, this is not just about the number of women in work, as some Government Members have said. Child care can help us tackle gender inequality and the motherhood pay penalty. Although the gender pay gap is negligible for young professional women, for mothers the gap is stark.

Mums not only increasingly want to work, but they have to work. As we know, to lift families out of poverty, two incomes are often needed. The killer point for Members who have talked about more women in work under this Government is that figures show that the pay gap between what men earn and what women earn has increased in the past five years for the first time, and that, by contrast, over the 13 years of the Labour Government, the gender pay gap decreased significantly. This is the measure by which we should work out whether policy is effective.

We know that good quality child care is good for society as well. We know that the most disadvantaged children can start school 18 months behind their peers. Good quality child care can close the developmental gap and equip children with the skills and experiences they need to be successful at school. Quality child care can lay the foundations for our country’s future. It can be a key tool in our early intervention armoury and, as my hon. Friend the Member for Newcastle upon Tyne North said, in tackling child poverty. Although we welcome any investment in child care, I believe that in many ways the Bill is a missed opportunity and that it will do little to meet those big policy objectives.

Why is our child care system not working? The price paid by parents is high, yet for too many the quality of child care is patchy. The Government came to office believing that they could solve the problem simply by loosening ratios. That policy failed, and it would not have worked in any case. The Government have failed to address the fundamental problem with supply. We have seen a reduction of over 35,000 in early-years places since they took office. Government Members talk about the increase in reception places at school as though that somehow fills the gap, but they fail to recognise that at the same time the birth rate has increased dramatically, and we are now seeing huge pressure on school and early-years places as a result. The two-year-old offer shows that the system is not working, because a third of local authorities do not have enough places to meet the Government’s own offers.

I have had a number of exchanges in recent months with the hon. Member for Dover (Charlie Elphicke) on childminder numbers. We have seen a dramatic fall of 11% in childminder numbers since this Government

14 July 2014 : Column 635

took office. There are now 6,000 fewer childminders. It is wrong to say that Labour oversaw a big reduction in childminder numbers as a result of changes in regulation, because Ofsted registration meant that many providers fell out of the system. We heard earlier about comments made by Liz Bayram, who backs up that claim. The Government have done little to increase supply for working parents or parents of disabled children, as the hon. Member for South Swindon (Mr Buckland) mentioned. They have watered down the duty on local government to provide sufficient child care places, and they have also axed the duty on Sure Start centres to provide child care.

All that, taken together, has had a chronic impact on prices. That is why we have seen costs rocketing by 30% since 2010. The Family and Childcare Trust has shown that even part-time child care costs now outstrip the cost of the average mortgage. On top of that, Government policy has had a direct impact on the market. The no-notice changes to tax credits, for example, led to many parents immediately withdrawing their children from day care provision, which had an immediate effect on providers.

The Bill does nothing to address those fundamental issues in our child care market and, in some cases, it makes it worse. That is why Anand Shukla, chief executive of the Family and Childcare Trust, has said:

“Our childcare market is not fit for purpose. It is failing to fill gaps in provision, particularly for those parents who most need childcare; it is failing to drive up quality; and it is becoming more unaffordable for parents despite increased government funding.”

Hywel Williams: I am intrigued by what the hon. Lady is saying, because the Childcare Act 2006 obliged all Welsh and English local authorities to ensure that sufficient child care for working parents and those undertaking training or education with the intention of returning to work is available. What happened?

Lucy Powell: That is exactly part of the problem here: local authorities no longer have many of those duties, and they do not have the staff or resources to ensure that good local child care markets are acting in that way.

Let me turn to some of the specific measures set out in the Bill. The Government have no plan to control prices. This scheme, on its own, will do nothing to reduce costs, and it could even increase them. It poses a greater risk of price inflation, which is not a good or efficient use of public funding. The Institute for Public Policy Research has show that by 2018 parents will be spending more of their disposable income on child care, even with the tax-free scheme in place. Therefore, although we do not oppose the idea of tax relief for child care, we are critical that the Government have no plans to control costs and use the extra funding to lever in greater quality. Policy evidence is moving much more towards supply-side solutions, such as Labour’s proposals to extend free child care places. Indeed, under previous demand-side schemes there has been price inflation. Have Ministers assessed how the scheme will impact on the child care market and what impact it will have on price inflation?

There will be no help until after the election. The Bill does nothing for families struggling with the costs of child care now. Ministers have cut support for families

14 July 2014 : Column 636

in this Parliament as child care costs have risen and wages have stagnated. When the policy is introduced, the child care subsidy—that is what it is—will not make up for how much more families are having to pay for child care under this Government, or how much they have lost, as my hon. Friend the Member for Newcastle upon Tyne North so clearly set out.

For clarification, the offer for 15 hours of free child care was actually a Labour Government policy, and the idea of the two-year-old offer, which many Government Members mentioned—it is a good policy that I agree with—was actually put forward by the Deputy Prime Minister. He implemented it in the face of opposition from his colleague who claims to be the Minister for child care in the Department for Education.

Also, the numbers simply do not add up. The Government’s presentation of the scheme suggests that families are going to receive £2,000 per child. That is untrue, and only 100,000 of the 1.9 million families eligible for the scheme—one in 20—will receive the full amount. The Government’s own impact assessment shows that most families will gain by £600 a year, which is well below the £2,000 per child that Ministers have been promising.

Many of the scheme’s benefits will go to the very highest earners—those earning up to £150,000 a year—rather than middle and lower-income families, who have been hit hardest. Only 100,000 of the richest families will benefit from the increase from £1,200 to £2,000 a year per child, which is around 5% of eligible families. The extra money for universal credit, although welcome, has to be found within the existing budget, so where will Ministers find it, and will they clarify today when families receiving universal credit will get the extra support for child care? The Minister said earlier that it will be in 2016. Is that a cast-iron guarantee to which we can hold the Government?

The complex relationship between the scheme and universal credit could leave many families far more confused about whether they are better off in work or out of work and on the borderline between moving to and from each scheme. Will the Minister tell us today how parents will know whether they are better off on universal credit or under tax-free child care? How will the Government support parents moving in and out of both schemes.

The scheme is also quite bureaucratic, with heavy running costs, and a number of questions remain about that. Further clarification from the Government about some of the IT that will underpin the scheme would be welcome. Serious questions remain about deliverability. The Minister said earlier that the scheme is on time, but according to the Government’s own timetable, published last autumn, they are now six months behind because they have had to re-consult on some of the scheme’s specifics. That is because Ministers failed to include key details in the first consultation. Can parents be assured that the scheme will be introduced on time?

As I have said, the Government have no bigger vision for child care. The Bill alone, although welcome, does nothing to address some of the fundamental problems in our country’s child care system. I suggest that the Government develop a much bigger vision for child care, as we did when we were in government—we had the child care plan in 1998, the 10-year child care strategy in 2004 and then the Childcare Bill in 2006—and as we are doing now.

14 July 2014 : Column 637

I also suggest that, in order to address the supply-side issue, the Government consider enhancing the role of local authorities in provision; ensuring that Sure Start centres expand to include child care provision, rather than being closed; taking action to ensure that prices do not simply increase and that there is more supply-side support; recognising that deregulation is simply not the answer, because we cannot pretend that we can solve the problem on the cheap; making improvements in quality; taking action on supply and on quality staffing and teachers; adopting Labour’s plans to extend free child care from 15 to 25 hours a week; and giving parents a guarantee of wrap-around care before and after school.

6.59 pm

The Economic Secretary to the Treasury (Andrea Leadsom): I thank all hon. Members who have spoken in the debate. Given the incredibly valuable contribution that this Bill makes to supporting working families, it is a great shame that no Opposition Back Benchers wanted to celebrate its arrival. It is fairly safe to say that the vast majority of Members who spoke agree that more needs to be done to support families with child care costs. It is also safe to say that the majority recognise not only the impact that an improvement in this area could have on millions of households but the impact it could have on the wider economy. We largely agree that more should be done to help more people, particularly more women, back into work. However, some Members described their concerns about the specifics of the scheme or the way in which it will be implemented, so I will do my best to respond to as many of those concerns as I can.

For most of us, having a baby is the most rewarding and challenging thing we ever do. It is incredibly hard to juggle home, children and a job, but whatever families choose to do, we recognise that they are best placed to make that choice. With three kids of my own, and having worked only part-time when they were small, I know I sometimes went to work for a rest, so I take my hat off to all the heroines, and some heroes, who choose to stay at home. This Government support you and salute you. Through this Bill, we want to provide more support for working families. That is why we are introducing tax-free child care to help families with the costs so that they can go out and work if they choose to or need to. They are the right people to make that decision, and we support them in that choice.

Some hon. Members implied that we may have over-consulted, but given the number of people this change will affect, and to help to ensure that the scheme works as well as possible, we have consulted very widely on its design over the past year and listened to the feedback we have received. We are considering the responses to our most recent consultation, which closed on 27 June, alongside those we received on the first one, and we will publish our response in due course. Whatever that response says, though, we are confident that the Bill has the necessary flexibility to allow for the delivery of child care accounts through the private sector or the public sector, and through a single provider or multiple providers.

The hon. Member for Manchester Central (Lucy Powell) made various points about who will benefit from the scheme. First, to qualify for tax-free child care,

14 July 2014 : Column 638

parents need earn only a little over £50 a week, so this is a boost to all families, whatever their earnings. Secondly, the overall system of child care support remains firmly focused on those on lower incomes. In just two months’ time, the Government will introduce a system that entitles 40% of two-year-olds from the lowest-income families to 15 hours of free education every week. In the Budget, we announced that all families eligible for universal credit will benefit from additional support, up to 85% of costs. We need to recognise that many families—not just the poorest but those across all income groups—are seriously struggling with the high costs of child care. While of course we want to focus our help on those with the lowest incomes, those in higher earnings brackets also warrant some support.

The Government recognise that child care costs have risen significantly over the past 20 years and are a huge issue for all working families. During the last eight years of the previous Government, child care costs increased by 50%, but they are now beginning to stabilise. Figures from the National Day Nurseries Association show that the average fee increase across all nurseries in the past year was just 1.5%, which is below inflation. Nevertheless, child care costs remain a massive problem for many parents who find that their income is eaten up by them. We need to extend free entitlement. That is why we are also increasing the supply of child care places and, ultimately, why we are introducing this Bill.

Government Members made some very good points. My hon. Friend the Member for Witham (Priti Patel) expressed her support for this much needed Bill. She said that flexibility in child care arrangements is absolutely vital to families, that child care costs are very high, that Labour’s economic legacy has significantly hurt families, and that it is important that we now provide support for those families in dealing with the costs of child care. My hon. Friend the Member for South Swindon (Mr Buckland), who speaks with such passion on this subject, welcomed the Government’s support for families with disabled children, who will benefit from this support up to the age of 17.

My hon. Friend the Member for Suffolk Coastal (Dr Coffey) welcomed the fact that more women are in work than ever before. She said that mothers often know best what is needed for child care; of course, we all recognise that. She talked about how to deal with the pipeline of talent and the barriers to working that women face. She highlighted support for carers and those on parental leave and welcomed the Bill’s offer of much more support to working women, in particular.

My hon. Friend the Member for Norwich North (Chloe Smith) explained that there is no household security without controlling public spending. She said that the measures in this Bill, while providing support for families, also ensure that we do not, as Labour Members suggest, just throw unfunded money at a project that could deliver more child care, but at an unknown cost to the public purse.

The hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Manchester Central asked how many families will be better off and by how much. I assure them that well over 1 million families will be better off, by an average of £600 a year. It is important to note that the Government support provided through this Bill will be 20p in the pound up to a maximum of £2,000 per child per year. The amount of benefit depends on how much families are spending on child care.

14 July 2014 : Column 639

Labour Members claimed that there are fewer child care places than there were at the time of the election, but that is simply not the case. In fact, as my hon. Friend the Member for Truro and Falmouth (Sarah Newton) pointed out, the latest figures show that there are about 100,000 more child care places than there were in 2009, and that represents a 5% increase. However, the Government are not complacent. We are working further to increase child care supply by providing start-up grants for new child care businesses, making good and outstanding childminders automatically eligible for early education funding, increasing the child care available in schools, introducing new childminder agencies, and creating simpler regulations allowing nurseries to expand more easily.

Labour Members questioned why parents cannot use the new scheme at the same time as tax credits and universal credit. Families in receipt of tax credits already receive more generous support with child care costs, and this is being extended in universal credit, where support towards the costs of child care will be available regardless of the number of hours worked and will provide support of up to 85% of the costs from April 2016.

The hon. Member for Manchester Central asked about parents who work on zero-hours contracts. The contractual position of parents will not determine whether they are eligible for the new scheme. The Government want to support all working families with their child care costs. Parents on zero-hours contracts will be eligible for the new scheme in the same way as anyone else, provided they meet the eligibility criteria, including the rules on qualifying employment. As I said, parents have to expect to earn a little over £50 a week, on average, during a quarter.

The hon. Lady asked about Sure Start. I would have hoped that Labour Members were delighted that 3,000 children’s centres are open and record numbers of parents and children are using them—over 1 million. It is up to local authorities to decide how to organise and commission services for children’s centres in their areas. Labour Members will know that I am passionate about children’s centres, as I know they are. However, I am extremely concerned when they talk about centres closing when they know full well that, in many cases, organisations have streamlined their administration by putting a number of centres under a hub system. In fact, only 1% of children’s centres have closed.

The hon. Lady asked how the Government will provide advice to enable parents to make calculations and choose between universal credit and tax-free child care. We recognise the importance of providing information and support to help parents make an informed choice about which scheme to access. Therefore, alongside wider guidance and information, we will provide support and online tools for parents choosing from tax credits, universal credit and the scheme under discussion.

The hon. Lady also asked what we are doing to improve the supply side. As I said earlier, we are taking a number of measures, including introducing new childminder agencies, which will help—

Lucy Powell: What will that do?

Andrea Leadsom: The idea is to promote more support for childminders. The hon. Lady will recognise that, under the previous Government, many childminders

14 July 2014 : Column 640

fell off the radar, because, as surveys showed, they felt under-supported, over-regulated and overburdened. The idea of childminder agencies is to provide the support, training and guidance that will enable them to go into business, and to support those that are good and outstanding to expand more rapidly.

As a result of the changes under discussion, more working families than ever before will be eligible for support with their child care costs. The Bill will introduce a less complex, more generous system of support, which should result in more parents being able to enter the work force with the confidence that quality, affordable child care is available for their children. The proposals have been welcomed by families and child care providers across the country and by many businesses that realise how important support for families can be in helping them to attract and retain good staff.

In short, this Bill will support the future of our economy and the well-being of our children. As such, I commend it wholeheartedly to the House.

Question put and agreed to.

Bill accordingly read a Second time.