Free Childcare: Costs and Benefits

I beg to move,

That this House has considered the costs and benefits of free childcare.

It is a pleasure to serve under your chairmanship, Mr Davies. I probably ought to declare that I am father to 14-month-old Ophelia and expectant father to another child, which is on its way, so I have a vested interest in this topic. Somewhat ironically, a number of colleagues asked me to express their disappointment at not being able to make the debate, given that this is half-term week. This week was supposed to be a parliamentary recess, but the Government cancelled it, so the debate was drawn for a time when lots of colleagues have to look after their children.

The motion refers to free childcare. Clearly there is no such thing, given that someone will always have to pay—parents directly, the state or a bit of both—but the premise of my argument is that childcare that is fully funded by the state should be seen as a redistributive investment rather than a cost. Such an investment could create a more productive, more equal and happier country due to the contribution that fully paid childcare can make to the economy, the impact it can have on tackling class and gender inequality, and what it can do for family happiness.

It is worth summarising where we are today. I think it is fair to say that most parents, if not all, would say the childcare system is far too confusing. Someone with a two-year-old child can get 15 hours of childcare per week if they receive certain benefits or have a child with disabilities, or if the child is looked after by the local council, but parents who do not fit into those categories have to fund the equivalent childcare or not be in work to look after their children. For children aged three or four, parents can get 15 hours of childcare per week until reception class for up to 38 weeks each year, and an additional 15 hours per week can be claimed by a single parent in work, a couple of parents earning less than £100,000 a year—that is, of course, a generous income bracket—and those in some other technical situations.

On top of that, we also have childcare vouchers, tax-free childcare, working tax credits and universal credit. Childcare vouchers are claimed through work, but the Government are phasing them out. Tax-free childcare involves a prepayment top-up by the Government, with parents using an online system to make payments to registered childcare providers, but is only for those who do not receive childcare vouchers. People on low pay can claim universal credit or working tax credits, but doing so means they cannot claim tax-free childcare.

All those schemes rely on someone receiving a regular income from employment, creating difficulties for those who rely on commission—one of my constituents, who is an estate agent, found it very difficult to evidence her income to fit into some of those categories—who are in flexible work or who are self-employed. I recognise that the Government have made welcome changes to tax-free childcare for those in self-employment, but those difficulties come up frequently in my constituency surgeries. That is especially true for tax-free childcare, which has been mired in IT problems since its launch. Parents now have to take the time—every three months, I think—to log in, register their children and make payments into the system, and must find a childcare provider that is able to receive money through the system.

There were significant problems, which have now been fixed, for people with children with disabilities. Those people get a 40% top-up rather than a 20% top-up, but that was not calculated properly on the system. Constituents in well-paid jobs told me they were having to think about selling their car in order to pay for their childcare and stay in work. That just cannot be right. Not only is the system too confusing but parents do not use it because it is too much hassle. Only last week, we heard that only one in 14 eligible families claim their tax-free childcare. The system is too hard to use—it is too confusing—and parents are not using it.

All that is in the context that childcare is an enormous cost in the family budget. In 2014, which I appreciate is now some time ago, the Family and Childcare Trust conducted research into the cost of childcare across the country and concluded that, on average, families pay about £10,000 a year. That cost will now be higher, because of welcome changes such as having to pay the living wage and other costs faced by childcare providers.

Even with families paying such large costs, however, the system is still not sustainable. Childcare providers tell me that they cannot afford to make ends meet without applying additional costs to families, on top of the core costs of childcare. A Twitter follower of mine made the point that, under Government-funded childcare, and obviously with the right ratio of staff to children, her childcare business receives only £3.84 per hour per child. She says she is on the brink of closure. We have a system that is too complicated, that parents are not fully using, that is not sustainably funded and that is bringing the childcare system to the brink of closure.

My hon. Friend is making an eloquent speech on the realities that parents face. I congratulate him on his wonderful news. The situation in Wales is different, and I may come back to that in a later intervention.

I have anecdotal evidence that, in order to reduce the pressure on family budgets, lots of my friends who are our age and who have children find it more cost-effective to work part time or to rely on elderly relatives—not just grandparents but great-grandparents in some cases—for childcare. Does my hon. Friend agree that, in the long term, regardless of which Administration lead on childcare, that is simply not sustainable?

I agree with my hon. Friend and thank him for his intervention. It has been shown that parents—especially mums, as I will come on to in a moment—often go from working full time to part time and do not return to full-time work until their children are in primary education. They are out of the labour market for years when they may wish to be in it. That is a systemic issue associated with the pressures of childcare.

I am not moaning about looking after children; I enjoy looking after my children. However, the fact of the matter is that I also want to contribute and to have a career, as does my wife. We should not have to live in a system where having a career is a trade-off between one and the other; where the childcare system is not fit for purpose; and where our way of life does not allow us fully to contribute to the success of the economy. The system is ripe for reform, not only so that we can help families or spend taxpayers’ money more efficiently but to create a country in which we can all be happier and more productive.

Moving on to the economy, OECD research shows that moving to a culture in which men and women are able to share parental duties, without mum or dad trading off who looks after the child, and therefore creating equal participation in the labour market, would increase GDP by about 10% by 2030. Under their current policies the Government seem to be in the mood to surrender GDP growth in the coming years, so reform of the childcare system may be a welcome contribution to increasing GDP.

This issue is particularly relevant to parents of children with disabilities, who find the system even harder and more expensive. I am proud that the Flamingo Chicks charity in my constituency teaches ballet to children with disabilities because there was no such provision. It not only provides excellent services for young people in Bristol and across the country—it is a growing organisation—but does research, too. I hosted the charity in Westminster a few weeks ago, when it launched research showing that only one in 10 dads feels able to tell their employer that their child has a disability. They fear telling their employer because they think that it might impact on their career. How sad is that? People ought to be able to tell their employer that they need to claim their right to flexitime or childcare leave in order to care for their children. In order to maintain their career, they should not feel pressured into having to put their job first and hiding the fact that they have children who need to be looked after. That is entirely incorrect.

I congratulate my hon. Friend on securing the debate. We should target childcare at the poor more comprehensively, because as he has described, when children arrive in school they are sometimes not ready—they are not even properly toilet trained and they cannot use a knife and fork. Does he agree that we should lament the number of Sure Start centres that have gone to the wall recently? They provided the foundation for better preparing those children for school.

I agree entirely. I am pleased that, in Bristol, we have managed to keep our children’s centres open by coupling them with nursery schools in the majority of cases, and by creating a funding environment that means we have not needed to close them.

We do not need to look far from my constituency, however, to see how many centres have closed around the country under the current Government. I wish that my predecessors in the Labour Government had thought about the scheme sooner, because they introduced it late in their time in government. It was the right thing to do and I hope that we will be able to reintroduce such schemes under a future Labour Government. The evidence is clear: intervention at an earlier age is essential for tackling the inequality gap.

I will touch on maintained nursery schools and the link to childcare.

My hon. Friend talks about the closure of centres across England, but of course things are different in Wales. In my constituency, two new Flying Start centres have opened in the last two years. I was previously a cabinet member for education in a local authority in Wales and we continued to open such Flying Start centres.

All the evidence from Welsh Government analysis and local government analysis shows that early intervention works. It can be clearly shown that, where early intervention takes place around potty training, interaction with adults and early learning, as my hon. Friend the Member for Stockton North (Alex Cunningham) mentioned, it makes a huge difference. Things can be done differently and are being done differently by the Labour-led Welsh Government.

I declare an interest because there are two islands within my constituency—Steel Holm and Flat Holm. One of them officially belongs to Wales, so I class myself as a Bristolian and a Welsh MP. I take great pride in joining my hon. Friend in recognising the achievements of the Labour Government in Wales and I long for such achievements in Westminster too.

One issue with the Sure Start centres was that some data suggested that they were being utilised most by more middle-class families, although the policy intention was to tackle the inequality gap that I have referred to. My argument is that a fully funded childcare system, because it is considered a public service, is not seen as a nanny state or someone trying to intervene to tell people how to parent; it is just available and it is what it is. We could have a more mainstream application of early years intervention in this type of system, which would tackle some of the challenges of the past.

I return to my soapbox on maintained nursery schools, which I and my hon. Friend the Member for Bristol West (Thangam Debbonaire), and other hon. Members, have talked about frequently. We have some excellent maintained nursery schools in Bristol, which have the costs of and are regulated as schools, but which are funded as private childcare providers. Some of the Minister’s colleagues have recently responded about them in the House of Commons.

The evidence from maintained nursery schools clearly shows that putting in the intervention and assistance before mainstream school has a huge impact on bringing those children up to the average when they get to mainstream education, which helps to tackle the inequality gap. We should take that evidence seriously and apply it to our public policy, to show that it could be done not just in cities and regions that still have maintained nursery schools—they do not exist everywhere in the country—but across all the regions and nations.

I will impose an advisory time limit of nine minutes.

It is a pleasure to serve under your chairmanship, Mr Davies, and I congratulate the hon. Member for Bristol North West (Darren Jones) on securing this important debate. I am pleased to speak today, particularly following the debate that I secured here last week on nurture care and early intervention in primary schools, which feeds nicely into this subject.

Early years education and nursery provision are crucial to ensuring that every child has the best start in life. Last week I spoke about that with reference to primary schools, although I said that the need for such support starts even earlier. As the hon. Gentleman said, free childcare is considered important because it allows parents to return to work and—for me, this is even more important—it ensures that children receive a good educational foundation. Without the right support in early life, children suffer, challenges become more complex, and costs grow. That is why I am an advocate of early intervention and proper support for disadvantaged and troubled families.

Across Mansfield and Warsop many low-income families rely on free childcare, and would certainly benefit from greater support with those costs. We have a relatively high take-up of the free childcare offer for two-year-olds, but I continue to have concerns that those most in need do not take up such support. The financial viability of those free places is a huge challenge for nurseries. Costs for nursery owners have increased because of payroll costs and other elements of inflation, and the funding offered by the Government to support childcare providers has not increased proportionately. That issue is consistently raised with me by local providers, and one local nursery owner also raised a valid point about wages and staffing.

In general, nursery staff are not particularly well paid, and progression can be unclear. That means there is a high turnover of staff, and providers cannot retain their best and most experienced people. After a few years working in childcare many people leave the sector and go elsewhere looking for better wages, and when we discuss the costs and benefits of free childcare we must also consider those aspects. I know from my experience with my now five and two-year-old boys that the attachments children make to nursery staff are important and emotional. My boys come from a safe and loving home, and it stands to reason that for children from the hardest backgrounds with problems at home, those relationships and the structure and safety of nursery are even more important. High levels of staff turnover are not helpful in delivering that continuity of care.

The hon. Gentleman makes a good case for those who are less advantaged than most of us. Does he share my view about Sure Start centres? They were developed to provide outreach, yet we have lost a lot of that. Will he encourage the Minister to encourage greater outreach into those communities, as we had under Sure Start?

That is an interesting prospect. Sure Start centres, and the ideas behind them, are positive, and we need that early support and intervention for families, and that hub for them to receive such support. I do not know whether Sure Start centres are always the right place—as the hon. Member for Bristol North West said, take-up at those centres is often by middle- class families and people who perhaps have the social capital to go out and find that support, when perhaps it could be more focused and targeted on those who most need it.

It is good that we are spending more than any other Government on supporting early years education at around £6 billion a year by 2020, and it is positive that more than 90% of all three and four-year-olds are accessing Government-funded early education. We are heading in the right direction in many respects, but we need to look more carefully at the impact of such provision, especially when it comes to the existing childcare offer. The Government’s policy of 30 hours of free childcare amounts to just over 1,100 hours of free childcare a year for many families, including my own—indeed, I count down the days until September when my youngest will be eligible for free childcare, and all the holidays I will be able to go on with that extra money. That perhaps identifies the problem—the funding should not necessarily pay for my holidays, which might be what it is used for.

The Education Committee, which I have the privilege of sitting on, noted in our recent report, “Tackling disadvantage in the early years”, that the policy might have entrenched inequality, rather than helping to close the gap. The Committee argued that the Government should reduce the upper earnings cap for 30 hours of childcare, the extra funding providing more early education targeted at the most disadvantaged children.

In 2016, a two-parent family on the national living wage with an annual wage of £19,000 a year, received 6% more in childcare support than a two-parent family on £100,000 a year, but now the former receive 20% less childcare support than the latter, because support has increased for wealthier parents, not the other way around. That is according to the Education Policy Institute. There is a balance to all such things. An important element is to provide value and support for those in work, so that people feel the benefit of work, but perhaps support has moved slightly too far from prioritising children who most need early intervention and support from the education system.

I congratulate the hon. Member for Bristol North West (Darren Jones) on bringing this issue to the Floor for consideration. I deal with this issue every week in my office, and in particular with my staff. I will give the Chamber an example of how the matter works in practice.

I have six staff, five of whom are ladies, so the issue comes through clearly. They are of differing ages, though I will not mention their names or refer to their ages, because that is something we do not do, if we want to live well. My part-time worker is in her 50s and is a grandmother. I allow her flexibility to change her days so she can mind her grandchildren and come into my office on the days or mornings that she does not have the children. That is a practical arrangement that works for her and for me—that is important.

A further two staff members in their 40s have children in the last year of schooling, so they are able to work their normal full-time hours. It is easier when children attend secondary schools and further education. I also have a staff member in her 20s who is due to marry next year, and she has informed me that I should be prepared for her maternity announcement the following year, as she wants children right away after she gets married. Again, I support her wholeheartedly in that.

My parliamentary aide is in her 30s, and has a three-year-old and a four-year-old. Her childcare arrangements are more pressing. They are all key members of staff, but she is in particular. When she returned to work after her second child, we came to a flexible working arrangement that allows her to work at home on Tuesday, Wednesday and Thursdays, when I am at Westminster.

In practice, when my aide’s kids are at nursery in the mornings, she works away for me, and when her husband gets home at 6 pm, she works on. She is my speech writer, preparing many of my speeches, so she probably has little to do—I jest, because I keep her busy. I talk the speeches over with her, but cut and add to them as I progress through the time. She is kept very busy, and her workload means that I sometimes see work coming through to me at 1 o’clock in the morning. That is a fact; it is how she does it with her flexible hours—I am very fortunate to have her working for me.

Thank you very much. We have still got a lot of time.

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

I, too, congratulate my hon. Friend the Member for Bristol North West (Darren Jones) on an excellent speech. It is a shame that he was not around a few years ago, because he could have been on the Bill Committee that considered the Childcare Act 2016. He would have been a tremendous asset at that time.

Although I would prefer to see a Labour Government delivering big on childcare, I, for one, recognise how the last Tory Government built on the legacy of the Blair-Brown Government—they most certainly did. I know that they like to pinch our policies, but I am always happy when they pinch the right ones.

I am saddened, however, that despite the Government’s policy of expanding childcare, which was progressive and actually made some progress, we are in danger of failing to land the kind of childcare provision that we want, because the implementation has fallen short. It has fallen short because the Government failed to engage properly with the sector originally. They failed to recognise the challenge they were facing in building capacity; they failed to understand the need to develop a sector that would be even more professionally led; and, despite the very welcome cash that came with the policy, they failed to recognise the need for professional staff to be paid a decent wage for looking after all our children.

I am a dad and a grandad, and my sons and grandson are the most precious of precious people to me; I am sure that there is not an MP here in Westminster Hall, or across the Estate, who does not think of their family in that way. Yet as a nation, we seem content to leave those most precious young members of our families to be looked after by people who are often on the minimum wage and discontented with their working lives. The hon. Member for Mansfield (Ben Bradley) referred to that issue in some detail, and I am sure that he agrees that we need much more action on it.

I call Thangam Debbonaire. I will call the first of the Front Benchers at 10.30, so you have a reasonable amount of time.