My Lords, I would like to speak to Amendments 1, 30 and 31 tabled by the noble Baronesses, Lady Jones, Lady Pinnock and Lady Tyler and the noble Lord, Lord Touhig. I understand the concerns that the noble Baronesses and the noble Lord are seeking to address through these amendments. I share their view that we need to get the funding for the entitlement right. Much of the success of the extended entitlement rests on sustainable levels of funding. However, I do not agree that these amendments are the right way to deliver that outcome. Indeed, it would simply risk delaying substantially implementation for working parents, which has been widely welcomed. This Government have already shown their commitment to ensuring that funding levels will be sufficient to deliver the 30 hours’ free childcare for the working parents of 3 and 4 year-olds. The Prime Minister himself has already committed to an increase in the rate paid to providers; indeed, we were the only party to commit to such an increase during the general election.
We have acted swiftly upon our promises. Within a month of the general election, we brought forward this legislation and committed to early implementation of the extended entitlement for parents in some areas from 2016, so that we can test the provision, which is so important. We definitely do not wish to delay, because although 2017 may seem a long way off, there is a lot to get right. At the June budget, we made financial provision for the extended entitlement, announcing £840 million, including Barnett consequentials, in 2018-19. That is the current estimated cost before the average hourly rate that providers receive is raised and indicates a further commitment by this Government to the delivery of the extended entitlement. We have listened and addressed the concerns of a sector that has been asking for a review of funding for early years, by establishing a review on the cost of providing childcare as soon as possible. As I have said, this is the most detailed national review of childcare that has ever been conducted. It is a very complicated issue, as noble Lords heard yesterday, and we do not believe that we should delay.
I hope we can all agree that it is clear that we share the same objective—one which the noble Baronesses and the noble Lord have set out in their amendments. We, too, want to establish a sustainable funding solution that addresses concerns about the delivery of the existing entitlement and supports providers to deliver the extension to the entitlement. We have no interest in a solution that will not work for providers. Under the last Government we expanded childcare very substantially and successfully and we fully intend to do so again.
Noble Lords raised the question of funding and the funding review in Committee. Understandably, there were many questions about how the review would be conducted and what it would cover. We have sought to provide more information about the analysis of the first findings of the call for evidence, the terms of reference and the policy statement. The Government have also made very clear their intention to publish the final report from the review following the spending review. The findings from the review will feed directly into the spending review, which is imminent, as we all know. That is where decisions about future funding
rates will be made. It is important therefore that the review is complete in order to inform this process. The Budget and the spending review are the appropriate times for the Government to set out their spending plans and Parliament debates those plans at the appropriate time. Legislating for the childcare entitlement is not the time to have this debate.
However, I have listened to concerns raised by noble Lords about ensuring that this Bill is scrutinised by Parliament once the Government’s spending plans are made clear at the spending review. Third Reading will be on 26 October and the Bill will then be sent to the other place in the usual way. It is then only four weeks until completion of the spending review. Although noble Lords would not expect me to be able to comment on the precise timetabling of business in the other place, there are no plans for the Bill to reach Royal Assent before that review concludes. I hope that noble Lords will find that statement helpful.
A delay to the coming into force of key provisions of the Bill will have a knock-on effect on the ultimate delivery of childcare to parents, delaying our consultation process as well as the start of early implementation. The purpose of the review is to provide a robust analytical underpinning for a funding rate that is fair for providers and delivers value for money to the taxpayer.
The review team is considering a significant body of existing and new evidence, such as published research and academic studies, and evidence provided by sector representatives, as well as studies recently commissioned by the Department for Education conducted by a number of consultancy companies. Some noble Lords have met the review team which, led by the department’s chief analyst, is working on two key analytical strands. I think that noble Lords found the meeting yesterday with the chief analyst helpful. I am sorry that the noble Baroness, Lady Andrews, was not able to come yesterday, as I think she would have found it very informative. However, if she would like me to set up a separate meeting for her to meet the chief analyst, I would be delighted to do so.
The first of these two analytical strands looks at providers’ costs and the second considers the supply and demand side of the childcare market. Both are complicated and key to informing our work. The review team recognises that there is huge variation in costs between different providers and between children with varying needs, and the analysis and modelling will allow scenario testing to understand the drivers and consequences of these differences, which will inform our testing in the early-implementation pilot studies.
In Committee many noble Lords raised the importance of the review looking at the costs of providing childcare for children with additional needs. It is absolutely right that it should do so, and we are grateful to those specialist providers and charities that have helped us with this question. We will extend the analysis in the review to consider the characteristics of the families that will be eligible for the new entitlement, including which families it will help back into work or help to increase their income. Details like this are extremely complicated, yet we are clear that they need to be considered carefully to ensure that the system is funded to support all children who wish to access it.
The Government greatly value the opportunity to engage with those who are directly affected by our policies. We have been engaging extensively with all of these groups, both through face-to-face meetings and via other channels. Key organisations in the sector such as the National Day Nurseries Association have welcomed the extended entitlement and have been key partners in the delivery of the review of the cost of childcare. While we are aware of their concerns on the delivery of the extended offer, we have sought their involvement in the development of our policies and the review in particular.
Noble Lords will have seen the report we published on 2 October on the analysis of the responses to our call for evidence. We had over 2,000 responses, the majority from providers—and, as I have said, already over 1,000 providers have come forward, wanting to be involved in the pilot studies. These responses gave us very useful information, which is informing the content of the review. The findings from the call for evidence will help us put into context the work we are doing on understanding providers’ costs. The review team has followed up to gather more detailed information from some of the providers that responded to the call for evidence.
As part of our plans for engaging with stakeholders we have also held a series of round tables over the summer across the country. The round tables have been a valuable opportunity to engage with providers face to face and to tease out some of the issues that were raised in the call for evidence, building on the significant body of evidence that we are considering and looking at the challenges that providers will face in delivering the extended entitlement, while always remembering that the providers would not be doing their jobs properly if they were not asking for more money, because we are, after all, in a negotiation with them.
The childcare sector is healthy, vibrant and growing. It has grown substantially in recent years—by 12% over the three years from 2009 to 2012. It is not a sector that is severely underfunded, and the number of providers offering places under the entitlement has also continued to increase. The market has demonstrated that it is able to respond to the extension of the free entitlement. We just need to look at the rollout of the entitlement for disadvantaged two-year olds, which was introduced in the last Parliament.
I turn now to the proposal of the noble Baronesses and noble Lord for a review to be independent. In coming to a decision about the most appropriate type of review, the timings of different review options, as well as the cost to the taxpayer, were significant factors leading to our decision for this to be a government review with an element of external validation and scrutiny. We determined that the most appropriate approach would be a cross-government review with expert support from outside.
We all know that there is a rigorous and time-bound process supporting any government spending provisions, particularly when increases to particular budgets are involved. Our priority has been to secure our knowledge and understanding of providers’ costs and to inform the discussions on sustainable funding rates during the
spending review this autumn. An independent review would have taken significant time to set up and its findings would, therefore, not have been available to feed in to the spending review. This is a vital point. It was important that we move quickly to set up the review and meet our commitment to providers to increase the rate.
We believe strongly that the review under way strikes the correct balance of needing to move quickly and thoroughly. If we now delay, it would be for a considerable period of time because, as I have outlined, the issues here are complicated and it would take considerable time for an independent review to get its mind round it. This would put under threat the timing of delivering the full offer in 2017, because it would delay the consultation, the regulations and, most importantly, the pilot schemes.
I am very grateful to the noble Lord, Lord Sutherland, for his comments on this. He so ably argued and explained why a delay would be a bad idea, and grasped quickly the fact that it would not be a short delay.
I am grateful to the noble Earl, Lord Listowel, for his comments about the impact that the Bill will have on social mobility, as it lifts more families into work or into more work.
As for the comments of the noble Baroness, Lady Howarth, I know that she is very experienced in the field of local authorities. I found some of her comments yesterday particularly helpful. As for the wider envelope and taking that into account, I do not know about that, but I will take it back. My noble friend Lady Evans will talk later about cross-subsidies, but I can assure the noble Baroness that this review is very comprehensive, taking into account all the issues that local authorities will face, and I will take her points back.
I hope that I have provided sufficient reassurance as to the rationale for the way in which the Government have decided to conduct this review and the robustness of the processes that we are following. As I set out, the outcome of the review will be published later in the autumn, as, of course, will the spending review. It will provide sufficient explanation of the Government’s intentions and the next steps, and will be made available to Parliament. As I have said, there are no plans for the Bill to reach Royal Assent before that review is completed. I am happy to ensure that there will be further opportunity for this House to scrutinise the details of the legislation after the spending review has been published. As I mentioned in my opening remarks, I would be happy to host a further meeting with the funding review team after the spending review, if noble Lords would find that helpful.
As I will outline when we debate a later group of amendments tonight, the Government are proposing that the secondary legislation under the Bill will be subject to the approval of both Houses. This will provide an opportunity for further debate on the details of entitlement, once the funding review has concluded.
I hope noble Lords will agree that placing in primary legislation a requirement to conduct a review, which is already under way, is not necessary and could in fact delay the positive progress that has already been made
if the Government were required to stop and begin again once the Bill receives Royal Assent. I therefore urge the noble Baroness and the noble Lords to withdraw their amendment.