Childcare Payments Bill

Public Bill Committee, 21 October 2014.

Jim Sheridan (Labour, Paisley and Renfrewshire North)

I will begin with some normal housekeeping rules; telephones should be either off or on silent and there should be no teas, coffees and so on.

Before we begin line-by-line consideration of the Bill, a brief explanation may be useful to those new to Public Bill Committees, which might include all of us. The selection list for today’s sitting is available in the room and shows how the amendments that have been selected have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. A Member who has put their name to the leading amendment in a group is called first. Other Members are then free to catch my eye to speak to the amendments in the group. A Member may speak more than once in a single debate. At the end of a debate on a group of amendments I will call the Member who moved the lead amendment again. Before they sit down they will need to indicate whether they wish to seek to withdraw the amendment or seek a decision. If any Member wishes to press any other amendment in a group to a vote, they need to let me know. I will work on the assumption that the Government wish the Committee to reach a decision on all Government amendments.

Where it is not already indicated on the selection list, I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debates on the relevant amendments. I hope that is helpful.

Clause 1 - Entitlement to receive money towards costs of childcare

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I beg to move amendment 1, in clause 1, page 2, line 2, at end insert—

‘(4A) The Chancellor of the Exchequer shall, within three months of Royal Assent, undertake a review of the impact of top-up payments towards the costs of childcare on the level of child poverty.

(4B) The Chancellor of the Exchequer must publish the report of the review required by subsection (4A) and lay the report before the House of Commons.’

May I start by saying that it is a pleasure to serve under your chairmanship this morning, Mr Sheridan? Clause 1 provides for parents’ entitlement to top-up payments; in other words, it is the money clause that enables Her Majesty’s Revenue and Customs to make the payment to eligible parents. The public money has already been authorised by way of a money resolution back in July. Subsection (2) lists the eligibility requirements under which those top-up payments may be made. A parent meets the eligibility criteria if they are an eligible person, they have made a valid declaration of eligibility, they have a qualifying child, they hold a child care account in respect of that individual child and they make a qualifying payment into that child care account. All of those provisions are outlined and defined in subsequent clauses that we will deal with later in the Committee’s proceedings.

There are various aspects of the Bill on which the Opposition are keen to seek much greater clarity from the Government, such as how the scheme will operate in practice, given that is a new concept and mechanism for the Government, and how it will impact on parents’ and, in particular, children’s lives. Indeed, we heard a number of concerns from a variety of witnesses over the past week that we are keen to follow up and probe the Government on to ensure that this is the best Bill it can be.

Amendment 1 calls on the Government to commit to a review of the impact of top-up payments on the level of child poverty.

David Heath (Liberal Democrat, Somerton and Frome)

I am just wondering, irrespective of the merits of a review, what possible purpose a review within three months could serve. It is almost impossible to get any realistic assessment of child poverty figures within that period, so the review would be completely in the dark.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank the hon. Gentleman for his intervention. I will come on to why we have specified that time period. We would have hoped that the Government would undertake the work before implementing the policy at all; failing that, we will push for a review as soon as possible, which the three-month period would ensure.

Nicholas Dakin (Labour, Scunthorpe)

Given that the Government, to their credit, remain committed to reducing child poverty, does my hon. Friend agree that they should grasp the task with both hands and get on with it?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I very much agree with my hon. Friend and thank him for his intervention.

David Heath (Liberal Democrat, Somerton and Frome)

The hon. Lady is being generous in giving way. The amendment would require a

“review of the impact of top-up payments”

after a period during which such payments had scarcely been paid, so an assessment of child poverty would not be able to work to any consequence. Frankly, the three-month period is a nonsense, although it might be sensible to have a base-level review to refer to.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

The hon. Gentleman is being helpful, and I genuinely take his comments as being so. I appreciate what he says, but the Government have an awful lot of work to do between now and implementation in order to explain to parents, stakeholders and Parliament exactly what they intend to achieve and the implications of the policy. I have expressed my disappointment at the fact that the impact on child poverty does not appear to have been addressed. The amendment would give the Government the opportunity, between now and the review, to look at how the Bill is implemented. Baseline figures could be provided for three months from implementation on the effect on the children in our system who we know need support. All public money relating to child care should be spent carefully if no regard is given to children living in poverty.

Pat Glass (Labour, North West Durham)

Whenever I look at Government policy, I want to see not only what the Government want or say, but the triggers and means that they have put in place for making it happen. It is insufficient for the Government simply to will the ends; they must also will the means. Given what we have said this morning about the importance of child poverty and its impact on people’s lives, I hope that the Government listen carefully to what has been said by Members on both sides of the Committee about ensuring that the Bill helps to reduce child poverty.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank my hon. Friend for a powerful intervention that pretty much sums up the argument I hope to make in favour of amendment 1. I would be pleased were the Government able to correct me, but as far as I can see the impact assessment published alongside the Bill makes no reference to child poverty or to the effect on low-income families. The Labour Government’s Child Poverty Act 2010, which was voted through the House with cross-party support, was aimed at sustaining and building on the unprecedented progress that Labour had made in lifting a million children out of poverty.

Charlie Elphicke (Conservative, Dover)

Can the hon. Lady explain why child poverty rose in the previous Parliament?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

It did not rise in the previous Parliament. Nevertheless, in the context of the Bill I do not think that it is particularly helpful to reflect on past child poverty trends. There is a significant challenge to meet, and the amendment has been tabled so that the Committee can reflect on what the Bill will do to meet the challenge of alleviating child poverty, which, it has been shown, will increase quite significantly under the current Government.

Nicholas Dakin (Labour, Scunthorpe)

Would it not be better to look at the figures on households below average incomes, which were published only in July? They show that efforts to take children out of poverty have ground to a halt under this Government. Those are up-to-date figures that are in the public domain.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Yes, and the Act passed in 2010 committed Governments to reducing child poverty by 2020 according to the following three measures: relative poverty must be reduced to below 10% of children; absolute poverty must be reduced to below 5% of children; and combined poverty and material deprivation must fall below 5%. There was also a commitment to set a target for persistent poverty—children who have been in poverty for several years—which is currently being consulted on.

Despite that commitment, this Government’s actions appear to be far from achieving the aim of reducing the number of children in poverty. The latest figures on households below average income, which were published in July, show that the progress Labour made in lifting a million children out of poverty has ground to a halt under this Government. The headline measures for 2012-13, which are the latest available figures, show that 2.3 million children were living in relative poverty, which was unchanged in two years; that 2.6 million children were living in absolute poverty, which was up by 300,000 since 2010; and that 1.8 million children were living in relative poverty and material deprivation, which was up by 200,000 on the previous year. If we look at the number of children living in poverty after housing costs, which the Institute for Fiscal Studies suggests is useful given that rents are a huge part of the cost of living crisis and affect low-income families in particular, we see that the number of children living in absolute poverty stood at 4.1 million, which was a staggering half a million more children than in 2009-10.

Equally worrying is the increase in the number of children who live in what is described as material deprivation. Further analysis of the HBAI statistics shows that, compared with 2010, 300,000 more children are in families who cannot afford to keep their house warm; 400,000 more children are in families who cannot afford to make savings of £10 a month; and 500,000 more children are in families who cannot afford to replace broken electrical goods, which brings the total to 3.6 million children.

Alex Cunningham (Labour, Stockton North)

My hon. Friend is outlining clearly and with real statistics the extent of poverty among children in our society and the different factors that affect them. The fact that the Government’s own poverty adviser, Alan Milburn, has labelled their child poverty strategy for the next three years as “a missed opportunity,” a “farce” and “particularly lamentable” suggests that it falls far short of what is needed. That is all the more reason why it is important that we get extra provisions in the Bill to help address poverty.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank my hon. Friend. I will go on to set out some of the comments that the Government’s Social Mobility and Child Poverty Commission made in its report that relate specifically to child care. We feel that the Government are missing an opportunity to make some headway and progress on child poverty, because we seem to be going backwards at the moment.

It is incredibly worrying that, while coalition Ministers seem to be squabbling over the definition of child poverty, the forecasts by the Institute for Fiscal Studies indicate that it will increase substantially by 2020. The Government seem to be way off course to meet their commitments. According to the IFS’s most recent projections, compared with when Labour left office, there will be 400,000 more children living in relative poverty by the end of this Parliament and 900,000 more by 2020. The projections are even more stark on absolute poverty—almost 1.5 million more children will be living in absolute poverty by 2020.

We must bear in mind that those forecasts were made before the Chancellor announced this child care plan. If they are still in government in May, the Government plan to cut tax credits for millions more working people for a further two years; that is one of the few concrete tax pledges that the Chancellor has made so far. Thanks to the Child Poverty Action Group, we know that, last year, when the Chancellor opted to cut tax credits and other family benefits in real terms, the Government’s own estimate suggested that it would push a further 200,000 children into absolute poverty.

We know that the Treasury has the means to assess of the impact of its legislation on some of our most vulnerable families and children, because it has done that on previous tax-related policies. That is why amendment 1 calls on the Government to do that work, if they have not already, and to publish the findings within three months of Royal Assent. As the Government’s child poverty adviser, Alan Milburn, said recently:

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

My hon. Friend the Member for Stockton North reiterated that.

We know that a huge number of the children living in poverty live in working households. We know that the cost of living has been rising and that wages have failed to keep pace. Alan Milburn’s report, “State of the Nation 2014”, states:

“There are 600,000 more children in working households who are living in absolute poverty after housing costs than there were in 2009-10. Too many of the jobs that are being created in the economic recovery are low-income and high-insecurity. They are a dead-end not a road to social progress. There are five million low-paid workers in the UK and, despite the success of the National Minimum Wage in eradicating extreme low pay, the proportion has barely changed in two decades…More than one in four women in work are low-paid as well as one in six men. These figures help to explain why twice as many poor children are now in working families than in workless families, and why wages have become a stronger predictor of child poverty than the number of hours worked. Pay is not rewarding parents’ efforts and neither is the way the tax and benefits system operates.”

Mary Macleod (Conservative, Brentford and Isleworth)

Does the hon. Lady not therefore welcome the work that the Government have done to take 2 million of the lowest-paid out of tax to help those families? Does she not welcome the fact that more women are in work than ever before?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

We have not opposed those things at any stage. We have sat in Committee Rooms over many months debating these issues, and one thing that we agree on is the lifting of the tax threshold for the lowest-paid. Unfortunately, the changes to the tax and benefits system far outweigh any benefit to the families we are talking about.

When we look at the tax and benefit changes since 2010, we see that families with children have been particularly hard hit. Even after the changes to the tax system that the hon. Lady mentioned, a family with children with both parents working will be £2,073 a year worse off on average. Where only one parent is working, they will be £3,720 a year worse off on average. The Government cannot hide behind the changes to the personal allowance to cover for the fact that families—including some of the poorest-paid families, who are working and struggling to meet their child care costs and living costs—are worse off under this Government.

Nicholas Dakin (Labour, Scunthorpe)

Does the squeeze on the living standards of families with children, which my hon. Friend describes so well, not underline the importance of ensuring that the child care payments—I welcome the Government’s commitment on them—reach those who most need them, liberating families from that squeeze?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Indeed. The Bill could go a long way in supporting the families who we know are struggling in work and struggling to support their children. That is why amendment 1 would commit the Government to assessing the Bill’s impact on child poverty.

Will the Bill help to make up for the devastating impact of the reduced support resulting from tax and benefit changes that have already taken place in this Parliament? The Chancellor appears to be planning more changes if the coalition parties or the Conservative party win the election next May. That is precisely why, as I said in July, we believe that the independent Office for Budget Responsibility should be tasked with monitoring and reporting on the Government’s progress on child poverty. The Government’s Social Mobility and Child Poverty Commission has suggested the same thing.

The figures I outlined show that progress on tackling child poverty has ground to a halt. Child poverty is set to rise, according to independent forecasts. The OBR should therefore be able to analyse the Government’s policy decisions, and the Bill would fall within that remit of assessing the impact of a policy on child poverty. We ask the Government to have that review undertaken independently, because this issue is too important for that not to happen. In addition, that remit would make it impossible for Governments to ignore child poverty when making policy proposals and using public money that should be going to the families who need it most.

Progress in tackling child poverty has ground to a halt under this Government, and child poverty is only set to rise. I therefore hope that the Government will take our concerns on board and take the necessary action to ensure that the Bill supports all families with their child care costs, particularly families who are struggling to make ends meet and children who are falling into poverty or failing to get out of it despite their parents working all hours.

David Heath (Liberal Democrat, Somerton and Frome)

It is a pleasure to serve under your chairmanship this morning, Mr Sheridan.

There are two reasons for tabling an amendment. One is to stimulate a debate on a subject. The other is to actually change the wording of a Bill. I am quite happy to accept that the hon. Lady’s purpose in this instance is to stimulate a debate on child poverty. I am not remotely happy to accept that she is serious about adding to the Bill the words that she has put down on the amendment paper, because, as I will explain, the amendment would not achieve its intended purpose.

If the hon. Lady’s purpose was to ensure that we discuss child poverty, she is absolutely right. She is also right that it is relevant to the discussion about the Bill. The Government have no reason to be ashamed of their work in this area. Let us be clear about why we have child poverty in this country. First, still too many people are out of work, although that has improved immensely over the past few years, about which I am extremely pleased. Secondly, those in work are not earning enough, which is related to the general prosperity of the nation and the wages that we can afford to pay. Thirdly, there is the issue of what the Government are taking from people, and a good point was made about the increase in the tax threshold taking people away from the poverty line by enabling them to keep more of what they earn. Finally, there are the on-costs of what the average family, and particularly families on low incomes, have to bear, which include child care costs. Therefore, if we can do something by pumping money into the system to reduce child care costs, which is exactly what the Bill will do, that is making a contribution.

The hon. Lady failed to mention that one of the reasons why child poverty has increased over recent years is that the country has been facing the biggest recession in living memory. It is hardly surprising that poverty increases during a really serious recession. Thank goodness the Government have, hopefully, dealt with the recession. The signs are certainly promising, and we must hope that that continues. That should not prevent us, however, from concentrating on child poverty as a target and from recognising that whatever Government takes office in six or seven months’ time, they will need to return to the subject again and again. It is simply not acceptable in a wealthy country that people are still living in poverty.

Charlie Elphicke (Conservative, Dover)

My hon. Friend makes a really powerful argument and debunks much of the case that has just been made. Despite the challenges, relative poverty after housing costs was about 30% when we came to power and has fallen by about 10% to 27%, which is a real achievement.

David Heath (Liberal Democrat, Somerton and Frome)

I am grateful to my hon. Friend, who has figures in front of him that I do not, but I will not discuss statistics that I do not have to hand. All that I know is that whatever Government are in power they should never forget that people are living in both relative and absolute poverty and that it is our duty as a civilised society to deal with that. It is an open secret that there are frustrations about targets and about whether we can be more ambitious. Some such concerns were expressed by Alan Milburn in his report, and it was interesting how the hon. Member for Newcastle upon Tyne North glossed over the criticisms of her party in that report. I do not think that any of us came out of that report unscathed. Its basis was that we could all do more and I agree with that, and I would like to see that happen.

The hon. Member for Newcastle upon Tyne North is making an important point. I do not want us not to be looking at the context of child poverty when the Bill is reviewed, as it inevitably will be, over the years. However, her amendment, as I think she will acknowledge, is nonsense. It is not possible to make an assessment of the Bill’s impact on child poverty within three months of its implementation. That does not allow time for the impact to be demonstrated in figures.

If the hon. Lady was trying to say that we should have a baseline, she should have said that. That, however, is not what the amendment proposes, which is that the review should be

“of the impact of top-up payments towards the costs of childcare on the level of child poverty”

and all of that should be done within three months of Royal Assent. That is fine as a talking point on which to hang a debate, but, once we have had that discussion, I hope that she will have the good sense to withdraw the amendment so that we can move on to discuss serious amendments.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank the hon. Gentleman for his contribution. We have had time to air some of these issues and express our concern that child poverty did not seem to be a factor in the Government’s thinking when they came up with the Bill. We heard in oral evidence last week that 80% of the Bill’s benefit goes to households with earnings in the top 40%. When the Government put money into the system, they need to take seriously who it is going to, who is suffering from the costs of child care, the barriers to work and the difficulties in terms of household incomes that have resulted in increases in child poverty.

I have taken on board the hon. Gentleman’s comments and I hope that the Minister will do that, too. There is cross-party desire to challenge child poverty; it is just unfortunate that most of the Government’s measures since 2010 seem to have been taking us in the opposite direction.

We have had an opportunity to air these issues and I hope that the Government will take them on board. On that basis, I beg to ask leave to withdraw the amendment.

Lucy Powell (Labour, Manchester Central)

I beg to move amendment 2, in clause 1, page 2, line 2, at end insert—

‘( ) The Chancellor of the Exchequer shall, one year after this Act is passed, and every three years thereafter, review the impact of the measures in this section on the cost of childcare with particular reference to—

(a) the average cost of childcare for parents in work;

(b) the effectiveness of this section on making childcare more affordable; and

(c) the impact of supply-led measures on the cost of childcare.

( ) The Chancellor of the Exchequer must publish the report of each review and lay the report before the House of Commons.’.

May I, too, put on record how grateful I am to be serving under your chairmanship, Mr Sheridan? May I also say how privileged I am to be working on this Bill with my hon. Friend the Member for Newcastle upon Tyne North? We share a vested interest in child care matters—when I was serving on a previous Bill Committee, I was in the same condition as she is now. I am therefore more than happy to help her with some of the heavy lifting, because I know how difficult it can be to make long speeches when an arrival is imminent. I also thank the witnesses and the Minister for helping us to explore the Bill in the oral evidence sessions and I thank the Minister for the concessions that she has made so far.

This is a really important Bill for families. Child care costs are rising much faster than wages and child care remains a big barrier to families trying to make ends meet and, in particular, to mums who want help to go back to work, or work more hours. We know that increasing child care provision is good for the economy, because it helps mums back to work. Labour has plans to extend free child care, which analysis shows could help as many as 100,000 mums back to work. It remains to be seen, however, what direct impact the Bill will have on maternal employment rates and I hope that the Minister will expand on the economic benefits during the Committee’s sittings.

Witnesses and other organisations raised real concerns about parts of the Bill and about its design in particular. While the Opposition support its principle and overall impact, we will seek to raise such concerns in Committee.

Perhaps one of the biggest concerns raised by witnesses, especially given the soaring child care costs we have discussed this morning, is how this new money might actually lead to further price inflation. That is why the Opposition have tabled amendment 2. We seek to put in place a review of this tax-free child care after one year and, subsequently, on a three-year basis, to assess child care costs for parents in work, whether this so-called tax-free child care has made child care more affordable for parents and how the supply of child care impacts on the cost. Under the amendment, the Chancellor would have to publish a report of each review before the House.

A key issue that has been raised is that the Bill is likely—indeed, very likely, according to some of the witnesses we heard from—to lead to further price inflation. In fact, some people—certainly the Institute for Public Policy Research—suggested that that would negate the extra support in a matter of a few years. As we know, the majority of child care providers—about 80% of the market—are private businesses, and we heard from the National Day Nurseries Association that providers are feeling the strain, which is why so many have been going out of business over the last few years.

Providers’ costs are rising, but the public subsidy for three and four-year-olds has not increased. Many providers cross-subsidise free places, relying on the paid hours to fill the gap. As providers see more money going into parents’ pockets to pay for child care, therefore, they are very likely to push up prices. The Family and Childcare Trust warned that

“there is little incentive for these providers not to increase prices to take advantage of the extra subsidy.”

The NDNA underlined that point, stating that

“on price inflation, when we speak to our members every year, some of them say that they have not put up their fees for two years during the recession. They will have to play catch-up.”––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 15, Q15.]

Alex Cunningham (Labour, Stockton North)

My hon. Friend is outlining what many of the witnesses told us—that we could expect prices to increase perhaps way beyond inflation as a result of the extra money. That does not mean that we should not have the extra money, but we need to monitor the issue closely. However, I am particularly concerned about higher costs for parents with disabled children. The prices for their care have outstripped all other costs in recent years. How can we make sure we get the information we require over the next year so that we can demonstrate that we need to do something about that as a nation?

Lucy Powell (Labour, Manchester Central)

My hon. Friend is absolutely right. The issues we will be discussing in relation to the majority of families are even more acute for families with disabled children. He and my hon. Friend the Member for North West Durham produced a fantastic report on child care for disabled families, and I hope we will discuss the issue. The issues for families with disabled children, as for other families, centre on supply, and there is nothing in the Bill to address some of the fundamental issues of supply in the sector. That is particularly true for those who have poor access to their local market, whether because they are in a rural area or an area of high deprivation, and for those seeking child care for disabled children. All those issues can impact quite markedly on cost and supply.

To return to my speech, the cash subsidies to parents might not expand the amount of child care available, but they do affect the disposable income available to parents to pay for child care. This demand-side subsidy will form about half the spending in the UK and is likely to have some impact on cost, but a greater reliance on demand-side subsidy is likely to lead to additional price inflation, which may erode the effect of such support over the medium term.

The Government are investing £750 million through the Bill. That is a large amount in these straitened times, and with no strings attached, but Ministers are missing the opportunity to take this issue seriously. In the evidence sessions, we heard from people such as Kitty Stewart that, in Australia, the introduction of a child care rebate of 30% coincided with a rise of more than 100% in costs between 1997 and 2006, compared with general inflation of 27% over the same period. In the single year of 2008, when the child care rebate was raised to cover 50% of all remaining costs, costs rose by 10%. In its evidence, the IPPR also warned about the Netherlands experience. Under the previous Labour Government, when we introduced tax credits and employer-supported voucher schemes, we saw similar price increases in England over that same period, as the Family and Childcare Trust warned. There is plenty of evidence, both domestic and from abroad, that shows that introducing additional money purely on demand-side subsidies can mean that prices rise significantly.

A key aim of the Bill is to help make work pay by making child care more affordable. However, when the amount of help for families was capped at £1,200 a year, the IPPR raised concerns that that support would be eroded in a fairly short space of time. Its analysis showed that, by 2008, the gains of the scheme would be wiped out, with parents paying proportionately more of their disposable income despite that extra money going in. If we look ahead to 2018, if child care prices are uprated using the Daycare Trust averages and incorporating the £2,550 that a family would get as a benefit of tax-free child care, with the eligible amounts increasing in line with inflation, the figures rise—I realise as I am reading this that it does not quite make sense, so I will skip this bit. Plenty of analysis has been done by the IPPR and the Daycare Trust that shows that, over a period of four years, an average family would be paying more for their child care costs, despite the extra investment, than they are today.

How might we guard against price inflation? What does the Minister think about that after hearing some of the comments during the evidence sessions? Kitty Stewart made an interesting suggestion of price capping or capping the hourly rate to keep fees low and to prohibit and stop some of the price inflation that we might see. What does the Minister think of her compelling evidence?

Part of the problem with rising child care costs is that supply in many areas of the country does not meet the demand from parents, as we discussed earlier. That is true for all parents, but particularly for parents of disabled children, those working atypical hours and those living in deprived communities, where local markets do not work for many parents. The Government have watered down the sufficiency duty on many local authorities. That is one of the key reasons why supply is falling. We need to hear more from the Government on what they will do to increase supply and quality in the child care markets.

The Government came into office with a strong agenda on what they described as deregulation. They thought that deregulation of the child care markets and loosening of ratios would resolve the problem. Thankfully, they dropped those proposals as they did not have the support of parents around the country. What is their plan to increase supply of child care places now? Ofsted figures show that there are 41,000 fewer early years child care places across the country since 2009. The hon. Member for Dover and I often have an exchange about the reduction of childminders, but he will know that the number of childminders has decreased over the course of this Government by more than 3,000.

Charlie Elphicke (Conservative, Dover)

There are a couple of points here. That figure is a minor difference compared to the complete decimation that took place before. The hon. Lady should recognise that. I hope she will talk about the evidence given by the Family and Childcare Trust, which talked about childminders, the importance of making it easier, deregulating, and making, if you like, the supply-side reforms. Does she recognise that we ought to be looking at supply-side reforms as well?

Lucy Powell (Labour, Manchester Central)

I absolutely agree that we should be looking at supply-side reforms, but the hon. Gentleman and I probably differ on what the reforms would look like. I am interested in meeting the twin challenge of bringing prices down for the parent while increasing quality. We must try to meet both those agendas. The truth is that in order to do so we need a public subsidy in the middle. What we are discussing today is whether the public subsidy will actually increase quality or bring down prices. I am not sure that it will do either.

Ben Gummer (Conservative, Ipswich)

On a point of information, the hon. Lady mentioned decreases, but she did not mention that average child care costs fell last year for the first time in 10 years.

Lucy Powell (Labour, Manchester Central)

The hon. Gentleman might want to look a little closer at the figures. I would not be quite so quick to jump to my feet to gloat about a 30% increase in costs over the course of this Parliament. Last year, costs fell by 1% in England alone, but I am not sure whether he would want to jump to his feet with the overall figure in mind.

Nicholas Dakin (Labour, Scunthorpe)

The compelling evidence that we heard from the National Day Nurseries Association and the British Association for Professional Nannies underlined the quality challenge as well as the supply challenge. If we do not get the quality of supply right, we will not be doing anybody any favours. How should the Government respond to that challenge?

Lucy Powell (Labour, Manchester Central)

I recently wrote to the Deputy Prime Minister on that point and gave him an action plan for how he might increase quality and supply in the system, which I also shared with the new Minister responsible for child care in the Department for Education. I see little evidence of the proposals being brought forward.

Returning to my main point, price inflation and poor supply are particularly acute for some types of families, such as those who are deprived or who live in rural areas. Alison Garnham from the Child Poverty Action Group underlined the point in her evidence:

“It is really difficult to talk about market impact because there is an imperfect market operating in child care. For higher-income couples, the child care market probably does operate as a market, but for lower-income families, it really does not; it is completely dysfunctional.”––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 64, Q130.]

I wonder what the Minister will say in response to that point, because she and her colleagues believe that market forces will deliver what the Government want, which is a lower price point and higher quality, but I do not believe that that will happen as a result of the Bill. The NDNA agreed that the Bill will increase demand, but will do nothing to increase supply. Mumsnet said:

“Although the extra support is welcome, if there is no guarantee that supply will increase we must pose a big question about what will happen over the next five years.”––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 41, Q86.]

In conclusion, the tax-free child care scheme is a significant injection of funding into the child care system that will unfortunately do relatively little to help address access, quality and affordability over time. Amendment 2 would provide a means to review and analyse the Bill’s impact on child care prices over a period of time. Substantial Government investment could simply disappear if supply issues are not dealt with and prices are not controlled. How will the Minister respond to those points? Will she accept the suggested review of prices? What are the Government doing about supply? What does she think of Kitty Stewart’s suggestion for a cap on prices and hours? What does she make of the evidence from the IPPR and others about price inflation?

Priti Patel (Conservative, Witham)

It is a pleasure to serve under your chairmanship, Mr Sheridan. I thank the Committee for how the debate has started this morning.

Clause 1 introduces the Bill’s provisions and provides a general overview of the new Government tax-free child care scheme, which will provide financial help to working families for their child care costs. Committee members have already started the debate, but as we proceed to consider the other clauses, we will definitely have a thorough debate about the nature of the Bill, eligibility and other aspects. Before I respond to the amendments and the questions that have been posed, I would like to set out why the scheme is needed and why it will provide such vital support for hard-working families throughout the country.

The Government are determined to help families to provide what is best for their children. As we heard last week in the evidence sessions, including when I gave evidence, the important thing is the timing and impact of child care support in children’s formative first few years. We recognise that many families face a difficult decision about whether it makes greater financial sense for them to stay at home and look after their children, therefore putting aside employment opportunities and career ambitions, or for them to go out to work and pay for child care. Those are the families that the Government are helping through the package of reforms in the Bill.

Our ambition is for those who wish to work to be able to do so. That is the underlying principle of the Bill. It is in the public interest to reduce the barriers and burdens on parents and support their movement back into the labour market, where they will both help to contribute to economic growth and, more importantly, be able to fulfil themselves. Today’s sitting is topical and timely, coming as it does after yesterday’s publication of the report by the Social Mobility and Child Poverty Commission, which featured a great deal of emphasis on social mobility and the need to give parents the opportunity to fulfil themselves personally by having the chance to pursue employment and careers—child care costs should not be a reason why people cannot do that.

Since 2010, the Government have introduced a comprehensive package of measures to help working families to cover nursery costs for their children. Unprecedented increases in the personal allowance, which my hon. Friends have already mentioned, have allowed people to keep more of the money they earn. We have extended entitlement to free early education to 15 hours for all three and four-year-olds and, by 2014-15, 260,000 two-year-olds from the most disadvantaged backgrounds are to receive 15 hours of free child care. On top of that, there has been an increase in the rate of child care support provided through universal credit from 70% to 85%, which will enable more families to move off benefits and into employment. Those are significant and radical measures that represent real changes for working families.

We have increased families’ freedom to find the right balance between work and family life, and the policies in the Bill are aimed at continuing that work. At the same time, we continue to focus on ensuring that early education continues to improve our children’s life chances, especially those from the poorest backgrounds, to whom we want to give a fairer start in life. No one can be complacent. The latest survey data from the Department for Education indicate that nearly a quarter of employed mothers would increase their working hours if they were able to access suitable high-quality child care. That is a challenge faced by many working parents and that all Governments have tried to address in the past. Through the Bill, we are taking action by providing working families with funding worth up to £2,000 per child per year.

The Committee will not be surprised to hear that a number of important stakeholder groups—we heard from some last week, but there are many others, including those involved in the consultation process and the development of the Bill—have warmly welcomed what the Government are doing with the Bill. The Professional Association for Childcare and Early Years welcomed the scheme, rightly pointing out that improving access to child care will help to support families balancing work and home life. The Family and Childcare Trust said that it was delighted by the measures and that the Government listened to its suggestions and recommendations as the details of the scheme were developed.

The support will be delivered through top-up payments. For every £80 a parent contributes to child care, the Government will provide a top-up of £20. The scheme extends to child care costs of up to £10,000 per child, and it is estimated that a million families in the UK will be better off.

I want to describe how the scheme will work in a little more detail. To qualify for these payments from Government, a parent must meet a series of eligibility conditions.

Lucy Powell (Labour, Manchester Central)

The Minister says that 1 million families will be better off. Will she break that down a little bit further for us? I understood that 1 million families will qualify for the scheme, but it is not clear to me or to many of the stakeholders we have heard from that 1 million families will be better off. Some will be worse off if they are basic rate taxpayers.

Priti Patel (Conservative, Witham)

I thank the hon. Lady for her question. I was going to come on to eligibility, because that will help to inform the Committee how families will be better off. I will touch on some of the specific points she raised about who will be better off, who will qualify and the financial support in the Government’s wider child care package.

Clauses 6 to 13 set out a series of eligibility conditions; we will come on to look at those later. There are requirements on parents to: submit a declaration of eligibility to Her Majesty’s Revenue and Customs each quarter, confirming personal circumstances, to demonstrate that they remain eligible for the scheme; have a qualifying child as defined in clause 14 and supporting regulations; and have a child care account as defined in later clauses, and pay money into that account. Those eligibility conditions are required to satisfy the criteria before we go into questions of who and how, and the detail.

Once a parent has had their eligibility confirmed, they will be entitled to Government support for three months, regardless of changes in circumstance. We covered that point last week in the evidence sessions. That will significantly reduce the burden on parents, who will be required to reconfirm eligibility only at the end of each three-month entitlement period. The point is that we are ensuring that child care accounts are simple to operate for parents and child care providers, while giving parents the certainty that their money will be secure.

On the hon. Lady’s point on families having access to the scheme, tax-free child care will be available for up to 1.9 million families. Approximately 1 million families will be better off under the scheme. It is different from existing schemes, and it is worth touching on the financial support available to families through it. The Government have already increased entitlement to child care provision. We have announced that families who are eligible for universal credit will benefit from additional support under the scheme, with 85% of the total cost of child care being met by the Government. That comes back to the extremely important underlying principle of the Bill: supporting families as they move into work.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

One issue that has been raised is the fact that 80% of the benefit of this policy goes to the top 40% of earners. Can the Minister reassure us that the Government have given some consideration not only to those in receipt of universal credit, but to those who, though not in receipt of universal credit, are on low incomes and are struggling with child care costs?

Priti Patel (Conservative, Witham)

We touched on that last week in the evidence sessions. The scheme is about supporting all working families and providing support, in terms of child care provision and places. The overall system of child care support remains focused on those on lower incomes. Families in receipt of tax credits are already in receipt of more generous support as regards their child care costs. UC will extend to cover up to 85% of the costs of child care. That will be available regardless of the number of hours worked.

It is worth me emphasising that this scheme is not about helping only wealthy families—that is a misconception. It is about ensuring that all families qualify for support with their child care costs. Of course, that is subject to meeting the conditions of the scheme’s eligibility criteria, which I briefly outlined.

To qualify, parents must meet a minimum income level, based on the amount earned from working eight hours a week on the national minimum wage. That means that parents will qualify when they earn just over £50 a week on average. It is therefore a misconception to say that the Bill benefits only one group of people. I also emphasise the fact that support has been extended significantly under universal credit and that those in receipt of tax credits already get more generous support with regard to child care costs.

On eligibility, it is worth saying—we touched on this last week—that the scheme has been designed having learnt many of the lessons of previous schemes. Its simplicity is paramount: it has been designed to ensure that child care accounts are simple to operate both for parents and for child care providers so that the money flows and is secure. The scheme marks a significant improvement on existing employer-supported child care schemes in a number of ways.

Charlie Elphicke (Conservative, Dover)

I have a couple of key points about what the Government are doing with the Bill, compared with the previous schemes. First, it is fairer than employer-supported child care because it is per child, not per adult. Secondly, it helps to provide fairness to self-employed people, who have found it so hard to access any kind of child care help.

Priti Patel (Conservative, Witham)

My hon. Friend pre-empts the point I was going to make—we touched on it last week. The current schemes provide no support at all for those who are self-employed and that is exactly where the new scheme offers a significant benefit.

Less than 5% of employers offer the employer-supported scheme, which means that more than half of all employees—as well as all self-employed parents—are without essential access to any Government support for child care. Frankly, that cannot be right. By contrast, the new scheme will be available to all working families, provided they meet the eligibility criteria, which we will come to later. We expect that the new scheme will be open to at least twice the number of people who currently access employer-supported child care. That has been widely welcomed by parents and other stakeholders as well as the Committee.

Another significant weakness of the existing scheme is that it favours some parents to the disadvantage of others. In particular, it provides twice as much support to couples where both partners work for employers who offer the scheme as it does to single parents. That is neither fair nor right. The new scheme will address that unfairness by ensuring that the level of support provided is determined not by the number of parents who can access the scheme, but by the number of children in the household. That means, for example, that two-parent and lone-parent households with the same number of children will have access to the same level of support.

In summary, the Bill introduces an important addition to the Government’s programme to support families with young children. The scheme will provide much needed help to hard-working families with their child care costs. It will enable them to go out to work when they choose to do so and help them to enrich their careers.

The hon. Member for Manchester Central asked about child care supply. There is no evidence to suggest that the scheme will increase costs. We all accept that child care costs have risen faster than inflation since 2003, but, in addition to the reforms that are being put in place by the Government, there are signs that costs are now stabilising. I emphasise that we are not complacent and are working to increase the child care supply further, which will improve choice and affordability for parents.

I think that I mentioned this point last week, but it is worth repeating that more schools are opening nurseries. We are establishing childminder agencies to increase the availability of childminders, and are also increasing the number of school nurseries that extend their opening times from 8 am to 6 pm, because parents’ working hours can change. We are supporting good nurseries to grow, and are making it easier for them by removing planning restrictions and some of the red tape associated with setting them up.

There is further work to do, as I have said. We are making start-up grants available, totalling £2 million, to help people to set up new child care businesses. We are making up to 32,000 good and outstanding childminders automatically eligible for early education funding. As more people go back to work, there will clearly be demands on the system, and it is incumbent on us to work collectively to find ways to meet that challenge.

The Government have already made a commitment to review the impact of the scheme within two years of implementation. That was set out in the impact assessment published alongside the Bill. That, together with the Government’s clear and continuing commitment to tackling child poverty, and reporting on progress, is essential. Child poverty was mentioned earlier; the Government are committed to the goal of bringing child poverty in this country to an end, once and for all, by 2020. Under the Child Poverty Act 2010, we are required regularly to report, through the publication of UK strategies for child poverty, on the progress that we are making towards that goal.

Progress has been made. We are committed to tackling the root causes of child poverty. Employment has increased by 1.7 million, but it is worth touching on other measures in the troubled families programme, in which the Government have invested £200 million. An additional 400,000 families will get back to work through the measures that we are concentrating on. Resources are being targeted. We are focused on breaking the cycle for poor children.

Lucy Powell (Labour, Manchester Central)

The Minister makes a good point about supporting poor families, but I wonder whether she is content with the Government’s record on Sure Start centres, which are an important part of that support, especially in the early weeks and months. Recent figures have shown that there are now 623 fewer Sure Start centres. Is she happy with that record?

Priti Patel (Conservative, Witham)

Those are not figures that I recognise, for a start. This is not about Sure Start centres; it is about the value and purpose of children’s centres. I have been to many children’s centres even in the past three months, and I saw a great one run by 4Children in Newham, which I may have mentioned last week when I gave evidence. Integrated services are benefiting parents and children. The same is happening in my constituency.

It is a question of targeting the resources, ensuring that the children’s centres are in the right locations, providing the right support to communities, and providing additional resources, particularly in parts of the country where we know through the troubled families programme that there are challenging families, so that we can focus assiduously on breaking the cycle of deprivation for poor children.

Pat Glass (Labour, North West Durham)

At the children’s centres did the Minister see any children? She may know that the Select Committee on Education recently published a report on child care showing that there are no longer any children in more than a third of child care centres.

Priti Patel (Conservative, Witham)

Let me reassure the hon. Lady that all the centres that I have been to, including the ones in my constituency—

Pat Glass (Labour, North West Durham)

You were very lucky, then.

Priti Patel (Conservative, Witham)

I do not think it is about luck at all. These are children’s centres doing the right thing. They are full of children who are benefiting from the provision there, which should be welcomed. Parents are also spending good-quality time with their children, particularly at the start of the new school year. New children are going into centres, where their parents are helping them settle down. Children’s centres—certainly the ones that I have visited—are successfully reaching out to the families most in need; 90% of eligible families are registered. It has been a privilege to meet many of those families and see their children benefiting from the quality environment provided.

The steps that we are taking to increase choice and provision of child care will, I hope, give the Committee confidence that any fears that the scheme will simply drive up the costs of child care and cause problems with provision are inaccurate. The points made have been welcome, and this has been a constructive debate. I commend the clause to the Committee, and I hope that the amendment will be withdrawn.

Jim Sheridan (Labour, Paisley and Renfrewshire North)

Before I call the Opposition spokesperson, as this has been an extensive debate, I seek your comments. It would be appropriate for anyone wishing to contribute to a clause stand part debate to make that contribution now. If no one wishes to contribute, I call Lucy Powell.

Lucy Powell (Labour, Manchester Central)

I thank the Minister for her response, but we will not withdraw the amendment. She says that there is no evidence that the Bill would cause price inflation. I outlined to her, as did many others, that the oral evidence session showed both domestic and international cases in which demand-side injections of cash without strings attached led strongly to price inflation. I know that families will be extremely concerned to see money being spent simply to increase costs.

Clause 2 - Qualifying childcare

David Heath (Liberal Democrat, Somerton and Frome)

I want to raise one point briefly with the Minister. She knows that I am concerned about access to child care in rural areas. Of course my constituency plays a large part in that, but there are many constituencies around the country in which it is extremely physically difficult to get to child care provision. The problem is of course that there needs to be a critical mass for a nursery to be viable, and in many rural areas there simply is not the population to support a multiplicity of nurseries. This means that people have to travel a reasonable distance, which can often be extremely difficult. I very often say to the House that my village has one bus per week. I am not sure whether anyone believes me, but it is true. If people do not come back within two hours, it will be a week before they can return, if they do not have private transport. That is an illustration of how difficult it is.

Travel is also expensive. I am concerned that in some rural areas a further barrier is the cost of getting children to the place where child care is provided. This can be a significant part of the total cost. I ask the Minister simply whether it is possible to bundle up some of the access costs into the qualifying child care regulations for those people whose transport costs form a significant part of their child care costs. That would make a real difference, and I ask the Minister to take this away and ask her officials to at least look at it. It is entirely proper that the cost of getting a child to the nursery be part of the cost of providing child care. It will not be easy to find the funds to cover these costs, but we should consider this, with the provision that there is some regulation regarding what would or would not qualify. The total must still fall within the cap. I see no reason why the total should exceed the cap, because the cost of child care in rural areas is generally not at London prices—there is certainly no need for it to be at London prices—so I do not think that this would approach the £10,000 cap.

Help with transport costs would be a significant boost to people who are in great need of this provision on two grounds. The first is that it is often more difficult to find employment in rural areas, and the second is that the dangers of lack of socialisation and isolation are greater for young children in areas where they are not regularly in contact with other children. As I say, I do not expect the Minister to say, “Yes, of course, that is a good idea and I shall implement it immediately.” However, I request that she ask her officials to look at whether it is possible for the regulations to meet what I believe to be a modest request.

Alex Cunningham (Labour, Stockton North)

It is a pleasure to serve under your chairmanship, Mr Sheridan, and to serve on this Committee. Members of the Committee will already be aware that provisions in clause 2 allow parents to use the scheme to purchase child care only when the main purpose—or one of the main purposes—is to help them to work. However, such a requirement will cause headaches for all parents, and is likely to prove particularly problematic for parents of disabled children. I would therefore like to take this opportunity to highlight the importance of relaxing these restrictions by broadening the definition of qualifying child care, and making sure that the available support is made more flexible for these parents.

We are all aware that access to good-quality, affordable child care is important for all parents. The quality of provision has a positive impact on children’s learning outcomes, as well as enabling parents to work. However, we must also be conscious that the relationship between work, family life and child care is not always straightforward, particularly for families with disabled children. There are intricate complexities that are unique to individual families. Indeed, it is impossible to foresee and cater for every eventuality, although that is not to say that we cannot look to do more with the knowledge that we have. I was therefore pleased to see the Minister acknowledge in her letter to the Chairs of the Committee the additional challenges faced by parents of disabled children, and offer a commitment to giving more support to these families.

One such complexity that is destined to arise is that the parents of disabled children need to buy child care outside of normal working hours, in order to allow them to combine caring and working. This may, for example, be over the course of a weekend, or perhaps for the purpose of providing respite care or short breaks. An extended definition of qualifying child care would be very beneficial for those parents. Let us also remember that for families with disabled children in particular, access to good quality child care is of great significance, because they are comparatively far more vulnerable to poverty.

It is an unfortunate reality that childhood disability is frequently a trigger for poverty, because families incur considerable additional and ongoing expenses as they care for their child or, in many cases, children, with it costing as much as three times more to bring up a disabled child than a child without disability. As a direct consequence, parents with disabled children are more dependent on accessing child care provision to support family well-being and to manage an often extremely tough combination of caring and work. To complicate matters further, disabled children are also more dependent on organised activities that fall within the child care registration system to stay active, make friends and participate in activities outside school.

Adding to the burden imposed by the higher everyday costs incurred is the fact that less quality child care provision is available for parents of disabled children to access. Only two in five parent carers believe there are child care providers in their local area that can cater for their child’s disability, while only 35% feel that providers are available at times that fit around daily commitments. We have had an example locally in Stockton-on-Tees, where the parents of one child are absolutely distraught at the decision of the local hospital foundation trust to close the nursery at North Tees hospital, where they believe provision is of high quality and specialist enough to cope with their child’s special needs.

This is not the case at North Tees, but generally speaking, where suitable child care for disabled children is available, it is often significantly more expensive than care for non-disabled children, which can render such options unattainable for many parent carers. That does not help parents of disabled children to return to and access work.

I was pleased to see the Minister acknowledge the additional child care costs that such families will need to meet, and to hear her commitment to exploring the possibility of going further to support them. I hope the written and oral evidence presented to the Committee will convince her that she needs to go further. I look forward to hearing her expand on the theory outlined in her letter.

As the Committee heard when taking oral evidence, a recent parliamentary inquiry found that 38% of parents with disabled children paid between £11 and £20 an hour for child care, while 5% paid much more than £20 an hour. That is obviously very high, particularly when compared with the national average of £3.50 to £4.50. As a result, 72% of such families were forced to cut back on, or give up, work. That not only risks forcing parent carers out of the labour market, but leaves working parents to pay what amounts to a significant income penalty due to their child’s disability. There cannot possibly be any fairness in that.

It would therefore make eminently good sense to expand the definition of qualifying child care to include that which supports carer well-being or educational and social activities for disabled children. As a feasible alternative, the parents of children with disabilities could simply be exempted from the requirements in clause 2. That would, effectively, allow them to qualify for child care under the regulations, because they would not be subject to the specific requirement that the cost of child care was incurred for work purposes only.

I hope the Minister will consider those potential courses of action when exploring the possible additional support that can be provided to parents of disabled children. She has gone some way, but I hope she will go the extra distance and make the difference that is needed.

Maria Miller (Conservative, Basingstoke)

It is a great pleasure to serve under your chairmanship, Mr Sheridan, and to have the opportunity to welcome this Government Bill, particularly because it will make tax-free child care available to almost 2 million families and to 200,000 self-employed people for the first time. That is particularly welcomed by working women in my constituency; as I am sure Members know, record numbers of women are now in work in this country.

I want to make a short contribution to the clause stand part debate to build on what the hon. Member for Stockton North talked about: what constitutes qualifying child care, as set out in clause 2. It is clear that the Bill is about supporting working families and those who are moving into work, and that is clarified in clause 9, which says that a person or their partner will be eligible under the Bill if they are in qualified work or moving into qualified work. However, there is merit in considering what is required, as subsection (2) says,

“to enable the person to work”.

Families with disabled children face particular difficulties; the hon. Gentleman set out a number of examples.

In Basingstoke we are privileged to have the KIDS nursery, which Hampshire county council helped establish. It is there particularly to support disabled children. Parents at that local nursery have explained to me clearly the distinct problems that parents of disabled children face when trying to get into employment. Short breaks and respite, for example, which may not occur when an individual is in employment, enable individuals to recuperate and have the energy to continue to be a working, contributing member of our community.

I urge the Minister to go a little bit further, if she is able, and provide details about the Government’s recognition that parents of disabled children—families—may require additional child care support. I know that the Government understand that parents of disabled children face higher child care costs, and that that might restrict their ability to get into employment. Evidence from the Family and Childcare Trust showed that the way the system works at the moment may be restricting the supply of child care for disabled children.

It is not necessarily advantageous for such detail to be included in the Bill. There is far more flexibility to do that in regulations, and I could accept the Minister’s saying that. However, I hope that she takes this opportunity to reassure Committee members that these differences and difficult circumstances faced by many families with disabled children have been fully recognised by the Government, and that that recognition will be acted on, either in the Bill or through regulations that will support it.

Lucy Powell (Labour, Manchester Central)

The Opposition have not tabled any amendments, but there are a few grey areas that I hope the Minister will use this opportunity to clarify.

The clause defines what qualifying child care is. The two qualifying criteria are that the child care must be

“registered or approved childcare”,

and

“the main reason, or one of the main reasons, for incurring the costs of the childcare”

must be

“to enable the person to work”,

and where they have a partner, the clause specifies that the child care must enable them to work, too. Obviously, we strongly support the principle behind that. On eligibility to qualify for the scheme, the Bill sets out how “work” will be defined for the purpose of the clause. It suggests that “enabling persons to work” will be defined as meeting the minimum income rule.

What steps is the Minister taking to define more clearly “enabling persons to work”, where they might also have a minimum income? For example, if they are in training, to what extent could that be used? They may be in paid work elsewhere, although being paid a small amount, but are in education and training for the other part of the week. Perhaps she will clarify what that means. Looking more closely at the explanatory notes, there is also confusion regarding the suggestion that this will be tested and measured in other ways, other than simply by how much a person earns.

Paragraph 30 of the explanatory notes states:

“This means that a person cannot use the money in their childcare account, which the Government will have topped up, to pay for childcare that enables them to pursue leisure activities. For example, if a person works for one day a week and pursues a hobby for two days a week, they will be able to use the funds in their childcare account to pay for childcare only for their one working day a week. They will not be able to use their childcare account to pay for childcare for the two days a week when they pursue their hobby.”

There will be no other checks to ensure that rule is met. Indeed, the explanatory notes go on to clarify that paying for child care to enable a parent to travel to work will be permissible. Again, this suggests that the Government, or HMRC, will require further proof from parents about whether they meet the minimum income rule and what activities they are undertaking in the rest of their week. Do the Government intend to require parents to prove that they are not using top-up payments to enable them to “pursue leisure activities” and how will they define travelling to work? If not, why is that requirement not made clearer in the draft regulations? Do the Government intend to introduce further regulations that set out the kind of activities that parents can and cannot pursue while paying for child care? Can the Minister clarify the issue of training and education? I echo the comments made by my hon. Friend the Member for Stockton North about the other reasons that parents might want to claim for childcare. For example they may claim for respite for a disabled child while working on other days, and claim child care for days when they are not in work. That is a grey area and I hope that the Minister will take the opportunity to clarify the issue.

Priti Patel (Conservative, Witham)

We have heard already, and I will explain again, that the objective of the new scheme is to ensure that parents can choose to go out to work and are not prevented from doing so because of the high cost of child care. Fundamental to the scheme is what is meant by child care for these purposes. As we have already heard, the definition is set out in clause 2. It contains two conditions which child care must meet to be treated as qualifying child care.

I will respond directly to the points made by the hon. Member for Stockton North and my right hon. Friend the Member for Basingstoke, in particular about their focus on disabled children. Obviously, the Committee saw my letter last week, which was very clear that we recognise that parents of disabled children face a range of additional challenges as well as costs and burdens when they are trying to fulfil working life alongside caring for a child. It is challenging and incredibly difficult. We have already recognised that by allowing support under the scheme to continue until a disabled child reaches the age of 17.

A number of points were made about whether parents will be able to use the scheme to pay for short breaks, assistance and cover in terms of carers’ breaks. Parents will be able to use the scheme to help pay for a disabled child to take a short break, providing the care meets the definition of qualifying childcare and the parent is using the child care to enable them and their partner, if they have one, to work. The scheme will also support parents of disabled children in other ways. We recognise that the costs of child care are incredibly high.

I re-emphasise the points that I made last week to remind hon. Members of my commitment to look at increasing the limit for parents of disabled children. I am very keen to engage with interested parent groups to discuss how that might be done. It is important that we invest time to try to get this right. I assure the Committee that I will make any necessary changes to draft regulations in due course. The scheme as it stands recognises that this is a difficult issue and that disabled children need specialist care, which is expensive. Therefore we are extending support to care that is regulated by the Care Quality Commission and allowing parents to use domiciliary care to access the scheme as well.

Maria Miller (Conservative, Basingstoke)

I thank the Minister for giving way: she is very generous. Her comments are welcome and I am sure that parents listening to this debate will recognise that she has worked incredibly hard on this and will be extremely pleased with the comments she has just made.

Alex Cunningham (Labour, Stockton North)

I echo those comments. For the sake of clarity, is the Minister confirming that short breaks and respite care would qualify 100% under the scheme?

Priti Patel (Conservative, Witham)

I thank both Committee members for their comments on and contributions to the debate on this important clause and for the points that they have just made. As I have said, we want to spend time with parents and stakeholders to get it right. I do not think that anybody would benefit if we were to rush into a decision. It is vital that we get it right. We developed the scheme to give maximum benefit to families and children.

I thank the hon. Member for Somerton and Frome for his contribution and observations about travel time. That is particularly important in rural communities, and it is important to recognise the challenge that it poses for all working families and households, full stop. The main reason test allows parents to use their childcare account to pay for child care that enables them to work, and that includes commuting time. We have outlined an example in draft guidance, but the point is that child care covers travel time from the nursery to work and back each day, which will enable a parent to access and use their tax-free child care account to pay for their total costs.

David Heath (Liberal Democrat, Somerton and Frome)

I am grateful to the Minister for that helpful comment. Actually, I was referring specifically to travel costs rather than time. Sometimes it will be necessary to hire a taxi in order to access child care.

Priti Patel (Conservative, Witham)

I hope that I can assure the hon. Gentleman that we are addressing an aspect of that. Potentially, as the scheme evolves and as we assess it, we might look into wider considerations and aspects.

Lucy Powell (Labour, Manchester Central)

I know that the Minister has moved on from this point, but I wanted to put on record Opposition Front-Bench Members’ gratitude to her for the concessions that she has made on parents with disabled families and their ability to use the payment for respite. She has done a fantastic job getting that through.

Priti Patel (Conservative, Witham)

I thank the hon. Lady, and I welcome her comments on this important issue. We must all work collectively to achieve the right outcome. I have nothing else to add on this clause, so I commend it to the Committee.

Clause 4 - Declarations of eligibility

Lucy Powell (Labour, Manchester Central)

Again, we have no amendments to the clause, but on a point of clarity, has the Minister given any further thought to some of the issues raised previously, which I know she has sought to address, about whether she is sure that those without access to digital and electronic registration will not be excluded? I know that that is not her intention at all. Is she happy that the measures will not cause problems for those who are digitally excluded?

Priti Patel (Conservative, Witham)

I reassure the hon. Lady and the Committee that, as we emphasised last week while giving evidence, we aim to simplify the scheme to make it as straightforward as possible. As we touched on last week, we are aiming to work with third parties and stakeholders to get all the right signposts in so that no one misses out on the potential to access the scheme. We are being conscientious and focused on doing this in the right way.

In addition to the digital development—as I explained last week, I have experienced a walk-through and it is straightforward—it is our priority to ensure that everyone who is eligible for the scheme has access to it. I hope that the Committee will agree that the clause should stand part of the Bill.

Clause 5 - Entitlement periods

Lucy Powell (Labour, Manchester Central)

I beg to move amendment 3, in clause 5, page 5, line 2, at end insert—

‘(5) The Chancellor of the Exchequer shall, within 12 months of the opening of the first childcare account under section 17, undertake a review of the impact of the three month entitlement period under this section.

(6) The report referred to in subsection (5) must in particular consider—

(a) the administrative impact of this requirement on eligible persons;

(b) the effectiveness and necessity of a three-month entitlement period; and

(c) what provisions are necessary to ensure effective awareness and communication of the requirement to reconfirm eligibility on a quarterly basis.

(7) The Chancellor of the Exchequer must publish the report of the review and lay the report before the House of Commons.’.

May I first put on record our gratitude to the Minister for the concessions that she has made on the entitlement periods for the self-employed? They will prove to make the measure much more effective, especially for those people who work, for example, a lot in the summer and less in the winter; those who have what was described in the oral evidence sessions as a “lumpy” income—that was a new phrase to me.

The amendment would allow for a review of the need for a three-monthly reconfirmation process, given the concern about whether that is necessary and the burden that it might place on parents. It is a probing amendment to allow us to understand the process better.

I understand where the Government and the Minister are coming from in trying to get the balance right between learning lessons from the tax credit system, where people ended up in a situation where they were overpaying, and taking some of the best parts of the employer-supported child care voucher scheme, which leaves people in the system on an ongoing basis without the need to reconfirm. I want to see whether we have got that balance right, so the amendment would provide the option to look at this measure again in time.

The clause sets the entitlement period—the time for which a person has made a declaration and will receive top-up payments—at three months, which means that parents and other eligible people will have to reconfirm their eligibility each and every quarter. Concerns have been raised about that requirement, which is why we would ask the Government to undertake a review of the impact of the reconfirmation. In particular, the amendment would ask the Government to consider fully the administrative burden that the clause will place on people as well as the provisions necessary to ensure that all child care account holders are fully aware of the requirement and do not accidently slip through the net.

According to the consultation documents, the Government have promised that this process will be light touch and we warmly welcome that. However, to reconfirm, parents will have to prove each quarter that they are: still in paid work; expecting to earn more than the minimum income rule but less than the maximum income limit; and not claiming other child care support that would render them ineligible. HMRC in turn will have to check any relevant PAYE references and self-assessment forms. However, the mechanics of the reconfirmation process are still not entirely clear. Will the Minister therefore take this opportunity to talk us through the process? She has mentioned on a couple of occasions that she has had the privilege of walking through some of these processes, so perhaps she could expand on them.

Does the Minister recognise the potential downside to the three-monthly revalidation, compared with the employer-supported child care scheme? Have the Government made any assessment of how long it will take the average parent to do the paperwork every quarter and whether parents are willing to do it? From the evidence we heard last week, I understand that the Minister and HMRC are changing the reconfirmation window from seven days to 14 days, which is to be welcomed. Why did the Minister alight upon 14 days rather than a longer period that might enable those of us who are busy both at work and at home to ensure that we do not unintentionally fall foul of the system?

The amendment would also require the Government to review the necessity of the reconfirmation requirement, because we are not entirely sure of the extent to which HMRC will be able to use other information to clarify what parents state. In their response to the consultation in March, the Government elaborated on the process, suggesting that

“HMRC will be able to use its existing information streams”

to assess whether a declaration is valid. Could that be done automatically so that parents do not themselves have to reconfirm?

Will the Minister clarify whether the reconfirmation process is necessary? Perhaps she can expand on why parents must reconfirm rather than simply having them enrol and stay in the system while other checks are made, and taken out of the system if their circumstances change.

Priti Patel (Conservative, Witham)

Clause 5 deals with entitlement periods, another fundamental building block of the new scheme, which are designed to ensure that it is simple for parents to use. Entitlement periods will deliver certainty and make parents safe in the knowledge that their entitlement will last until the end of the period, regardless of any changes in their circumstances.

The clause sets out that an entitlement period will be three months long, a key scheme design feature that takes into account both the views of parents and the need to learn lessons from tax credits—as we have touched on—about the risks of long entitlement periods. The three-month entitlement period also avoids both the additional errors and overpayments that an annual scheme entails and the excessive administrative burden that monthly reconfirmations would place on parents.

A three-month period strikes the right balance between simplicity and certainty for parents and not allowing entitlement to continue for too long without checking continuing eligibility. Furthermore, the requirement for parents to reconfirm their details regularly in order to access Government support will be an effective means of reducing the number of ineligible parents seeking to access the scheme, and it will be more effective than requiring parents to notify us immediately of every change in their personal circumstances. We know from tax credits that many simply would not do that.

The clause also allows regulations to vary the length of an entitlement period for a particular person in specified circumstances. We intend to make regulations to allow, for example, an entitlement period to end around the middle of the month, thus avoiding the potential confusion that might arise if a parent were required to reconfirm their eligibility at the same time as payments were made into and out of the account. We also intend to use the powers in the clause to allow for all child care accounts held by one parent to have the same entitlement period end date, so that they can reconfirm their eligibility for all their children at the same time.

The hon. Lady’s amendment appears to reflect a concern that the quarterly reconfirmation cycle will be onerous for parents. It would require the Chancellor to review the effectiveness of the three-month entitlement period 12 months after the first child care account is opened, then to publish a report and lay it before the House of Commons. The quarterly entitlement regime design was reached after extensive stakeholder engagement and has been welcomed by those we consulted and engaged. The Government currently have no intention of altering the entitlement period, for the reasons to which I have already alluded.

I want to emphasise that the entitlement period system, with the requirement for parents to actively reconfirm, is aimed at driving behaviour. It is reasonable to ask parents to take that small step every three months in order for them to secure continuing entitlement and for the Government to be certain that taxpayers’ money is not being paid to people who are not entitled to it. Once in the scheme, parents will receive reminders of the need to reconfirm their eligibility via their preferred communication channel—normally e-mail or text. I have touched on the walk-through of the scheme that I have had; it is straightforward and happens quickly. After that, parents will have a three-week window in which to reconfirm, allowing them the flexibility to do so at any time of their choosing.

When a parent reconfirms, all the forms will be pre-populated with their information provided at registration, so they will not have to re-upload data or personal information. That will save time and effort. We have had comments from parents when we have engaged them on the scheme, along the lines of, “If I am managing an online account, I would expect to receive e-mails or text reminders”, because that is how many of us operate now, whether in online banking or purchasing goods online. We have also heard, “I would expect my eligibility to be checked first before I waste any time going back on the system.” In particular, parent groups welcomed the continued entitlement period for a number of reasons. They thought it would give parents the opportunity to get another job and therefore become eligible for the scheme in time for the beginning of the next fixed quarter. It was also felt that it would enable some parents to make changes to their child care arrangements, depending on their circumstances.

I remind members of the Committee that a review of the effectiveness of the scheme is already planned and is referred to in the published impact assessment. That review will take place two years after the new scheme is fully implemented and will consider the appropriateness of all aspects of the scheme rules. It is therefore wholly unnecessary to require an additional review in the Bill, as that is already covered. I therefore ask the hon. Lady to withdraw her amendment.

Lucy Powell (Labour, Manchester Central)

I thank the Minister for her reply. She has responded to a number of the points that I made and given clarification as to how this process will work. It seems from her comments that this will be an extremely light-touch process, and I hope that that spirit will be maintained. On that basis, I beg to ask leave to withdraw the amendment.

Clause 6 - The person must be 16 or over

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I have a few comments relating to clauses 6 to 13. However, I have none relating specifically to clause 6. Instead, I would like to make some comments when we get to clause 8. All of those clauses address the scheme’s eligibility criteria.

Clause 8 - The person must be in the UK

Bob Russell (Liberal Democrat, Colchester)

Will the Minister clarify what is meant by the statement that a person must be in the UK? The clause states what regulations “may” do

“if the person is in the United Kingdom on the date of the declaration.”

The explanatory notes, which the Minister may recall I quoted last week, specifically state that

“members of the armed forces who have been posted overseas…are to be treated as being in the UK.”

I detect that the words “may” and “permits” might provide some wriggle room, but the explanatory notes specifically mention that members of the armed forces serving overseas are to be treated as being in the UK. When we discussed clause 2(4) earlier this morning, reference was made to child care provided outside the United Kingdom, yet clause 8 states that the condition of eligibility is met

“if the person is in the United Kingdom on the date of the declaration.”

I need clarification on how that may or may not affect members of Her Majesty’s armed forces who are serving overseas. Have the Minister and her officials had time yet to discuss with the Ministry of Defence how to ensure that children of military personnel, whether in this country or overseas, do not miss out because their parents have been moved from one depot, garrison or naval port to another?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I also have one or two questions on the clause. The regulations setting out the residence criteria do not seem to provide a definitive definition. Will the Minister outline what does and does not constitute ordinary residence in the UK? Like the hon. Member for Colchester, I have been reading the explanatory notes, which refer to treating non-residents—those taxed in the UK but who may have some of their income exempt from UK taxation—as being exempt for the purposes of the scheme. Will the Minister explain to what sort of people the explanatory notes refer? Are they referring to non-domiciled taxpayers, for example? The Committee would be grateful for clarification on those points.

Priti Patel (Conservative, Witham)

The Bill provides a broad rule setting the territorial scope of the scheme by requiring those benefiting from it to be in the United Kingdom. That follows the same approach as for tax credits and universal credit, so regulations made under the clause will provide detail on exactly what that means, with some necessary explanation. The draft regulations that we have made available to members of the Committee provide that explanation. Subject to exceptions, people will be required to be ordinarily resident in the UK to meet the criteria, and I emphasise that point.

The hon. Member for Colchester rightly mentioned our armed forces and the children of military personnel. I assure him that British forces posted overseas whose child care is outside the United Kingdom will be able to use this scheme. We are proud to emphasise that point. Last week I made a commitment to him that it is my mission to join up with the Ministry of Defence to ensure that no one misses out on the scheme. The families of all military personnel who are entitled to the scheme will be able to use it.

Anne Main (Conservative, St Albans)

Before we start, there have been some complaints about the temperature of the room, so we are going to try to alter it to make it less drafty for those Members sitting by the windows.

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

Alex Cunningham (Labour, Stockton North)

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

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

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

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

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

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

Priti Patel (Conservative, Witham)

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

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

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

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

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

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

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

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

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

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

Anne Main (Conservative, St Albans)

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

Alex Cunningham (Labour, Stockton North)

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

Clause 10 - The income of the person and his or her partner must not exceed limit

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I beg to move amendment 4, in clause 10, page 6, ine 24, at end insert—

“(6) The Chancellor of the Exchequer shall, within three months of the passing of this Act undertake a review of the impact of the income requirements introduced under this section.

(7) The report referred to in subsection (6) must in particular consider—

(a) the appropriateness of the limit specified in regulations under section 10;

(b) the estimated average value of top-up per child;

(c) the proportion of parents paying for childcare who are expected to be beneficiaries; and

(d) a distributional analysis of the beneficiaries.

(8) The Chancellor of the Exchequer must publish the report of the review and lay the report before the House of Commons.”

It is a pleasure to serve under your chairmanship this afternoon, Mrs Main.

Clause 10 sets out the fifth eligibility condition of this group of clauses. It provides for regulations that set the maximum income limit, over which parents will become ineligible for child care. Regulation 15 of the draft Childcare Payments (Eligibility) Regulations 2015 provides that persons not expecting to pay the additional rate of income tax—that is, not earning more than £150,000 a year—will be eligible for the scheme, meaning that households with a joint income of £300,000 a year could be eligible for tax support for child care costs. That is the point on which the Opposition would like to focus.

With amendment 4, we are seeking to probe the Government on the reasoning behind the income limit and the effect of that limit on who benefits most from the Bill. The question that must be asked is this: will the Bill really help those parents who need the support the most? Last week, the Committee heard concerns from a number of witnesses about the way in which the benefits of top-up payments will be spread across the income distribution. Indeed, along with other Opposition Members, I have raised the issue with Ministers through written questions and on Second Reading. We have been asking for the full facts and figures on who exactly will be better off under the new scheme and whether any particular income groups will benefit. So far, the Government have not been forthcoming with the information, so we have tabled the amendment 4.

The Resolution Foundation is the only group that seems to have published any detailed work on the Bill’s distributional effects. According to Vidhya Alakeson, who gave evidence last week, the Resolution Foundation’s analysis suggests that 80% of the families who will benefit from the top-up payments are in the top 40% of the income distribution, and even the remaining 20% will go to those in the middle of the distribution scale. Those stark figures form the basis of the amendment. If we accept that the two key aims of the Bill are to support parents with the costs of child care and to help more parents to get back into work by making work an economically viable option, the Resolution Foundation figures raise serious questions about whether those aims will be achieved.

We should bear in mind the Resolution Foundation’s work when we think about the 2013 report by the Government’s advisory group on child poverty, Alan Milburn’s Social Mobility and Child Poverty Commission. That report recommended that the Government address the concerns I have just outlined. It warned that the original proposals on child care payments would subsidise the better-off and create a two-tier system. In January 2014, the commission recommended that the Government introduce a lower cap of £120,000 on the joint income of dual earner families, with the money saved to be transferred to working families on low incomes. Will the Minister address that issue and explain what consideration the Government have given to the commission’s recommendations?

When she gave evidence last week, Alison Garnham from the Child Poverty Action Group told us that she believes that most of the funding for the scheme will go to the top 60% of earners. Katie O'Donovan, the head of communications and partnership at Mumsnet, also gave evidence last week. She has previously criticised the Government’s decision to open up child care subsidies to high-income parents with household incomes of up to £300,000. In August 2013, she said that

“there is concern that single-parent households might lose out whilst some very high earning two-parent households will benefit. A couple could earn £300,000 a year and still benefit. That doesn’t seem sensible and is inconsistent with other cuts, such as those to child benefit and to childcare tax credit.”

Following the March 2014 announcement of the changes to the scheme, Citizens Advice welcomed the changes to the universal credit provisions in particular, but made it clear that the Government could still do much more to support those on the lowest incomes, rather than

“giving additional help to high earners”.

The Institute for Public Policy Research, which also gave evidence to the Committee, has previously suggested that top-up payments will be

“skewed towards benefiting higher income families”,

while still not necessarily securing lower costs for parents or the Government.

The Committee also heard from Kitty Stewart, from the London School of Economics, who drew comparisons between employer-supported child care and top-up payments. She explained that, under employer-supported vouchers,

“if a basic rate taxpayer spent £2,913 on child care, they would benefit by £930 a year.”––[Official Report, Childcare Payments Public Bill Committee, 16 October 2014; c. 86, Q170.]

To get the same support from the new top-up payments, that parent would need to spend £4,650 on child care. That is quite a staggering difference.

Lucy Powell (Labour, Manchester Central)

Did my hon. Friend see the information that Kitty Stewart subsequently sent to the Committee, which showed that lower earners spend a lot less on child care than the highest earners? That point was starkly made in her evidence.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Yes, and a lot of the evidence we received pointed to these questions being raised with and hopefully at least considered by the Government, if not responded to. We need to ensure that this additional tax expenditure achieves the maximum possible. The Government’s own stated aim is to ensure that it makes a difference to parents for whom, at the moment, it simply does not add up for both of them work. Families on lower incomes—particularly those just above the universal credit income distribution—need to be supported with their child care costs.

Many organisations seem to agree that the majority of the benefit from top-up payments will go to those on higher incomes. However, the Government have so far remained silent on the matter. They have not yet published their own analysis, which we can only presume was undertaken when they devised the policy, and they have yet to set out the facts. Many questions have been raised about whether public money being spent on top-up payments could, in fact, be better spent on other schemes that target those on the lowest incomes, who most need the help. Some witnesses proposed lowering the income cap—which, in itself, would presumably save the Government money—and matching that with an increase in the rate of top-up payment for those on the lowest incomes. What consideration has been given to those proposals? They would not require extra expenditure by the Government but would perhaps require the current envelope of funding to be distributed in a different way.

Other witnesses mentioned extending the free entitlement offer, as the Opposition have committed to do. That is another example of something that could support families on lower incomes much more effectively. The Minister told the Committee in last Thursday’s evidence session that the Government plan to carry out a standard post-implementation review two years down the line. Amendment 4 asks for that work to be undertaken now. It asks the Government to look properly at the distributional impact of top-up payments and to publish that information for the benefit of the Committee, the House and the public.

Nicholas Dakin (Labour, Scunthorpe)

I am pleased to serve under your chairing, Mrs Main.

The case for distributional analysis is even stronger than it was before in the light of the evidence given to us last week. Therefore, my hon. Friend is making a strong point, to which I am sure the Minister will want to respond carefully.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank my hon. Friend. I agree that distributional analysis is key in relation to the new expenditure on child care costs, and I am sure that the Government have considered the issues raised. At this stage it would be helpful if the Minister were to share some of that thinking with the Committee, so that we may all have a clearer view of the distribution of impact.

The review suggested in the amendment would be intended to answer a number of questions. For example, what kind of income groups will benefit most? What will be the income of the average beneficiary of a top-up payment? Will the money disproportionately benefit high-earning parents, and therefore not contribute to the vital aim of ensuring that more parents, particularly women, are enabled to get into work when they might otherwise not be able to afford to do so? Will the Minister set out for the Committee whether her Department has carried out any analysis of the distributional impact? If not, is it something that the Department will look at before the scheme is rolled out, instead of waiting until two years after the roll-out to see whether the impact has been as great as the Government might hope?

Another key aim of the Bill is to enable more parents either to work longer hours or to get back into work. As witnesses have told us, however, there appears to be little evidence to suggest that offering top-up payments to families on incomes of up to £300,000 will have an impact on increasing labour market participation. When the Minister responds, perhaps she will be helpful and set out the Government’s justification for setting the maximum limit at £150,000 per year, or a combined household income of £300,000 per year. I appreciate that there might be a good explanation—perhaps simplicity—but will the Minister clarify the thinking behind the limits?

The bottom line is that since the scheme was announced in March this year, it has remained completely unclear to average working parents with average expenditure on child care costs how much they can expect to receive under the new scheme. Under the employer voucher scheme, parents know that they can expect to receive a set amount per week depending on their income. That support does not depend on the amount that they spend on their child care and, arguably, it is therefore far more reliable for parents to plan for the future. In contrast, we still do not know what the average top-up payment will be, which is why the amendment calls for the Government to make it clear exactly what they expect it to be. That is better than stating that if people spend £10,000 a year on child care, they will save x amount of money, which according to independent estimates is clearly not the average.

The amendment is intended to get answers to a number of questions about the effectiveness and targeting of the support, about which stakeholders and Committee members have expressed a number of concerns. I urge the Government to respond to the issues that I have raised or, failing that, to do the analysis needed to help Committee members and the House better to understand the impact of the Bill on work incentives and on helping the families who need help the most.

Priti Patel (Conservative, Witham)

Amendment 4 would amend clause 10 to require a review of the new scheme within three months of the Bill receiving Royal Assent. That would cover the impact of the upper income limit, the average value of top-up per child, the proportion of parents paying for child care who are expected to be beneficiaries, and distributional analysis.

It may be helpful if I remind hon. Members that the scheme will ensure that, for the first time, parents can be certain that support will be available as they move into work or increase their income. The new scheme is much more fairly targeted than the current employer-supported child care system. All working families who meet the eligibility criteria will be able to apply, whereas employer-supported child care does not work that way—parents get the opportunity only if the employer chooses to offer it. As was made clear by witnesses at the evidence sessions, only one in 20 employers make such an offer, leaving more than 50% of employees, and all self-employed parents, unable to access that support with their child care costs. Tax-free child care will therefore distribute benefits far wider than the previous scheme. Importantly, it will ensure that all working families will be able to access support with their child care costs.

On the points made by the hon. Member for Newcastle upon Tyne North, which also came out during last week’s evidence sessions, predominantly from the Resolution Foundation, I reiterate that the overall system of support, including tax-free child care, will remain focused on those on lower incomes. Families in receipt of tax credits already receive more generous support with child care costs. Under universal credit, support is being extended to cover up to 85% of child care costs, regardless of the number of hours worked. The scheme is not at all about helping the wealthy; it is about ensuring that all families can qualify for support with their child care costs, subject to meeting the eligibility criteria. It is valid to point out that many households and people are struggling with the high costs of child care, and that the problem is not limited to low earners.

Aligning the scheme with the established additional rate parameter will also make it simpler for parents to understand and easier to administer, building on parents’ awareness of their tax status and the rate of tax that they pay and making it straightforward for them to assess their eligibility for the scheme. I spoke this morning about the purpose of making the scheme simple and clear for all eligible families and parents.

On the distributional analysis of tax-free child care, such analysis alone does not capture the full picture, because it misses the point about the wider overall system of child care support, which remains focused on those on lower incomes. As I have already said, those on tax credits already receive more generous support. In addition, there have been other changes regarding personal income tax thresholds. Capturing distributional analysis right now therefore does not give the full picture of the level of child care support.

Officials are discussing with colleagues across Government the possibility of considering the matter in more detail and of carrying out distributional analysis of all Government child care support. Much child care support is outside the Treasury’s remit and lies with the Department for Education, and many of the schemes that exist have been touched on in the Committee.

Nicholas Dakin (Labour, Scunthorpe)

I very much welcome the Minister’s comments about a wholesale look at the matter, including distributional effect.

I want to ask about the group of parents who are just above universal credit access, and will therefore fall into the support set out in the Bill. Does the Minister have any concerns about that group getting fair access to support?

Priti Patel (Conservative, Witham)

No, but I thank the hon. Gentleman for his comment.

Returning to the scheme’s objective and how it is designed, it is absolutely about ensuring that those who are eligible meet the criteria and have access to the scheme. It is not about people falling through. It is not like previous schemes, under which people have missed out or missed opportunities for reasons such as complexity or the need to reporting changes in their circumstances. As I emphasised this morning, the Bill is not about that. Under universal credit, the support is there regardless of the hours worked.

Supporting hard-working families to secure a better future for their children is the purpose of the Bill and the objective of the Government’s child care plans and policies.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I did not want to interrupt the Minister, but I got a sense that she was about to wrap up her comments. Before she does so, will she comment on the queries about the upper income limit, which has been set at £150,000 for an individual earner or £300,000 for the household? That was a key concern that was raised by a number of stakeholders during evidence sessions.

Priti Patel (Conservative, Witham)

I reiterate my earlier point: the scheme is targeted at those on low incomes. As for supporting families on the higher incomes that the hon. Lady highlights, we took the decision to align the scheme with the established additional rate parameter, to make it simple and straightforward. It is about raising awareness of the scheme and making it simple when people access it, as well as not complicating it from a tax point of view. We are also trying to keep it straightforward for parents to assess their eligibility for the scheme. However, I emphasise that the focus is on those on lower incomes. We have announced that families eligible for universal credit will benefit from additional support at 85% rather than 70%, in addition to other measures—outside the Treasury’s remit, but supported by the Department for Education—on extended free early-years provision for two-year-olds for those on lower incomes.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I appreciate the Minister’s explanation about simplicity. However, given the concerns that have been raised, what consideration have the Government given to alternative formats? For example, one suggestion was to increase the amount available for those on the basic tax rate and taper it for those on the higher tax rate. Other alternatives have also been put forward. Have the Government considered those, or have they not even considered integrating them into the Bill?

Priti Patel (Conservative, Witham)

It is fair to say that all aspects have been looked at and deliberated upon in the development and design of the Bill. In my view, we are doing the right thing by setting the upper limit at the income band for the additional rate. It is fair to say that previous schemes have not had that upper earning level. The scheme will be reviewed in two years, as has been clearly stated. Part of our objective is to make it simple and straightforward for families and parents to access the scheme within the current tax parameters. We have focused the right and proper amount of provision on those on low incomes. I assure the hon. Lady that the issues have been considered sufficiently.

As I emphasised earlier, the new scheme is about providing hard-working families with the necessary support for their child care costs, within the wider overall child care offering that the Government are providing to help every working family across the United Kingdom. Evaluating the scheme is important, and, as I set out in our evidence session last week and have touched on today, we are planning the standard post-implementation review at the two-year mark after full implementation. That will set out the benefits of the scheme and what it has delivered. We take the view that that is an appropriate period for such a review; by that stage the scheme will have bedded down and we will have had more engagement with eligible parents, more contact and more feedback. Producing a report three months after Royal Assent that looked at distribution analysis alone and excluded all other child care support measures would not be appropriate. I therefore ask the hon. Lady to withdraw her amendment.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I am partially reassured by the Minister’s comments, particularly in relation to the fact that the Government will look at the distributional impact of the Government’s child care offer across the board. That is an important piece of information to put out there. I assume that if the Government are confident that they are distributing support fairly, some transparency around that would be welcomed, both by the Government and, obviously, by stakeholders and Opposition Members. At this stage we will not press the amendment to a vote, but we will look to hold the Government to account for their promises that information will become publicly available in due course. I beg to ask leave to withdraw the amendment.

Clause 11 - Neither the person nor his or her partner may be claiming universal credit.

Lucy Powell (Labour, Manchester Central)

I beg to move amendment 6, in clause 11, page 7, line 1, after “may—”, insert—

“(a) repeal this section, or”

Anne Main (Conservative, St Albans)

With this it will be convenient to discuss the following:

Amendment 5, in clause 11, page 7, line 6, at end insert—

“(7) This section shall not come into force except as specified in paragraph (a) below.

(a) The Chancellor of the Exchequer shall bring the section into force by order within six months of the passing of this Act.

(b) a statutory instrument containing an order under paragraph (a) shall be accompanied by a report which details—

(i) the impact of delays to the rollout of Universal Credit on low-income families with children expecting to receive top-up payments, including a timetable for the rollout of this support;

(ii) the impact of this section on the take-up of Government childcare support schemes;

(iii) the impact of the eligibility criteria under this section on the complexity of interactions between Government childcare support schemes; and

(iv) what guidance will be provided to parents to raise awareness, understanding, and simplify those interactions.”

Amendment 7, in clause 69, page 44, line 27, at end insert—

“() regulations repealing section 11.”

Lucy Powell (Labour, Manchester Central)

It is a pleasure to serve under your chairmanship, Mrs Main. I would like to discuss these amendments together as, obviously, they have been grouped. The amendments allow us to explore the interaction of universal credit and tax credits with the tax-free child care scheme that is proposed. Given the complexity of the issue and the number of representations that we heard last week and over the past few months, I apologise in advance for the length of some of my comments. However, it is very important that we have this discussion about the relationship with universal credit and tax credits and about the purpose of the Bill, because at the heart of the Bill is a desire to help make work pay and to support parents looking to go back to work or to increase the hours they work. Parents need to know under which system they will be better off, and under which system they will get the most support to return to work. They also need to know whether returning to work or increasing their hours under either or both systems will actually result in their being better off in the first place.

This is not a static situation for most families, because it is not only about their earnings or their income. It is also to do with the number of children people have, because that can influence how much support they receive under both schemes. It can also relate to the other benefits that they receive, and under the Bill it will also relate to their actual expenditure on child care. All of these variables come into play, and this can be a very complex space for parents. I want to expand on some of these issues in my comments.

David Heath (Liberal Democrat, Somerton and Frome)

Welcome to this afternoon’s sitting, Mrs Main.

I am most grateful to the hon. Member for Manchester Central. She is making a very important point, on which she will now expand, about the interplay between universal credit and these provisions. This does need looking at constantly, especially as universal credit evolves.

I have one real problem with what the hon. Lady has proposed here, and that is amendment 6. That gives the power to repeal primary legislation by means of secondary legislation. I do not think that that is right in principle, because this is a very complex matter. If we have to revisit it we should do so in primary legislation, because that will have knock-on effects on the very complex structure which is universal credit.

Lucy Powell (Labour, Manchester Central)

I thank the hon. Gentleman for his intervention. As I shall explain, the purpose of amendment 6 is actually to leave the door open for a smoother interaction between these two systems. I will explain later why that is. Rather than us all needing to come back here at some later stage to amend this legislation, it leaves the door open for that possibility later on. Perhaps the hon. Gentleman will bear with me, and we can debate that as I move forward with my comments.

By way of background, as we heard from many people last week, our child care system is already fiendishly complicated for parents. It built up over time, and the last Labour Government, too, bear our responsibility for that. There are now numerous options for accessing support for child care. Citizens Advice got to the nub of the matter in its evidence, particularly about the impact of those different systems on a parent’s ability to figure out whether they are better off in work. It stated:

“Life is very complicated and there is a plethora of child care support out there, and it is very complex. The smoother you can make that journey between schemes, the easier it will be for people to move on in work”.––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 59, Q121.]

For the purposes of everybody in the Committee, I will set out some of the support that we have. There is 15 hours’ free early education for the 40% most disadvantaged two-year-olds; 15 hours’ free early education for all three and four-year-olds; tax credit help if families work more than 24 hours or a lone parent works more than 16 hours; employer-supported child care vouchers; and now the tax-free scheme set out in the Bill. Interaction between all those entitlements and demand-side funding schemes will make the situation even more complex for parents to understand.

A critical point is how the new tax-free scheme will interact with tax credits and, eventually, universal credit. For people in the middle, who may go in and out of these schemes, it could be especially mind-boggling. That is why we wanted to discuss these and work out how we can best address some of the issues involved.

The point was underlined in the evidence from Working Families, which runs a helpline for working parents. Sarah Jackson said:

“The difficulty about moving between the two systems is that it is enormously complicated. It is not really as simple as saying, ‘Would you be better off on universal credit or would you be better off using tax-free child care?’ What parents really want to think about is the number of hours that they want to work to be with their children.

The kind of calls that we get are from people saying, ‘I would quite like to change my working hours’—

but those people do not know what to do. She went on:

“I spoke to the advisors who said that today they had a call from someone whose family income is £40,000. She is not currently claiming any help from tax credits at all and her weekly child care costs are such that she probably could.”

She continued:

“It is an issue now between tax credits and vouchers, but it is going to be more complicated between the new system and universal credit…My benefits advisers are saying it is probably a 40 minute conversation to really unpick it for people”.––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 41-42, Q87.]

That is how complicated the system is for those who want to come in and out of it and want to work out whether they will be better off.

Critical to that discussion, for the people on middle incomes that we are talking about, is how we can ensure that we are making work pay. That is how we can get the most benefit in the maternal employment rates that my hon. Friend the Member for Newcastle upon Tyne North was discussing earlier. We heard in evidence that the real impact on those rates comes from those whose family income is less than £60,000 a year. Many of those people are in the interface between universal credit and tax-free child care.

Last week, we had a lengthy exchange about the generosity of the various schemes. In particular, there were questions from the hon. Member for Dover, who is otherwise engaged right now. [Interruption.] No, I am sure he is listening intently to my comments. We discussed the fact that under tax credits, families can now have up to 70% of their child care costs supported, and that the Government propose, alongside the tax-free scheme, to increase that to 85% under universal credit. I welcome that. However, it might benefit of everyone on the Committee to understand that to receive that full 85% subsidy, a family will normally need income of less than £10,000 a year. A family whose household income is up to about £41,000 a year could receive a proportion of that help, and then the proportion will taper off from £10,000 right through to the £41,000-ish mark. A family with a household income of about £41,000 a year, and therefore at the top of that threshold, might get only a few per cent. That is why the interaction is so important. For the vast majority of middle-income families with a household income of between £25,000 and £45,000 a year, it can be complicated to work out whether they would be better off with universal credit, tax credits or the 20% flat-rate subsidy under tax-free child care. It is important that we set out that context.

As Alison Garnham pointed out in oral evidence last week:

“In fact, for most people on tax credits currently who claim the child care element, their average payment to help with child care costs is £55 a week, so people tend to self-manage and claim relatively small amounts.”––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 66, Q134.]

I looked at analysis of the distribution of tax credits, and the child care component in particular, and found that less than 6% of families claim more than £150 a week, which is at the top end of what is possible.

When we have debates such as this, it is important to point out that it is not the case that someone who was getting universal credit would get 85% support on one day and then, if they tipped over the scale, get 20% support under tax-free child care the next day. The vast majority of families will get a decreasing percentage of support depending on not just their income but how many children they have, the amount they pay for child care and so on. From all the evidence we heard, we know that it is families in the middle income bracket for whom the decisions on the number of hours they work, and whether they go back to work, absolutely depend on child care costs. Those in the higher percentiles of the income distribution and those in the lowest percentiles, with incomes of less than £10,000 a year, would receive the majority of their child care costs back.

I am sorry for sticking for a while on that point of context, but, given last week’s debate, it is important to see this measure in context. At its heart, it is about how we can ensure that we increase maternal employment rates and get people back to work.

I turn to the amendments and what they are intended to do. Amendment 5 asks the Government to examine the complexities that will be created between this scheme and universal credit. It asks them to consider how confusing it will be, how they will make things as simple as possible for all parents, and what tools they will provide to allow parents to understand under which scheme they will be better off. It also allows us to discuss how detrimental the delays to universal credit will be to parents who will benefit under that scheme but will have to wait for years for that benefit.

The Minister reassured us about better off calculators, and we heard evidence from many of the relevant organisations on how we can communicate about them. She, like me, will get a large case load from people who are unsure about whether they would be better off in or out of work, or increasing or decreasing their hours.

Universal credit so far is not fit for purpose. It is behind schedule, and we still have no idea how some of the passported benefits, such as free school meals and free prescriptions, will be integrated into it. Although the new child care support in universal credit, which will increase from 70% to 85% of costs, is to be welcomed, many families will not get that until two years after the tax-free scheme comes into play. If universal credit experiences further delays, it could be longer than that.

There are a number of differences between how the universal credit and tax-free child care systems work. I will say more about that later on, but, in particular, under universal credit people will be able to claim only for the child care costs of two children, whereas under the tax-free scheme they will be able to claim for an infinite number of children. That is an important point.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I am sure that my hon. Friend is aware that we are not talking about a small number of people. Estimates are that 4.4 million families with children on universal credit could be waiting for the support until 2017 or beyond, which is three times as many as will benefit from the top-up payment. The issues that she is setting out are clearly vital for the Government to focus on.

Lucy Powell (Labour, Manchester Central)

Absolutely; they are critical.

Amendment 6 would allow the Government to introduce regulations to allow for the possibility of top-up payments to be aligned more with universal credit. The amendment will allow us to discuss further some of the issues raised by the Children’s Society and Citizens Advice, among others, about the differing designs of the two schemes, how they will work in practice for parents and why some of the better designed aspects of tax-free child care could be extended to those on universal credit or those moving between the schemes.

During the evidence sessions, there was some interest on both sides of the Committee in the possibility that in future the Government might want to combine top-up payments with universal credit, so that universal credit claimants receive a lower subsidy from universal credit, but are entitled to top-up payments through the tax-free scheme. In total, it would equate to the same level of support, but with the two schemes better aligned. That is what the hon. Member for Somerset and Frome was asking about.

David Heath (Liberal Democrat, Somerton and Frome)

I must school the Committee on the name of my constituency: Somerton and Frome. No one ever gets both components right at the same time.

My problem with the hon. Lady’s proposal is that if that were to be the case—if there were a need to align the two schemes better—we would need to have primary legislation in order to change universal credit. We could not have universal credit carrying on as it does and the measure we are discussing simply being repealed. I have difficulty with secondary legislation being used to repeal primary legislation, in particular when primary legislation would be needed in any case for the changes to universal credit. Both things could be done in the same primary legislative vehicle; a Minister does not need to be given the capacity to have secondary legislation to repeal primary legislation, which I think is wrong in principle.

Lucy Powell (Labour, Manchester Central)

I thank the hon. Member for Somerton and Frome—

David Heath (Liberal Democrat, Somerton and Frome)

Well done!

Lucy Powell (Labour, Manchester Central)

I have been to Frome, so I know how to say it.

I appreciate the point that the hon. Gentleman is making. It gets to the nub of some of the issues. It is hard to see the schemes in complete isolation. I am proposing a possible way to align the schemes more in the middle. As he rightly indicates, any change to universal credit means consideration. I am arguing that, by bringing in a scheme above and beyond universal credit, but applying to many people who are included under universal credit, those people might find themselves in tax-free child care. That might change quickly, however, and they might suddenly get the free entitlement, in the following term or whatever, so the child care costs decrease.

The situation is fluid for families, which is why we have tabled the amendment, to probe some of the issues. As the legislation stands, it does not allow for alignment of the schemes. If Ministers or other Government Members wish to make other suggestions that would achieve that better, we are more than happy to consider them.

The amendment is not about hindering the roll-out of tax-free child care, which proceeds as designed, but would allow for provision of tax-free child care or for child care accounts for households in receipt of universal credit or tax credits, if that were deemed desirable by the Government after further consideration and investigation. It would take out the strict criterion in the Bill that excludes universal credit recipients from holding child care accounts.

To reiterate, the interaction of tax-free child care and universal credit is complicated and the complexity is likely to lead to confusion and poor financial and workplace decisions. As we heard from the Child Poverty Action Group, families tend to err on the side of caution, so if they feel there is a possibility that they will be worse off, they will make decisions to not go back to work. The Bill does not allow for any consideration of that interaction and those issues and the amendment is designed to allow us to consider them in the future.

Some of the issues around the complexity between universal credit and tax-free child care are that, for example, the amount payable under tax-free child care is not means-tested, yet universal credit is. As I said earlier, universal credit is limited to two children, yet tax-free child care is for—what phrase did I use? [Hon. Members: “Infinite.”] An infinite number of children—something I wouldn’t recommend. As the mother of three children, I think that is probably enough for most, but each to their own.

Which system is right for people will depend on lots of different factors and is difficult, if not impossible, to work out, notwithstanding whatever measures the Government are putting in place to help with this better-off calculator. A better-off-calculator can help a person with the static information on that day, but as I said earlier, it cannot consider that a few months later one of their children will qualify for the free hours. That, again, would change their circumstances, as would one of their children going to school a few months after that and so on. Even without income changes, the changes in a child’s age can change whether a person is better off in one scheme or the other.

A number of concerns were also raised about the help with child care costs through universal credit compared with tax-free child care. I would like further consideration of some of the benefits of the tax-free child care scheme to be extended to those on universal credit, for example to address the payment in arrears problem that was discussed at great length in the evidence sessions last week. For households in receipt of tax-free payments into their child care account, it is an advanced top-up of what the parent pays in, whereas universal credit payments for child care costs are paid in arrears. Parents are usually required to pay child care providers one month in advance so many claimants are likely to have to borrow that money. Further payments and further loans are then necessary in the following months.

Child care costs are often higher in school holidays than they are at other times of the year and that can be difficult for families to manage. A family might be better off claiming tax-free child care in the school holidays, but be better off under universal credit for the rest of the year. I was grateful for the clarification in oral evidence last week that families will be able to switch more than twice if their circumstances change and they will not be penalised, which was not clear previously. I should be grateful for further clarification about what those changes in circumstances would be. Would a school holiday, for example, be one such change?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

My hon. Friend is setting out as clearly as one can a complicated system that will become increasingly so. I appreciate that amendment 6, which she is discussing, relates specifically to universal credit, but many of the arguments could equally apply to the deliberations that families will have to undertake about whether to come out of the voucher scheme, if they are currently in it. They might be better off under the new top-up scheme in the summer holidays and want ultimately to revert back to the voucher scheme, but will not be able to.

Lucy Powell (Labour, Manchester Central)

Absolutely. My hon. Friend gives another example of the complex array of support out there for families, which can be tricky. The reason this is so important for middle-income families on £25,000 to £45,000 is that this is where child care costs are most relevant to decisions on the number of hours worked or going back to work at all. This is where we can therefore have the biggest impact on maternal employment rates.

Payment in arrears can be the single biggest factor for a parent in deciding whether to go back to work, since otherwise they have to find the money up front for child care. They would eventually get that money back, although they might not get it back in terms of the loan repayment for another three years, until they leave the nursery and get their deposit back. That concern was backed up by the evidence from the Children’s Society, which said:

“We are really worried about the message that that sends to the lowest income households—that the first thing you need to do when moving into work and taking on child care is to get into debt. We do not think that is going to help, either in terms of supporting the children in those households to get the best outcomes or in terms of increasing parental employment.”––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 62-3, Q127.]

We heard in the evidence sessions that one solution—it might not be the best solution but it is the only one that anyone has offered at this stage—is to allow those on universal credit or in receipt of tax credits to pay money into a child care account, without getting any more support than they would otherwise be entitled to. That might help the parity of treatment, in terms of how resources are given back to families in receipt of tax-free child care and those on universal credit. As we heard from my hon. Friend the Member for Newcastle upon Tyne North, another possibility is looking at the distribution of this support and lowering the cap while increasing the amount that can be claimed. Decisions about going back to work might then be a lot clearer for some middle-income families.

Finally, I remind the Committee why this debate is so important. It is worth remembering the words of Ellen Broomé from the Family and Childcare Trust, who said:

“The reason why it is so important to get this interaction between universal credit or tax credits and the new system right is that it determines people’s working patterns. We want to see encouragement of people, enabling them to go back to work, stay in work or take on more work if that would help their families. Some of the interactions that we are talking about, and some of the functionality of the scheme in itself, would hinder that. It would not enable parents to have the clarity of what kind of support would be available and, therefore, what type of work they would be able to do. That is why it is important to get this addressed.”––[Official Report, Childcare Payments Public Bill Committee, 14 October 2014; c. 58, Q118.]

Will the Minister discuss with colleagues in the Department for Work and Pensions and the Department for Education how those interactions will work and enable the Committee to better understand them? Does she think that child care accounts could be an important budgeting tool for households in receipt of universal credit or tax credits? We have been talking about the establishment of those accounts, rather than any additional funds to families, but does she know how much it would cost to enable that? With child care payments in universal credit paid in arrears, how can we ensure that parents are able to pay their child care costs when they first move back into work? Does she agree that this enabling provision to extend the scope of tax-free child care and child care accounts without further primary legislation would be a sensible step to ensure that the scheme can develop over time?

Priti Patel (Conservative, Witham)

Clause 11 sets out the sixth condition of eligibility, which is that the person and their partner, if they have one, cannot be claiming universal credit. The clause provides that when a person makes a declaration of eligibility under the scheme, they must not be due any award and must not have made a claim to receive universal credit that would be payable during the entitlement period. In effect, the clause prevents anyone from receiving support under this scheme and universal credit at the same time.

The Government are committed to fairness and supporting those who want to work hard but who are struggling with the costs of child care. We are already spending more than £1 billion a year on child care support through the tax credits system, and we will extend that spending under universal credit. We are investing an additional £400 million in child care so that, from 2016, working families on universal credit can claim 85% of their child care costs. We are also investing a further £200 million so that parents can access child care support, regardless of the number of hours worked.

A parent with two children who spends £10,000 a year on each child’s care may receive a maximum of £4,000 under tax-free child care, whereas under universal credit, a parent with two or more children could receive support for child care costs up to a maximum of £13,000 a year. The new scheme will ensure that Government support is available to working families as they move off universal credit, and it is appropriate that the scheme is not available to those who are claiming universal credit.

Amendment 5 would require the Government to report on a number of diverse topics, including the roll-out of universal credit, the complexity of interactions between the Government child care support schemes, and the guidance that will be provided to parents to raise awareness and understanding of those interactions and the scheme itself.

The introduction of universal credit is a once-in-a-generation reform, and we are working carefully and responsibly to get it right. It has been more than a year since universal credit was first rolled out, and strong progress has been made on this groundbreaking reform. Universal credit is now available to single and couple claimants in more than 50 jobcentres in England, Wales and Scotland, and it will be available in nearly 100 jobcentres by Christmas.

Universal credit is expanding to families this autumn, and to all remaining jobcentres and local authorities from early next year, which is a significant acceleration in one of the Government’s biggest welfare reforms. That is a sign of the policy’s progress. Universal credit will continue to be implemented carefully in a safe and secure way, which remains the right approach. We should not forget that families can continue to benefit from tax credits, but we are also committed to rolling out the new scheme as quickly as possible, which means that where universal credit is introduced, working families can choose the scheme that best suits their needs.

Parents who are eligible for universal credit will be able to opt out and claim support under the new scheme if they wish. If their circumstances change, they will be able to move back into universal credit, and that will not be restricted. Such a flexible approach means that parents can receive the support that they think best suits their circumstances and needs. We will be supporting parents to make those important decisions.

In last week’s evidence sessions, and in Committee today, we discussed the tools, methodology and communications that will be available. We will be launching online support tools, including a calculator and clear guidance. As I have already announced, draft guidance has been published well ahead of the scheme’s launch, which shows our commitment. I re-emphasise the collaboration with stakeholders, parents, child care providers and other users so that we can gain their feedback and ensure that the guidance is tailored to their needs.

Lucy Powell (Labour, Manchester Central)

Will the Minister further clarify the point on changes in circumstances and families flipping between the two systems? What constitutes a change in circumstance? How small could such a change be? Could it be a school holiday, a small income change, or entitlement to free hours? How prescriptive will it be?

Priti Patel (Conservative, Witham)

If I may, I would like to finish my point about the engagement and communication plans.

We are building up our communications campaigns and plans to ensure that parents are aware of what support is available in the right and proper way. We have already touched on the evaluation scheme, which is an important part of that. It will be the appropriate time for a review. The scheme will have to bed down so that we can make the appropriate decisions and the full evaluation will allow us to reflect on how it is working.

The hon. Lady spoke about aligning the rules and definitions for tax-free child care with existing schemes. It is fair to point out that tax-free child care and universal credit are different types of scheme. They have been developed to provide support and financial assistance, but for totally different purposes. It is inevitable that there will be differences between the schemes, how they have been constructed and how payments are made. It is important that we produce the right guidance to engage parents and communicate how the scheme will work and best suit their circumstances.

I cannot define changing circumstances at this stage because we are working with parents on that. It is important that we work with parents to get things right, which is why we published the draft guidance. We need to hear their views and to know from them and particularly from other users what constitutes a change for them, and how they can feed that into the system. In terms of a change in circumstances that will be recognised for a person moving from tax-free child care to universal credit or tax credits, the scheme is being designed so that parents can start to claim tax credits or universal credit as soon as they experience a change in their circumstances. It is going to be very personal. We cannot be prescriptive, because anything can happen to people’s personal circumstances: life events, losing a job, moving house—anything. As changes occur, we will work with parents through publishing the draft guidance to see how we can address those changes and ensure that, as they occur, parents can move on without having to wait until the end of their entitlement period. That way, no one will fall through the gaps.

The hon. Lady spoke about universal credit as a payment system. As we know, it is paid in arrears, month to month, reflecting very different personal and financial circumstances. Importantly, it helps with budgeting a monthly income, as well as enabling ease of transition for the household when it comes to starting or returning to work.

The hon. Lady also mentioned complexity in the system, as she did when we took evidence last week. Naturally, I disagree, partly because I have already seen some of the schematics and walk-through processes, and I am obviously working with officials and parents to ensure that we get it right. We come back to the importance of providing information and support to enable parents to make an informed choice about which scheme will work for them. Alongside wider guidance and information, I have mentioned that there will be an online calculator for parents so that they can work out their financial situation for themselves.

HMRC and the Government Digital Service will of course be working with stakeholders. I can give the Committee a very strong commitment that we will not be doing this in isolation. This is not about officials working away with a scheme that they think might work; there is dialogue and consultation. We must ensure that it is easy to use and meets the needs of the majority of families. We must make things user-friendly and accessible for parents and ensure that we develop the right scheme and get it right. Giving them input and having a dialogue with them is absolutely crucial.

The effect of amendments 6 and 7 would be that parents would be able to get support under the new scheme and universal credit at the same time. I do not want to cover the points that I made before, but families in receipt of universal credit will already receive good, generous support for their child care costs, as is right. Child care support is offered to parents on universal credit as part of the wider welfare system designed by the Department for Work and Pensions to ensure that we make work pay for those who need support the most. Up to 300,000 more people are likely to be in work as a result of universal credit, and we expect that a significant proportion of those will be households with children, but it is not right for a parent to receive tax-free child care in addition to universal credit when support is already there. I mentioned that 85% support for their child care costs will be provided from April 2016.

I am aware from the evidence sessions that some of the Committee may think that this is complex, but I have addressed that point. We are working with stakeholders and families. It is our objective and my mission to ensure that the scheme is easy for parents to use, and I re-emphasise that our focus remains on those on lower incomes. The introduction of the scheme gives parents confidence that as they increase their income and move off universal credit, they will continue to receive Government support towards their child care costs. That is an important provision in the Bill, and it is a commitment from the Government. I therefore ask the hon. Lady not to press the amendments, and I commend the clause to the Committee.

Lucy Powell (Labour, Manchester Central)

I thank the Minister for her contribution. I absolutely recognise her commitment to ensuring that the better off calculator and similar communications relating to the scheme are available. I hope that she can do so. Some of our wider concerns may not relate to her Department, so that is a slightly trickier point, but I want to push further on enabling the possibility that in future, somebody receiving universal credit could receive child care credit. The amendment would not enable that right now, but it would enable that option to be taken later without primary legislation having to be amended. That is important, so although I will be happy not to press amendments 5 and 7, I will not withdraw amendment 6.

Clause 12 - The person and his or her partner must not be in a relevant childcare scheme

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I beg to move amendment 8, in clause 12, page 7, line 43, at end insert—

‘(7) The section shall not come into force except as specified in paragraph (a) below.

(a) the Chancellor of the Exchequer shall bring the section into force by order within six months of the passing of this Act.

(b) a statutory instrument containing an order under paragraph (a) shall be accompanied by a report which details—

(i) a comparative analysis of the beneficiaries of top-up payments versus other relevant childcare schemes;

(ii) what additional package of measures will be enacted to raise awareness and understanding of the comparative benefits of relevant childcare schemes; and

(iii) what information will be provided to persons to enable them to make informed decisions about which scheme will be most beneficial to them.’

Clause 12 covers the seventh eligibility condition, providing that a person or their partner cannot be in another relevant child care scheme, including employer-supported child care, universal credit or directly contracted child care. That ties in with clauses 62 and 63, which provide for the restricting of the employer-supported child care scheme to new entrants. We will come to those clauses later, but it might be helpful to remind the Committee to bear them in mind while discussing clause 12 and our amendment, because implications flow from the later clauses.

Clause 12, along with clause 11, which we debated at length, will effectively force parents to make a choice between various schemes—they may be eligible for all three. My hon. Friend the Member for Manchester Central set out at some length the enormous potential for complications if families edge in and out of eligibility or if their circumstances fluctuate over time. The addition of top-up payments will present another option for parents when choosing which form of Government support for the cost of child care is most appropriate.

There are various factors to consider, including the intricacies of the schemes and how they will apply to a parent or care-giver, and what the tangible benefit will be to a parent or care-giver. I guess the fundamental question that parents will ask themselves is which scheme will make them better off. Many parents will face that critical choice next year, so how will the Government ensure that parents are properly equipped to make it? What information will be provided to parents to ensure that that decision is as straightforward as possible for them? Is it even possible to make it a straightforward choice?

That is the context of amendment 8, which calls on the Government to provide a comparative analysis of the two schemes—we know that that would be useful to parents—and to explain what additional measures they will introduce to raise parents’ awareness of the choice they will face. It also asks the Government what information they will provide, once parents are aware of the importance of that choice, to help them to make it. Those are our key questions.

We had some useful discussions during the witness sessions last week, when we managed to get to the nub of some of the issues. In the final evidence session, we discussed them at length with the Minister and officials. We know that the Government intend to design and introduce an online tool to help parents with that choice. The scheme’s director in HMRC suggested that it is already working with the Government Digital Service on what she described it as

“a really easy to use online calculator.”––[Official Report, Childcare Payments Public Bill Committee, 16 October 2014; c. 116, Q232.]

She made it clear that it will be not only for parents deciding between top-up payments and universal credit, but for parents having to decide whether to move off employer-supported child care and opt for other child care schemes or top-up payments.

As we know from previous examples, such as HMRC’s child care indicator, which compared employer-supported child care support with tax credits, such tools are not always simple to use or effective, in spite of HMRC’s best efforts. Last week, we heard from the Low Incomes Tax Reform Group about its concern that a calculator could be impossible to create, particularly one that would manage to cover all scenarios. That said, its written evidence also made some recommendations about what a successful tool would need to be able to do, namely, give parents projections of how they would fare under each scheme if their circumstances were to change. That has to be the key.

As I have mentioned, the issue with clause 12 is that parents will need to make an active choice between one scheme or another. However, once parents have chosen to step away from employer-supported child care, or not to take it up while it is still available to them because they know that top-up payments are on the horizon instead, they will not be able to reverse their choice. In other words, there is no going back for parents if or when their circumstances change, whether because they are spending less on child care, having another child or changing employer.

In spite of Government commitments to make transitions between schemes as simple and as smooth as possible, parents on top-up payments will not be able to return to employer-supported child care if their circumstances change. As a result of clauses 62 and 63, which we will consider later, employer-supported child care will no longer be available to new applicants after some point in autumn 2015.

Maria Miller (Conservative, Basingstoke)

I have a small point to make. Circumstances do change, but must we not be careful not to make a good and extremely well thought through plan more complex than it needs to be to take account of a very small number of situations in which circumstances might change? Surely parents would like a simpler system, rather than having more complexity built in.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I understand the right hon. Lady’s point, which is the point that we are making in amendment 8. The system is already complex, including for those who will be transitioning between universal credit and the top-up payment system. Those on child care vouchers will need to decide whether to keep the vouchers or to transition to the new system. Circumstances change, but that is outwith many parents’ control. The issue that we are debating, however, is the information made available to parents to help them make that choice. As much as the Government hope to simplify the system with their new scheme, there are complexities in the system already that the new proposals will do nothing to simplify. They will add an extra level of complexity for parents during the transition period when they need to make the decision about what arrangement is better for them.

In an ideal world, the whole system would be simplified, but in reality it will get increasingly complex, so the information available to parents about which choice is better for them is key. Surveys are suggesting that parents are not being properly informed—the worry is that they will not be in future either—about the changes that due to take effect or how they should go about making the decisions on whether to transition from one form of child care support to another.

The Childcare Voucher Providers Association conducted a survey of more than 23,000 parents in June 2014, and some of the findings about parents’ awareness and the need for more information were particularly interesting. The survey found that two thirds of parents believed that they had been insufficiently informed about the new scheme, or about whether they would be better off continuing to claim the employer-supported child care vouchers or transitioning to the new scheme in autumn 2015; and that 7% said that they would definitely move to top-up payments, while 67% said that they required more information. Almost a third said that they would remain on employer-supported child care. That survey suggests that some parents think they might be better off staying on employer-supported child care, but also that parents need more information before they can make that decision.

We heard some interesting and valuable evidence from payroll and human resources practitioners last week. Charles Cotton from the Chartered Institute of Personnel and Development said:

“A lot depends on how many winners and losers there are in an organisation…it is important that we have information to communicate to our employees, so we can let them know that there is a change and to say, ‘In these circumstances you may be better off going to the new regime’, or, ‘Under these circumstances you may be better off sticking with child care vouchers.’”––[Official Report, Childcare Payments Public Bill Committee, 16 October 2014; c. 76, Q146.]

He went on to suggest that the clear message from his organisation’s members over the summer was that they as employers needed more information and clear guidance on the introduction, so that they could plan ahead and start providing meaningful advice to their employees to help them make the all-important decision on which scheme to choose.

Rob Flello (Labour, Stoke-on-Trent South)

Has my hon. Friend given thought to the situation where an employer, acting in good faith, gives some advice to an employee to switch from one scheme to another, and that employee finds that they are worse off and goes back to the employer and says, “You gave me advice. You might have been acting in good faith, but you have cost me money”?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

My hon. Friend outlines a nightmare scenario for employers. I suspect that they might be nervous about giving advice to their employees for that reason, especially given the complexity of the situation and the changing circumstances. For example, they might advise an employee to go one way, then the employee’s child might suddenly reach school age, and their entitlement for two children would reduce to one, meaning that it would have been better to stay on the voucher scheme. They might then feel frustration with their employer.

That scenario reiterates the point we are making: the Government’s role in this is vital. Employers will be nervous about giving advice to their employees, and they will very much depend on the Government being able to provide meaningful information, advice and tools to help employees make decisions. I suspect that employers will be keen to direct employees in the direction of Government-provided information sources, rather than ending up in the nightmare scenario of being held responsible for a reduction in child care support. I do not think that any employer would wish to be left in that situation.

Samantha Mann of the Chartered Institute of Payroll Professionals pointed out that information, as well as being provided to employers, needs to be communicated to the media and to professional technical writers, so that they can build it into training courses and advise employers. Have the Minister and her Department factored such requirements into the Government’s communications strategy? Will she say a bit more about that and provide a bit more detail on how exactly the information will be communicated to employers and individuals, who will ultimately be the ones to take the decisions?

There have been various strands of work to attempt to understand the circumstances in which parents will be better off under each scheme. Obviously, such calculations depend on a whole range of changeable factors, but often the work has concluded that some parents will find themselves better off staying on the employer-supported child care scheme unless their child care expenditure is relatively high. Officials have suggested that work is under way on a better off calculator. Presumably the Government have some idea of which scheme different parents will be better off under. What exactly will the better off calculator involve? Will the tool understand and take account of the nuances between the two schemes and how the differences could benefit some parents as opposed to others?

The consultation response included a fairly crude table comparing the two schemes, which suggested that parents will be better off under top-up payments because there is the potential to receive £2,000 in support. On the face of it, that is more than employer-supported child care currently provides. However, that is clearly a rather blunt comparison, and it is pretty useless given the intricacies and nuances of the two schemes, not to mention myriad differences in parents’ circumstances. Can the Minister reassure the Committee that the online tool that is being developed will be far more sophisticated than that, and therefore far more useful to parents?

Some of the witnesses who gave evidence last week urged the Government to be a bit more up-front and transparent about the realities of the new scheme. There is no point in the Government painting an image of all parents being better off and benefiting to the tune of £2,000 per child, when in reality the majority of parents who will focus keenly on the decision tool to decide whether or not they can work will not receive anywhere near that amount of top-up payment—it is likely to be at a much lower level.

In the previous debate on clause 11, we discussed serious concerns about the complexities of and interactions among the various schemes, and how parents’ decisions will be affected. Later clauses in the Bill restrict new entrants to the employer-supported child care scheme so that only those parents who are on the scheme by a certain date next year—I believe that that has not been made clear—will be able to stay on it. The stakes are therefore very high for those currently on the employer-supported child care scheme. Should they come off it and opt for top-up payments? There will be no going back for those parents once they have made that decision, so the key question that the Minister must answer to reassure the Committee is this: how is she going to ensure that parents understand the complexities and the significance of their decision? How will parents be helped to make up their minds? I hope the Minister can reassure us so that we do not have to push the amendment to a vote.

Priti Patel (Conservative, Witham)

I am delighted to discuss clause 12 because it gives me the opportunity to alleviate the gloom and pessimism that has come from the Opposition, and to be positive about how the Government are going to communicate tax-free child care.

Clause 12 sets out the seventh of the eligibility conditions for the scheme, as has been well documented already and as is clear in the Bill. As I said earlier, the new scheme represents a vast improvement on employer-supported child care. By definition, the current scheme is not available to anyone who is self-employed, whereas the new scheme will, for the first time, be available to the employed and the self-employed alike. An even greater flaw in employer-supported child care is that its availability depends on whether employers offer the scheme to their employees. As I have already highlighted, HMRC estimates that less than 5% of employers currently make the scheme available to their employees. People are missing out, but the Bill will do something about it.

On the other hand, the availability of the new scheme to those in employment will no longer be a matter of luck. Instead, provided that they meet the eligibility conditions, anyone can receive support. It is hopefully self-evident that the new scheme marks a massive improvement on what it will replace. As we have said previously, it is only right that a parent should not be able to access Government support twice.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

The Minister’s language goes to the heart of the problem. The Government continue to make blanket statements that parents will be better off under the new scheme, and that it is a better scheme all round. That sends out misleading messages to the lucky people who are currently on the employer-supported child care scheme who will have to make a very difficult decision about whether to switch to the new scheme or stay with their current provision.

Priti Patel (Conservative, Witham)

I disagree with the hon. Lady. The point about tax-free child care is that it opens up the scope for other families to access child care support. We should all welcome that. That is not about rhetoric or language because it is a fact. That is the Government’s mission, not only with the Bill, but through the other measures that we have undertaken and that the Committee has touched on in our discussions about previous clauses.

Maria Miller (Conservative, Basingstoke)

Am I right in saying that 95% of employers do not offer employer-supported child care, which excludes more than half of employees from support? Indeed, it excludes all self-employed parents.

Priti Patel (Conservative, Witham)

My right hon. Friend is absolutely right. That is where the new scheme is groundbreaking compared with the previous schemes that are in the marketplace. Those schemes are restricted, but the new one is about providing support for many more working parents and households, and that should be welcomed.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

The Opposition do not oppose what she is saying about opening up eligibility to additional parents and to self-employed workers; that is all to be welcomed. The point of amendment 8 is to ensure that those who are currently on employer-supported child care schemes are given the information they need to support them in deciding whether to take the new scheme or not. The Minister’s comments should be focused on that, as that is where the concern lies.

Priti Patel (Conservative, Witham)

I will come to those points, but I want to emphasise that the scheme is very positive and is about making child care support more available to families, parents and households who do not currently have access to it.

To ensure that employers and parents are aware of tax-free child care and familiar with the changes to the current arrangements well in advance of its introduction, we intend to communicate it to them using a wide variety of channels. I emphasise again that the scheme is not being designed by officials in isolation; they are working with parents, stakeholders and employers. It is right and proper that we do that to get it right. We are planning to advertise the scheme online, as has been discussed, and to target parents through the range of communications means that are out there—not just digital, but print communications too. Many of the stakeholders that we have engaged with, and those that the hon. Lady has referred to, have a positive role to play in communicating with and engaging parents. We welcome that.

It is fair to say that while we are taking the Bill through Committee, we are almost speculating about what the methodology will be. We aim to ramp up all communications in the spring of 2015 to support the introduction of an online tool that will allow parents to check their entitlement under tax-free child care. As I mentioned in the discussion on clause 11, we have just published draft guidance on the scheme. The aim is to develop the guidance so that it is clear, and so that it is easy for consumers and parents to familiarise themselves with tax-free child care.

For parents who are already in the existing scheme, we want to give them the choice of whether to stay in it or move on to the new scheme. We will publish detailed guidance and an easy-to-understand tool to support them in that decision making. Through that tool, parents will be able to understand their personal details and circumstances so that they can make the choice—it is important that parents make that choice themselves. The two schemes are obviously different, but through that tool in particular, and through communications, it is important that we do the right thing and provide all the necessary information to support parents and help them make an informed choice about the type of schemes that are available and how they can go about making their decision.

As I have said—I will not labour the point again— the new scheme will address many of the failings of the existing scheme. We are keen on, and committed to, ensuring that we do our utmost to secure the communications, deal with the facts and engage with parents so that they can make an informed choice. On that basis, I ask the hon. Lady to withdraw the amendment.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank the Minister for her response, and I hope that she takes on board the complexity that she has potentially introduced for those who are currently in receipt of employer-supported child care, and who will need to make the difficult decision about transitioning on to the new scheme. I appreciate that the Government and HMRC do not yet have all the details of how they will go about getting the information out there and ensuring that parents feel confident about making the choices that they need to make, but I am reassured that we have put our concerns on record and communicated to the Minister and her officials how vital it is that that information is available to parents. We hope that it will be sufficiently sophisticated to help parents make those difficult decisions. We appreciate her reassurance that the issues have been taken on board, so I beg to ask leave to withdraw the amendment.

Clause 13 - Neither the person nor his or her partner may be receiving other childcare support

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Clause 13 sets out the eighth condition for eligibility, stipulating that to qualify, a person, and their partner if applicable, must not be receiving other types of child care support. The explanatory note gives the example of the child care grant as one such other type of child care support that parents will not be able to receive if they want to take up top-up payments. The child care grant supports parents in full-time education courses with up to 85% off their child care costs. However, the explanatory notes state that support schemes in which child care support goes directly to the child care provider will not render parents ineligible for top-up payments. Free early years provision is one such example.

The explanatory notes suggest that no other form of Government child care support can currently be claimed by parents when they make their declaration of eligibility, and the clause makes a similar reference. Given that there is some complexity involved, it would be helpful if the Minister could set out exactly what forms of Government child care support will render parents ineligible as a result of the clause. It would be helpful to Committee members to be fully aware of what support the clause excludes, and it would be certainly be helpful to parents. I hope that she can clarify whether a list will be issued, for example, to ensure that there is clear guidance to parents.

On a more general note, what kind of guidance, whether written or electronic, does the Minister plan to provide so that parents know exactly what is and is not allowed and do not unintentionally fall foul of the eligibility criteria for the scheme? The introduction of top-up payments, although we all welcome the additional funding and the expansion of support to a wider variety of working parents, adds complexity in its interaction with other available Government-supported schemes. We have discussed that at great length, but it would be helpful to have clarity about other forms of Government support. Some reassurance from the Minister in that respect would be helpful.

Priti Patel (Conservative, Witham)

Clause 13 sets out the final eligibility condition, which is that the person and their partner, if they have one, must not be receiving certain other forms of Government child care support on the date when they make a declaration of eligibility. I reassure Committee members that parents will remain eligible for support under the scheme if they access a free child care place as part of their 15 hours a week provision of funded early education for three and four-year-olds, and for two-year-olds from lower-income households. Eligible parents will be able to use the scheme to help pay for any child care that they need in addition to their free entitlement.

It is only right that when a person or their partner receives financial help with the costs of child care from another Government provision or scheme, such as the child care grant, they should not be entitled to further support. That is just one example. There are numerous other schemes run by the Department of Health and the Department for Business, Innovation and Skills, such as the bursary child care allowance. It is fair to say that the guidance that we have discussed in previous clauses is about clarification and information. It is not at all about parents falling foul; it is about the due diligence required when it comes to the eligibility criteria.

The onus is, of course, on the Government to ensure that we are communicating effectively and providing the right guidance and information to highlight what schemes would come under the “other child care support” provision. I hope that Committee members will agree that the clause is fair and necessary, and that it will allow parents to access the child care support that best suits their circumstances. As I have said, it is part of the information side of the Bill and concerns what communications we send out to parents. I therefore commend the clause to the Committee.