My Lords, I am delighted to be opening the Second Reading debate of the Childcare Bill. I welcome the support for the aims of this legislation and the level of interest and engagement from noble Lords. There is tremendous expertise and experience in this House on these matters. Last night, my honourable friend the Minister for Childcare and I were pleased to have the opportunity to discuss these issues with members of the Select Committee on Affordable Childcare, which has done such important work in this area. I pay tribute to that work and the leadership of the noble Lord, Lord Sutherland, in particular.
The Government’s long-term economic plan is focused on ensuring that working people have a chance to get on, offering them security and opportunity at every stage of their lives. We know that, for many families with young children, childcare is not an issue—it is the issue. Many parents want to go back to work or work more hours, but find the costs of childcare unaffordable. The Government want to reward hard-working families by reducing their childcare bill.
As the Family and Childcare Trust has said:
“The Childcare Bill is great news for working parents and the doubling of the hours of free childcare will make a really big difference to many families. We look forward to working with the Government on the development of the detail around the Bill”.
It is also pleasing to see the support for the Bill from parents. The National Day Nurseries Association’s chief executive, Purnima Tanuku, said that a poll of parents carried out by Netmums shows that the Government’s offer of more childcare is,
“wanted and needed and already eagerly anticipated”.
She said:
“The survey also suggests that reform will encourage more parents to work more hours, bringing the economic boost the Government wants. There could also be a knock-on effect that grandparents, freed up from childcare, may also look for more work”.
Access to childcare is not a luxury but is essential for families in Britain and it is a crucial investment in this country’s economic future. As Vicky Redwood, an economist at Capital Economics, said recently, the plan to double free childcare for three and four year-olds of working parents should help boost employment rates by enabling more parents, especially women, to return to work. She said:
“Fifteen hours is probably not really enough for someone to do even a decent part-time job, whereas 30 hours is, so it could have a disproportionate effect in supporting women who want to go back to work”.
Many in this House worked on the Childcare Act 2006. I pay tribute to the noble Baroness, Lady Hughes, and others in this place. It was game-changing in its time and the world has continued to change for parents and children. The employment rate has increased consistently for women with children aged under five. The recent Labour Force Survey shows that the long-term employment rate for this group has risen over the last two decades from 49% in 1996 to 61% in 2014.
Our business and our economy depend on working parents and those parents depend on access to safe, high-quality childcare. The Childcare and Early Years Survey of Parents tells us that 22% of working couples found it difficult or very difficult to pay for childcare; for lone working parents that rises even higher to 38%. The Government have responded to these challenges. We have made childcare more flexible and affordable so that pressure is taken off household budgets, helping families to be financially secure and able to plan for the future.
In the previous Parliament we increased the free entitlement for three and four year-olds from 12.5 hours a week to 15 hours a week. Take-up of this offer is consistently more than 95%. We introduced a new free entitlement for the 40% most disadvantaged two year-olds and we legislated for tax-free childcare, which will save up to 1.8 million families up to £2,000 per child on their annual childcare bill. We are also introducing universal credit, which includes an element to support parents with their childcare costs, even if they work only a few hours a week. On top of this, we introduced a new entitlement for mothers and fathers to share parental leave.
The Government already invest around £5 billion per annum to support parents with childcare. With this new entitlement working families will receive more childcare support than ever before, creating a saving for families of more than £2,500 a year per child and making more high-quality provision available for parents. The Bill takes that support even further. The Government are delivering their commitment to supporting people at every stage of their lives and reducing the cost of childcare by providing an extra 15 hours of free childcare for hard-working families. I wish to reassure noble Lords that the new entitlement will not impact on parents’ ability to access the current 570 hours of free early education per year
for all three and four year-olds. The Bill will guarantee working parents a total of 1,140 hours of free childcare per year.
The Bill places a duty on the Secretary of State to secure that childcare is available free of charge for qualifying children of working parents for, or for a period equivalent to, 30 hours in each of 38 weeks in any year. Parents will have the chance, and most importantly the choice, to work before they have to pay for childcare. I am sure noble Lords will be pleased to hear that I can confirm that the definition of “working” has been determined to include: working parents with children aged three and four; where parents are working part time or full time, the only requirement is that each parent is working the equivalent of eight hours per week, which is the same threshold as the tax-free childcare scheme; the entitlement can be accessed by parents who are employed or self-employed; and lone parents who are working to support their families.
The Government have also made clear their intention to roll out the entitlement in certain areas from September 2016 in advance of full implementation from 2017. The regulation-making powers in the Bill enable the Secretary of State to have sufficient flexibility to do so. Noble Lords have my reassurance that it is, of course, of paramount importance to the Government, as it is for parents, that the additional hours are delivered in safe and secure settings. We have improved early years qualifications and encouraged high-quality entrants to the profession, and it is encouraging to see that in the recent DfE Childcare and Early Years Providers Survey, between 2008 and 2013 the proportion of full daycare staff with at least a level 3 qualification grew from 75% to 87%. By improving the quality of those entering the workforce, parents can have confidence in the people supporting the learning of our youngest children.
The quality and affordability of childcare has been of great interest to this House, notably the work of the Select Committee on Affordable Childcare, and I was delighted to discuss this with members of that committee last night and the Minister for Childcare, Sam Gyimah. In addition to increasing the available hours of free childcare, we recognise that it is crucial that parents are able to easily access information about childcare and other services in their area. We want to ensure that parents are able to access such information through a range of sources and this is why, through the Bill, we will require local authorities to publish information which will support parents to make informed choices about childcare. Let me reassure noble Lords that the childcare sector is healthy, vibrant and growing. Eighty-three per cent of providers are rated good or outstanding by Ofsted, up from 69% in 2009. There are around 230,000 more childcare places than in 2009—a 12% increase—and there has been a significant increase in the take-up of childcare provision in low and middle-income areas. The noble Baroness, Lady Jones, has previously quoted a figure of 40,000 fewer childcare places between 2009 and 2014. I would like to clarify that this figure excludes the growth of childcare provision in the maintained schools sector, which has contributed greatly to ensuring that parents have access to flexible, affordable and high-quality childcare.
Over the last five years we have worked closely with the profession to help raise its status, and as a result the number of staff has increased, they are better paid, and more providers are rated good or outstanding. However, we are not complacent. That is why we are committed to working to raise the status of the profession further and increase the average funding rate that providers receive—a move that has been welcomed by the providers. Noble Lords will understand that it is important that the hourly rate for the childcare entitlement strikes the right balance between being fair for providers as well as delivering value for money to the taxpayer. We are addressing the concern that has been highlighted by the sector and have already committed to increasing the average funding rates. To get this right, my honourable friend the Minister for Childcare is leading a review of the cost of providing childcare. I am delighted to confirm that, as he set out in the other place yesterday, this is already under way. It is extremely important that we get this review right and so we will appoint external experts to contribute to and validate the review. So that the views of providers and parents are reflected, we have issued a call for evidence which can be accessed via Directgov. The review will report in the autumn.
The system needs to work for parents. It is of the utmost importance that we take the time to listen to the views of parents and providers, and we will be consulting them about the features of a system which best meets their needs. The additional entitlement will be delivered in a way that is flexible, affordable and high quality for parents, and the Bill enables the Government to set out further details in secondary legislation once we have listened to parents and providers. I intend to share more details of that consultation with your Lordships in Committee.
I hope that the principles behind the Bill are ones that everyone in the House will support. The measures in the Bill will have a direct and significant impact on the lives of children and families across the country so it is right that it is subjected to the most thorough scrutiny and debate. I look forward to listening to the debate and I look forward to working with your Lordships on the Bill.