PARLIAMENTARY DEBATE
Childcare: Affordability and Availability - 20 December 2022 (Commons/Westminster Hall)

I beg to move,

That this House has considered the affordability and availability of childcare.

It is a pleasure to serve under your chairmanship, Mr Hosie. I am eternally grateful to have secured—to have been granted—this debate so that we can address the important issue of childcare affordability and availability, because the simple reality is that this Government are seriously failing children, parents and businesses through the chronic lack of affordable and high-quality childcare in our country. My Slough constituents are far from impressed. Indeed, the reason why I put in for the debate was to express their anger and to try to express to the Chamber just how frustrated many individuals, not just in my constituency but across our country, are. As far as I can tell, Ministers have little interest in doing something substantial and radical to rectify this. However, the Government’s usual lack of effort and ambition, as frustrating as it is, does not mean that we should not at least try to persuade them that they need to up their game.

We know that the first 1,001 days of a child’s life are integral to their development, and evidence shows that improvements in children’s outcomes in both the long and the short term are strongly associated with the quality of their early childhood education and care. The Local Government Association has told me that by the time disadvantaged young people, in particular, sit their GCSEs at the age of 16, they are about 18 months behind their peers, and about 40% of that gap has emerged by the age of five. It is therefore crucial that we provide the best possible environment in which to bring up children.

I welcome the case that my hon. Friend is making, and congratulate him on securing the debate. Has he seen the report published today by the Select Committee on Work and Pensions on support for childcare costs in universal credit? It highlights two big problems. One is that people claiming universal credit have to pay the up-front costs of the first month’s childcare; they have to pay the first month’s childcare costs themselves and are reimbursed later. For some people, finding such a large sum of money is simply not possible. Secondly, the cap on monthly childcare support is the same as it was in 2005; it has not been uprated, so it nowhere near covers the costs of full-time childcare support.

I am extremely grateful to my right hon. Friend the Chairman of the Work and Pensions Committee, not only for that impressive intervention but for his tireless, persistent work in this area to try to shine a light on the injustices. I sincerely hope that the Minister and the Government will look closely at the findings in the Select Committee report and take action accordingly.

Since this Government came to power in 2010, parents of children under the age of two have had to deal with a 60% increase in the cost of a part-time nursery place. Average earnings have grown at only half that rate over the same period, putting ever greater pressure on already squeezed family budgets. As one Mumsnet user wrote:

“When we started using nursery 9 years ago it was £45 a day. Now the same nursery we use for our…3 year old is £90. He gets 30 hours free in January but they…will also be putting fees up then. Honestly when he goes to school we will have £1,000 extra”

to pay

“a month. It’s more than our mortgage.”

That is not an isolated case. A joint survey by Mumsnet and Pregnant Then Screwed found that close to two thirds of parents are spending on childcare as much as, or even more than they spend on their rent or mortgage. Shockingly, one in four parents is cutting down on food, heating or clothing in order to afford sky-high childcare costs.

What are parents doing in response? Increasingly, they are being forced to take themselves out of the labour market. Under this Conservative Government, a day’s pay is not worthwhile for a parent needing childcare.

Sadly, women are often hit hardest by the Government’s failed childcare system. Only three in 10 mothers with a child aged one work full time, and three in 10 mothers with a child under 14 say they have reduced their working hours for childcare reasons. The Office for National Statistics found that the number of women who are not in work in order to look after family has risen by 3% in the past year alone. That is the first sustained increase in at least 30 years, reversing decades of reduction. Women who are reducing their hours, forgoing promotions or even leaving work altogether due to unaffordable childcare suffer lasting financial consequences, and that widens the gender pay and pensions gaps.

This is also a huge issue for business. At a time when so many vacancies are going unfilled, this motherhood penalty equates to 43,000 women dropping out of the workforce in the last year alone. It is no wonder that even the Confederation of British Industry is calling for reform, highlighting that childcare costs in the UK are now some of the highest in the OECD and that our economy is suffering from losing £28 billion of economic output every year, because women are being forced to choose between their careers and their children. We could add a whopping £57 billion to our GDP simply by increasing female participation in the workforce—something that greater childcare provision would help achieve.

On this Government’s watch, the childcare system is failing families, women, businesses and our economy. I would therefore think that addressing it was a priority, especially given how formative these early years are for our children, so why are the Government not taking decisive action to fix this mess? They tried to convince us that they were by announcing the 15 and 30-hour free childcare entitlement, alongside their commitment to the tax-free childcare scheme. As with so many other Conservative policies over the past 12 years, even this small stepping stone towards improving the accessibility of childcare has failed to deliver the bare minimum. As I pointed out last month in the Chamber, the Government, not satisfied with hammering parents, women, businesses and the economy, have set their sights on making it too expensive for childcare providers to operate by consistently underfunding the 15 and 30-hour entitlement by more than £2 an hour, thus forcing providers to use their own resources to plug the gap and further driving up the cost of childcare. Meanwhile, Ministers have spent a whopping £2.37 billion less than they allocated for their flagship tax-free childcare scheme in the past four years alone.

Rather than ensuring we have even more childcare providers to meet the significant demand for childcare across our country, the Government have created an environment in which 4,000 childcare providers closed between March 2021 and 2022—that is 4,000 providers in just one year. We have childcare costs rising twice as fast as wages and businesses struggling to fill vacancies while women who want to work cannot because of childcare. Despite the demand, thousands of childcare providers are closing while the Government underfund the sector. That is this Government’s record.

As a country, we can and must do much better. The Government must recognise that families need support from the end of parental leave right through to the end of primary school. While more investment is needed, surely as a minimum the Government should stick to their original commitments. I ask the Minister to commit to investing in the childcare system the more than £2 billion her party has pledged. During this cost of living crisis, families are already struggling, so when will the Minister step in to ensure that parents are not forced to sacrifice a meal or a night of heating over the winter months to pay for their child’s care? Maybe the Government would be in a better position if they had developed a long-term plan. With five Education Secretaries this year alone, the Minister is probably just happy to get through the year without any more chaos. However, families across our country should not be made to suffer because of the Government’s continued incompetence.

Parents need the introduction of universal primary breakfast clubs for every primary-aged child in England, which I look forward to hearing more about, I hope, from the shadow Minister. That would help disadvantaged pupils, in particular, to access additional support from staff and friends, allowing them to catch up on learning. Where is the Government’s commitment to that? Instead of cutting hundreds of Sure Start centres, the Government should be investing in local children’s centres and helping parents with young families in some of the most disadvantaged areas in our country to get them the best possible start in life. Why aren’t they?

The hon. Gentleman is making an excellent speech. This is a vital debate to have in the Chamber at this time. Does he agree that for very young children, nursery might be the first place where teachers can pick up on special needs and then help to refer them for autism diagnoses? People often wait far too long to receive that diagnosis. I refer hon. Members to my entry in the register, but I was shocked to hear that training placements for educational psychologists may be being funded to a lesser degree in the future, and that some educational psychologists are actually having to fund their own placements. Does the hon. Gentleman agree that it is vital that the Government address some of those concerns on the part of the profession, and that they also ensure that children with autism and special needs have the support that they need at the earliest stage in their childcare?

I thank the hon. Member. She has made some excellent points, no doubt based on her experience. Indeed, we know that those early years are incredibly important for the child, but also for teachers, or those in authority, to pick up on certain issues, whether it is a child being on the spectrum, or other special educational needs. That issue comes up again and again in my constituency, so I am incredibly grateful to her for that intervention.

Given that so many childcare providers have been forced to close on this Government’s watch, is it too much for my constituents, and parents across the country, to expect that there will be childcare places locally? I do not think so. What are the Government doing to not just halt but reverse the decline in the availability of childcare?

As we can see, the current picture of childcare in England is far from ideal, and it does not seem as if this Conservative Government are willing to take any meaningful steps to change that. Instead, in the face of all those issues, they are happy to sit on the billions of pounds that they have pledged to the sector, while hoping that no one notices. Well, hard-working families across our country are noticing the impact and deserve better. If the Government really want to build a better future for Britain, they must start by looking after those very people who are Britain’s future.

It is a pleasure, once again this afternoon, to serve under your chairmanship, Mr Hosie. It is also a pleasure to debate issues around childcare for the second time in fairly quick succession in Westminster Hall. I think that is helpful because it shows that, across the Chamber, as well as from the hon. Member for Slough (Mr Dhesi), there is a great deal of interest in how we improve the care of our youngest citizens.

I thank the Minister for the personal interest that I know she has taken in this issue. It was a pleasure to welcome her to Harefield Infant School in my constituency, and to hear from a headteacher who is also very much engaged with the local children’s centre about the way in which parents interact with it—the journey that they go on from the moment their child goes through the door of the children’s centre, how they access childcare in the local area, and how the child develops to be, hopefully, school-ready. The headteacher also described how such settings, by working together in partnership, can address the kind of emerging issues that we have heard about. That may include special educational needs and disabilities, and safeguarding issues, which often first come to light when the child is in a formal setting.

It is perhaps worth my framing my contribution to the debate by saying that I have had the privilege of being a lead member for children’s services in a local authority, both under the previous Labour Government and in the years since 2010, with the election of the coalition and then a Conservative Government. I have had the opportunity to see how childcare policy in the UK has developed over those years. I think it is fair to say that in the Labour years, when attention to childcare was a relatively new thing from Government, the key focus was very much on the availability of the cheapest possible childcare in order to encourage women to rejoin the workforce.

Since the coalition was elected in 2010, there has been a much greater focus on not just availability to encourage people to go to work, but the quality of what happens in those settings. Examples of that include the development of the childcare workforce and a focus on qualifications, on the quality of the physical environment in particular settings, and on the way in which Ofsted regulates those settings to ensure that every childcare placement is not just safe, but an environment in which children can thrive. As the parent of two very young children—I am sure the hon. Member for Slough would acknowledge this—I can say that children are expensive, and delivering quality for them is even more expensive.

It is helpful to reflect on a number of the policies that the Government have introduced in the past few years that have gone to the heart of extending both the availability and the affordability of childcare. Both from a policy perspective and as somebody who has been through this as a parent of young children, I welcome the fact that the Government have focused on direct support for families and, particularly, working families through the advent of the tax-free childcare policy. Although it is right that the Government are now focusing on a programme to raise awareness of that policy among working parents and to increase its take-up, it has been enormously helpful in making access to childcare much more affordable for working parents.

There are some technical issues that could be addressed. The decision to use National Savings and Investments as the payment processing organisation for tax-free childcare accounts generally means that it takes a long time for a parent’s contribution to make its way to the childcare provider. That makes the process more difficult than a faster payments processing provider would when changes of arrangements need to be made at short notice—for example, when there are school holidays and changing work patterns. None the less, treating childcare in the same way as we incentivise people’s personal pensions or their saving to buy their first home, for example, by giving them tax relief is an important, valuable step. It is also reflected in the direct support that families receive through universal credit, although the points that the hon. Member for Slough made are important to bear in mind. The way in which that system works is worth considering.

Let me turn to the broader context of availability. For many years, local authorities have had a duty to secure both the availability and the supply of childcare in their local area, and to play a role in developing that market. It is important to be clear that local authorities are not the providers, but if we look at the London Boroughs of Hillingdon and of Harrow, which serve my constituency, both authorities have a families information service that parents can contact to find out where they can access a childminder or a nursery placement in their local area, and also access information about other issues to do with childcare. For example, if a child has special educational needs or disabilities, their parents might need to access a specialist organisation to guide that child on their journey, and the families information service can point them in the correct direction.

Many families will be able to access a proportion of free hours that increase as the child gets older. That does not just provide an effective subsidy to the hours that would otherwise be paid for by working parents, enabling them to top up from their tax-free childcare account, but means that a greater proportion of children in the lowest-income households can access that free childcare early. Those of us who are parents will have seen from the recent communications from our children’s schools that as we go into the Christmas holiday period, we are being made aware of what the local authority and other organisations are doing. Families that are eligible for the holidays activities and food programme are being alerted to it, and we are being alerted to what local authorities are doing about safeguarding through our schools, so that we know what to do should we have those urgent needs, or should our neighbours, friends and acquaintances require that support as the holidays get under way.

Moving towards a conclusion, although it is easy to criticise, we need to recognise that the focus on how we spend the money and how we ensure the highest possible quality in our nurseries and among our childminders has been a big benefit to childcare in the UK. The Government’s announcement of a substantial investment in the early years workforce is an important step in the right direction. The focus on Ofsted as the regulator of quality is significant, as is the developing evidence base from organisations such as the What Works centres funded by the Department for Education, which look at the best means of intervening to help children in the earliest years of their lives.

With respect to the ability to secure new infrastructure where a lack of buildings or physical capacity is a challenge—we aired that during the debate on the Levelling-up and Regeneration Bill last week—capital contributions by developers under section 106 of the Town and Country Planning Act 1990 can be used to create new early years and childcare facilities where that is a priority for a local area. Although that guidance is owned by the Department for Education and not the Department for Levelling Up, Housing and Communities, it remains in place so that new infrastructure measures envisaged in the Levellinyg-Up and Regeneration Bill will include the ability to use that money in the same way local authorities might use it to support police and law and order organisations in their local area.

It is clear that a number of different resources and steps are available on the capital side to help with the physical creation of new capacity. It is also possible to invest in the workforce to improve the quality of what is available, and introduce a broader set of policies with direct support to ensure that working families and parents have childcare available to them.

I will finish with a plea, once again, to recognise that, although research overwhelmingly shows that the money we spend in the earliest years has the biggest impact on outcomes in children, the way in which we distribute education funding still favours much older children. There needs to be a national debate about the fact that although everybody pays attention to GCSE results, it is the money spent on nought to five-year-olds that gives children the best possible chance when they are 16 and 18 and as they go into adulthood. We need to look at rebalancing the way we spend that money over time, so that we spend it where it has the greatest positive impact.

It is a pleasure to see you in the Chair, Mr Hosie. I congratulate my hon. Friend the Member for Slough (Mr Dhesi) on securing this important debate. The availability and affordability of childcare is a pressing issue for families right across our country, and it is right that we debate it in the House.

I am grateful to all the hon. Members who have attended this debate, especially the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), who has spoken from his extensive experience as a former Cabinet member for children’s services. I am confident that had this not been the final Westminster Hall debate on the last sitting day before Christmas, more colleagues would have joined us. I know that this issue is presenting itself in Members’ inboxes and surgeries in many parts of the country.

Childcare is vital social infrastructure. It helps parents to work, it delivers early education to the youngest children and it underpins the growth of our economy. However, under this Government we have seen the cost of childcare rise, increasing numbers of providers closing their doors and an increasingly complex funding system for parents to navigate, resulting in low take-up of both subsidised two-year-old places and tax-free childcare.

The costs are eye watering. The latest release from Coram reports that the average cost of 25 hours a week in a nursery in England for a child under two is over £140. The same amount of time with a childminder is over £124. The cost for a child of two and over is more than £135 at a nursery, and £122 with a childminder. Those costs are averages so they can be significantly higher, particularly in London. Analysis by the TUC estimates that the cost of childcare for a child under the age of two has increased by £2,000 a year on average since 2010.

A survey by Pregnant then Screwed of 27,000 parents found that 62% reported that their childcare costs are now the same or more than their domestic costs, rising to 73% for lone parents. More than four in 10 mums reported that childcare costs had made them consider leaving their job, and 40% said that they had to work fewer hours than they would have liked because of the costs of childcare. Another survey found that almost a third of new parents said that the cost of childcare was preventing them from having any more children.

The Women’s Budget Group estimates that 1.7 million women are being held back from taking on more hours at work due to the cost of childcare, and recent data from the Office for National Statistics has shown that for the first time in decades, the number of women leaving the workforce to look after family is increasing—it is up by 12.6% in the last year. The unaffordability of childcare is also placing strain on grandparents, many more of whom are now giving up work or reducing their hours—not simply to spend time enjoying their grandchildren but to step in effectively to provide formalised childcare.

The Government’s funding model is undoubtedly part of the problem. Parents can access help with childcare costs from a wide range of sources, depending on their circumstances and the age of their children. The subsidy for two-year-olds is means-tested, but some of the subsidy for three and four-year-olds is applicable only to working households. Some funding is provided through the benefits system, and some through the tax system. There is significant unclaimed funding for childcare because the system is so complicated and confusing for parents to navigate, and the Work and Pensions Committee report published today highlights serious flaws with the universal credit childcare costs element, which really is not working for the families who need it. The amount of funding claimed through tax-free childcare is far lower than was previously spent through childcare vouchers, and there is similarly low take-up through the benefits system.

The system does not work for the providers of childcare either. The Government have admitted that they do not pay providers what it costs them to provide the so-called free two-year-old and three and four-year-old places, so they have effectively created a cross-subsidy model for childcare. This drives up the cost for parents of under-twos and leaves childcare providers in areas of deprivation, where parents of very young children simply cannot afford to pay higher rates, really struggling. It also forces nurseries to charge parents for additional costs, such as for particular activities and for lunches, which really should not be the case when parents are already paying so much for the core costs of that provision. Providers are facing rising energy costs, wage bills and food costs, and many are finding it hard to recruit the staff they need, which has led to a tsunami of nursery closures this year. During the summer term, from April to July 2022, 65% more nurseries closed than in the same months in 2021.

I pay tribute to everyone who works in childcare and early years education. They are highly skilled professionals to whom we entrust our most precious little ones, yet they are under-recognised for the work they do. The best settings, such as the Early Years Community Research Centre in Shirecliffe, Sheffield, which I had the great pleasure of visiting recently, are a partnership with parents to support and care for young children, providing support to the whole family. Working with very young children should be a rewarding vocation and a lifelong career. It should offer the opportunity to develop expertise and specialisms, and to progress accordingly, yet all too often there is no opportunity for development or progression, and nurseries report that they end up competing with better-paid roles in retail or distribution.

After 12 years of Conservative government, our childcare system is failing families, failing children, failing providers and failing our economy. It is holding back parents from succeeding and progressing at work, and what is the Government’s response to this situation of such central importance to our economy and family life? The response is silence. There was not a single mention in the Chancellor’s Budget statement last month of the affordability and availability of childcare, which is holding back our economic growth. The main measure that the Government have mooted is the relaxation of childcare ratios to allow the same number of staff to look after more children. There is no evidence that this would have any impact on the costs to parents, but there are concerns that it reduce quality and compromise safety. That is not what parents or providers want, and it is not what is best for children.

Labour recognises the fundamental importance of childcare to parents, children and our economy. We also recognise that childcare costs do not stop when a child starts school, which is why we have announced our plan to introduce fully-funded breakfast clubs for every primary school in the country, supporting parents to work and helping to address food poverty. We will make sure that every child, wherever they are in the country, starts school ready to learn. Our children’s recovery plan proposes to increase the pupil premium for the early years to the same level as for reception, quadrupling the funding and ensuring that additional support is available in nursery settings for children who have suffered the impacts of the pandemic in their early development. We will address disadvantage and prevent it from becoming embedded for a lifetime.

Breakfast clubs are just the first step on the road. We are committed to building a childcare system that supports children and families from the end of parental leave until the end of primary school, as part of the vital infrastructure that underpins our economy. It is vital that the Government get a grip on this issue and show the vision and leadership that has been so badly lacking.

I thank the Minister for the various facts and figures on the amounts that the Government are pledging. Will she commit to reinvesting the £2 billion that her party has already pledged into the childcare system?

I acknowledge the huge benefit that has for parents, especially those getting back into work, but we have a real issue with providers, because the gap between the funding and the cost to providers is around £2 per hour for those voucher places. Nurseries in Leeds have closed because of that funding gap and others are under severe pressure. What will the Minister do to ensure that those nurseries can survive and thrive, not just at a price to the provider because the vouchers are in place?

The last year for which we have figures available shows that a total of £62 million in unspent funds was ringfenced within the dedicated schools grant for early years. That is money that the Government have made available that cannot be spent because the funding formula means that a council, for example, cannot reallocate it to increase the funding rate to its local settings and it can be spent only in accordance with the constraints of the national funding formula. While that would not go all the way towards bridging the gap, will the Minister consider looking again at the funding formula regulations, so that local discretion could allow funds that are already allocated to be redistributed in a way that might help address some of the policy issues that she has outlined?

Thank you, Mr Hosie, for your expert chairing of today’s debate. I thank all the Members who have participated for their excellent interventions. I particularly want to thank the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), especially given his knowledge and expertise of the area as a former elected councillor and cabinet member for children’s services and, like me, as a parent. He highlighted the various technical issues that need to be addressed.

I thank the Minister for her promises to parents, and also the shadow Minister, my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), for the first-class work that she is doing to hold the Government to account and for highlighting the increased importance of the role that grandparents and family members play as they try to plug the gap to help parents, and in particular for helping to delineate the problems of the recruitment of nursery staff.

We have heard in today’s debate how important affordable and high quality childcare is, and about the difficulty that families face today in accessing childcare and all the consequences that follow on from that to children, parents and businesses. Fixing the problems with childcare provision should be far more of a priority for the Government than it appears to be, so I look forward to seeing what the Minister implements to support families in the coming year.

This is the last day of the school term for many, just as it is for parliamentarians here today, so I want to put on the record my thanks to all nursery nurses, daycare centre staff, breakfast club providers, teachers and everyone else in the childcare sector for the really important work that they do for our children.

Finally, as this is the last Westminster Hall debate of 2022, I want to put on record my thanks to all the staff of the House who support these important debates. I wish all the staff of the House and everyone here a very merry Christmas. I look forward to seeing everyone in the new year.

Merry Christmas, everybody.

Question put and agreed to.

Resolved,

That this House has considered the affordability and availability of childcare.