CHILD CARE VOUCHERS

HC Deb 16 July 1990 vol 176 cc753-69

'(1) Where an employee makes arrangements for care of his or her children aged under sixteen, and pays for this child care with vouchers provided by the employer which can only be used for this purpose, the provision of these vouchers will not be subject to basic rate tax in the hands of the employee.

(2) This section shall only apply to vouchers up to £75 per week in regard to child care being provided for a child aged up to five. For children aged over five to sixteen the limit of the value of vouchers which will not be subject to basic rate charge tax will be £1,500 per annum.

(3) This section shall only apply subject to the provisions of the Taxes Act 1988 section 155A(1)(d) and Taxes Act 1988 section 155A(4) (as proposed in the 1990 Finance Bill).

(4) The registration requirements under section 20(1)(4) shall apply to this section.'.—[Mr. Beith.]

Brought up, and read the First time.

Mr. A. J. Beith (Berwick-upon-Tweed)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Harold Walker)

With this it will be convenient to consider new clause 6—Child care and the self-employed—

1. '(1) The Taxes Act 1988, section 74, shall not operate to deny tax relief for child care provision, at basic rate only, and on payments up to £75 per week, where a self-employed person makes provision for child care for his or her children aged up to five. For children aged over five to sixteen the limit of the payments which will not be subject to basic rate tax will be £1,500 per annum.
2. (2) This section only applies where—
1. (a) the provisions of the Taxes Act 1988, section 155A(1)(d) and the Taxes Act 1988 section 155A(4) (as proposed in the Finance Bill 1990) are satisfied.
2. (b) the registration requirement in section 20(1)(4) has been met.
3. (c) the self-employed person works full-time at his or her trade, profession or vocation.'.

Mr. Beith

New clause 5 deals with child care vouchers, and new clause 6 applies a similar principle to the self-employed. It looks as though the about-to-be Secretary of State for Trade and Industry is to reply to the debate. I look forward to that and congratulate him on his sudden and unexpected promotion, and wish him well in his new responsibilities.

We have been campaigning for better provision for child care in successive Finance Bills. There is some provision for child care in the current Finance Bill, but it is so inadequate that we feel obliged to table the new clause. It is my contention and the view of many groups and organisations that workplace nurseries are only a tiny contributor to dealing with the problem of child care. Such nurseries provide only a small number of employers, whose work force is concentrated on one site, and even if such nurseries became much more widespread among employers, they would not cater for large numbers of parents for whom child care nearer the home is more appropriate. Such nurseries make no contribution to solving the problem of child care for children of school age, after school and during school holidays.

We have always proposed an alternative approach based on vouchers given by the employer that are free of tax up to a certain level at the hand of the employee if those vouchers are used in registered forms of child care, nursery education or play groups. That idea is widely supported. I was particularly struck to discover that it has gained support in Government circles. Therefore, I shall be surprised if the Financial Secretary, when he replies, does not catch the mood of his party and the feelings of those who are already expressing themselves on the issue.

The Guardian on Monday 9 July stated: A voucher scheme for nursery facilities to help young mothers wanting to go out to work has been endorsed by the Government's inter-departmental working group on women, chaired by John Patten, the Home Office Minister of State. The proposals are likely to be the subject of strong debate within the Conservative Party and Whitehall as the Government tries to reach a consensus on its approach to the family and morality. I shall not go into the further reaches and implications of the Government's current studies of the family and morality but will concentrate on child care, which has obviously been considered in Government circles and found to be of interest. Perhaps the Government are beginning to react to the widespread disappointment that what initially looked to some people like a major concession on child care in the Chancellor's Budget speech turned out to be so limited in its effect and implications.

A small number of mothers will be able to continue to use workplace nurseries and avoid the tax that they have been paying up to now on benefit in kind of those nurseries. That is quite right, but many more women will continue to pay for nursery care out of their taxed income. Not merely are they failing to receive a benefit on which they would be taxed; they are paying for child care out of their taxed income.

The Government have included child care provisions in the Finance Bill because they believe that the changes in the labour market and the need to make use of the skills that women can offer dictate that the Government should make some effort to encourage women back to work and to encourage employers to help women to return to work. They may also have been influenced by the wider issue of principle that, regardless of the needs of the labour market, women should be given the maximum opportunity to deploy their skills in the workplace. I agree with that principle. The Government must have been influenced by that thinking to have introduced such provisions into the Finance Bill. They have been criticised by some of their own supporters for moving away from the level playing field and for opening the door to schemes such as the one for which I am now arguing. However, they have made a very limited move. They must recognise how disappointing it will prove to many women who hoped for a real advance in their opportunities to continue their careers.

Of course, it is a matter of choice. No one is arguing that the Government should put any pressure on women with young children to go out to work. That must be a matter of choice. Many of the arguments relating to child benefit relate to whether women are able to stay at home when they have young children. We would prefer the regular uprating of child benefit which, among other things, would ensure that those women who choose to stay at home would be in a slightly better financial position than they are at present. However, the Government should provide some encouragement to employers to assist those women who wish to exercise the choice to work, particularly as their children reach school age.

I have spoken to many employers and employers' organisations, and I understand that there would be a considerable response from employers if it became clear that offering child care vouchers would provide a tax-free benefit to employees. Clearly the Government are hoping that even their limited proposals will invoke some response and that there will be more workplace nurseries. There probably will be some more as a result of the provisions that the Government have included in the Finance Bill, but many employers are already saying that they cannot open a workplace nursery as they have too few employees with a relevant need gathered in any one place. If they were to provide for those employees, it would seem unfair to the majority of their employees who may work in branches scattered around the country. Many of the large retail chains face that problem, as do almost all small businesses. What small employer can hope to set up a workplace nursery if he has only a handful of employees, one or two of whom have young children, although their needs are no less because they work for a small business?

The Government have an opportunity to encourage employers to make provision for child care. We are not putting to the Government a plea for a massive injection of Government funds directly into the provision of child care, although we should like there to be more investment in nursery education. However, we see considerable scope for the activities of the private sector, whether in voluntary sector playgroups, commercial nursery provision or individual registered child minders, who play such a large part in child care.

There is a wide range of possibilities that could be met by a voucher scheme. I do not understand how the Government can resist the logic of such a scheme, particularly as they have embarked on giving some tax relief for nursery education. Workplace nurseries cannot provide the answer for the vast majority of women who wish to exercise the right to work. Therefore, we urge the Government to adopt the voucher scheme that we propose and say that they should listen to the voices of those—including many Conservative Members—who have advanced that case. Although the hon. Member for Billericay (Mrs. Gorman) is not present tonight, on previous occasions she has advanced that view most strongly, as have others. Ministers privately seem to be expressing interest in such schemes.

New clause 6 makes a comparable provision for self-employed people. There is a strong case for full-time, self-employed people to have a limited ability to set child care costs against tax. The Government, quite rightly, have encouraged self-employment. Many women are becoming self-employed as self employment offers flexible opportunities for work. Many women work in sectors where self-employment seems a natural development and their expertise can be used in various forms of consultancy work.

8.45 pm

Self-employment is sometimes appropriate for women who wish to work only part time while their children are very young and then resume full-time work, taking on more contracts and more work as their children reach school age. There seems no reason why such women should not be allowed to make the same provision as an employer could to set child care costs against tax. I hope that the Minister will consider that ancillary feature of our scheme, which is set out in new clause 6, and will be sympathetic to our case. I see no serious prospect that he will do so at this stage as I do not consider that his last action as Financial Secretary will be to make that major change.

Mr. Simon Hughes

I was hoping that my hon. Friend would encourage the Minister to do so. We understand that, when she was disturbed at the weekend, the Prime Minister was writing a major speech on the family, or was planning to do so, at Chequers. It may be that the right hon. Gentleman is party to any proposals that the Prime Minister is about to make, and before he moves onwards and upwards he may be able to tell the House that the Government plan not only to talk about these matters, as the Prime Minister often does, but to do something practical to implement policies to encourage that aspect of family economic growth.

Mr. Beith

My hon. Friend conjures up the slightly frightening prospect that a Government seminar is about to be arranged in which the characteristics of women would be discussed in a misleading and inaccurate way and the contents of which would be leaked.

I hope that the various moves and discussions within the Government will eventually lead to someone waking up to the fact that workplace nurseries are not a solution and that something along the lines of our suggestion is essential.

Mr. Paul Boateng (Brent, South)

We thank the hon. Member for Berwick-upon-Tweed (Mr. Beith) for enabling us to discuss such an important topic at this stage. However, he is somewhat optimistic if he believes that the new Secretary of State for Trade and Industry will take into account in his response the new wind which the hon. Gentleman discerns to be blowing through the Conservative party. I doubt that, but I am sure that in the fullness of time there will be a translation in the attitude of the former Financial Secretary. We all congratulate him on his appointment.

I expect that there will be a transformation in the right hon. Gentleman's approach to this topic as child care not only involves education and welfare, but strikes to the heart of our competitiveness with our European partners. As a nation, we have the worst child care record in Europe. Only 44 per cent. of three to five-year-olds in the United Kingdom receive public pre-school education—the second lowest percentage in the European Community. That is bound to impact on our success in obtaining a skilled work force in terms of the educational advantages to children in receipt of pre-school education, and, more importantly, drawing on the pool of skills that women are able to offer in the economy. It is an economic issue and an equal opportunity issue to which no Secretary of State for Trade and Industry can be blind.

The Government are in the grip of a dilemma. Some in the Conservative party continue to oppose any measure along these lines because they believe that it would weaken and undermine the family, while others appreciate the needs of the economy and of women to be free to make a contribution to economic growth and to the growth and prosperity of their family if they so please. The two are engaged in an enormous war within the Conservative party. That is why we have seen an almost schizophrenic approach to this issue among Ministers. They change month in and month out. I join the hon. Member for Berwick-upon-Tweed in celebrating the current approach of the hon. Member for Oxford, West and Abingdon (Mr. Patten), who chairs the ministerial group on women's issues, and his willingness to consider new ideas such as vouchers with a more favourable mind than is normal in the Conservative party, but we cannot forget that only months ago he said in The Guardian: I don't think the state should step in to help the working mother unless her life has collapsed. That was what the Minister said then, but what has happened in the interim? One hopes that there has been a new dawn and an awakening, but one doubts it. The Government's attitude to this issue is one of indecision and uncertainty. The Prime Minister may have been poring over her speech on the family while she dithered and vacillated over the future of her Secretary of State for Trade and Industry at the weekend, but we say that she was also dithering and vacillating on child care and equal opportunities for women, and we are not alone in that. The Daily Mail, no less, said of the Government's attitude:

The Government takes the view that good old private enterprise needs no prompting. That is the official line. This is dangerously complacent. Our competitors are far better geared to woo the working mother and beat the labour shortage that results from falling birth rates and aging populations. In Europe, there are many more publicly financed nursery places. Here, Margaret Thatcher and her Ministers still dither about how to defuse the demographic time bomb. Dithering and vacillation are the hallmarks of the Government. We say that that should end and we look to the Secretary of State for Trade and Industry, in his new role, to play a part in bringing it to an end.

We find the new clause wanting in several respects. We find it technically deficient and therefore are unable to commend it to Labour Members. Nowhere is a definition of the word "care" suggested. We are concerned that it would be so wide as to include schooling and elements of private schools, as, arguably, schools care for their pupils. It makes no attempt to incorporate section 155A(7), which would have prevented that.

We are concerned that the new clause would allow payments to a wife to look after children at home to be tax deductible. Even if the registration requirements of the new clause were technically effective—we fear that they are not—those requirements apply only where the carer or the premises in which care is provided require registration. That does not apply to parents looking after children at home, which is a major defect.

We are also concerned about the reference to section 20(1)(4) in new clause 5(4) and new clause 6(2)(b). That does not exist and cannot be satisfied. We must presume that it is a reference to section 155A(4), which is introduced by clause 21, formerly clause 20. The wrong reference invalidates both new clauses.

The new clauses refer to basic rate tax. We presume that that means income tax at the basic rate, because under the Finance Bill there is no such thing as basic rate tax. There is certainly no basic rate charge tax, as mentioned in new clause 5(2).

Nor do the clauses make clear the limits of relief. Is it £1,500 per year for all children aged between five and 16 or for each child? Likewise, there are no provisions to deal with abuse of the classes.

For those technical reasons, we shall be unable to recommend the new clauses as they stand, but we find another cause for concern that goes to the principle of accepting vouchers without taking on board the wider context in which they are introduced.

Above all, we are concerned that there should be quality provision of child care. We are concerned to ensure that in increasing the supply of child care there is variety. A parent should not be obliged to take second best. Therefore, we envisage a role for the public and private sectors in child care, but a central role for local authorities in maintaining and improving standards and in co-ordinating child provision. As the new clause would expand provision without guaranteeing that it was of sufficient quality, we shall have to oppose it.

Mr. Beith

The hon. Gentleman is now dealing with the substance of the new clauses, but I am not sure what he is arguing. Is he arguing that the Labour party would accept vouchers if they were so controlled by a local authority that it could determine whether the level of provision was suitable, or is he still opposed to vouchers in general?

Mr. Boateng

We are not opposed to the principle of vouchers; we believe that it needs careful examination. However, we are opposed to giving vouchers priority at a time when we have not created a context in which their introduction can be guaranteed to produce quality provision. When we are dealing with limited resources, we must see how they can best be spent.

The unit cost of workplace nursery care is relatively high, at some £4,500 per place, compared with £1,350 per unit spent on under-fives in nursery schools, nursery classes and reception classes in primary schools in the public sector. Those figures reflect the cost-effectiveness of child care provision. We are not satisfied that it would be right to forgo the resources that would be the inevitable consequence of a new clause of this nature while there is still so much to be done, not least in improving the training and status of child minders and those who provide nursery care.

Some 43,000 child care workers are employed on regular contracts in this country, compared with some 125,000 in West Germany and 150,000 in Italy. Child care workers in the United Kingdom are among the worst paid, with nursery workers earning on average some 70 per cent. of the average manual worker's rate. By comparison, West German nursery workers earn up to 170 per cent. of the unskilled rate.

The figures for child minders also give cause for concern. In the United Kingdom, their average wage is 46 per cent. of the manual worker's rate, whereas in France it is 71 per cent. of the minimum wage plus holiday pay. In Portugal it is 100 per cent. when the child minder is looking after four children, and in Denmark it is 72 per cent. of the unskilled worker's rate, including holiday and pension rights.

We have a long way to go to improve training and registration, and to give local authorities the means to take the innovative steps that some have been able to take already—even with limited resources—to bring the public and private sectors together to maximise the quality as well as the quantity of child care provision. Labour local authorities have led the way in that regard. Each of the 25 local authorities with the best provision is Labour controlled. That is a credit to Labour's approach to the issue of child care, which is centred on the child and on enabling and empowering parents to participate fully in the workplace and in a growing economy. That will happen when we can harness fully the resources in our country to a common purpose, geared towards maximising the opportunities of all our people to contribute to economic growth.

If we are to meet the challenges of the 1990s, to compete successfully with our European Common Market partners and to take advantage of the single market in 1992, it is vital that we get this matter right. A survey for the European Commission called "Childcare and equality of opportunity" found that in Britain there were wide differences of quality and quantity in the available provision. That is not compatible with the concept of the single market. As a result of that survey, there was a recommendation that there should be a Community directive to encourage the development of adequate provision.

Although it presents a principle that is worthy of examination, the new clause does not provide a complete answer, and we cannot support it in the Lobby.

Mrs. Edwina Currie (Derbyshire, South)

May I also congratulate my right hon. Friend the Secretary of State for Trade and Industry on his elevation? I am sure that he will do a good job for us, but I suspect, as has been said, that this issue will pursue him to the Department of Trade and Industry, as it is now a major concern for many employers.

The proposals before us are not at all the answer. They are sweeping, extravagant and, as one would expect from the Liberals, badly drafted. The Opposition think that they are so important that most Opposition Members have gone home. Whatever my right hon. Friend says, I hope that he will not close the door on consideration of this issue at some time in the future.

There is no doubt that we need more women in the work force in the 1990s. It has been estimated by the Department of Employment that, of the 1 million new jobs likely to be created between now and 1995, about three quarters will have to go to women because of the demographic time bomb. The issue becomes more acute as time goes on, because by 2000, less than a decade from now, about 90 per cent. of all new jobs will have to go to women either those who are not working at all at the moment, or those who are working part-time and who can be encouraged to work full-time and to improve their productivity.

It helps briefly to set out one or two principles. First, we should not be heading for state-run, state-funded nurseries. That is the way it has been done in the Soviet Union up to now, and it has been a total disaster. We should not propose or contemplate such a system. It is what the Labour party would like and what it often advocates but it would be disastrous.

We should press employers, including state employers, to carry part of the burden. I share the belief of my right hon. Friend the Minister that, left to itself, the market works very well on such issues. The problem is that the jobs market is often inflationary and simply pushes up pay. One of the most expensive ways to provide child care is to pay employees extra so that they may pay for their own child care. That is inflationary, and would make it much harder for us to reduce inflation to the sort of levels that our international competitors are achieving. We have a supply side rigidity and should be wary of shutting the door on any proposals that might help it.

Mr. Beith

When the market seeks to address these problems, it has to face the distortions in the system as well. Now, of course, there will be an invitation to workplace nurseries, but it remains the case that, even after all that the Chancellor has done, it would be more tax-efficient to give the woman a car as part of her remuneration, because that is still not fully taxed, than to give her money to pay for child care.

Mrs. Currie

I suspect that my right hon. Friend the Chancellor has his beady eyes on our cars as well, and that is probably a good thing. I am generally against giving tax relief on any kind of perk. To me, it has to be argued very hard that the tax relief on some kind of benefit, whether or not one dubs it a perk, is better than simply putting all the tax reliefs in the pool and charging everybody less tax. I am, however, bothered by the fact that some of these issues appear to be hampered by what is seen as penal taxation on workplace nurseries, which is covered in the Bill.

We should remind ourselves of the problems that face single parents. The largest single group of available people who are not working are in that group. There are 1 million single-parent families in Britain, and most, but not all, of them are headed by women. In response to surveys, about 40 per cent. of them have said that, if they could resolve the problem of reliable and affordable child care, they would want to go back to work immediately.

We know from much research that that is often best for such people and their children. At the moment, if they go for training on the employment training scheme, they get £50 a week per child for child care, but there is little help when they seek a job. That results in a waste of public money. If we could get 250,000 of those single parents back into work, even low-paid work, then, according to calculations made for me by the Library, we could expect to save at least £1 billion a year net. That is also a good Tory principle.

The Bill contains changes that will affect workplace nurseries. Many people who have used such nurseries would agree that it is the most expensive way to provide child care and the least flexible. The family have a real problem when the children reach school age. It is all very well for small babies, but what happens when the child reaches the age of five? What do the parents do after school and during holidays? If we are effectively to press employers, we must press them to take much more flexible approaches to these issues. These sometimes include part-time work, as well as the provision of child care.

It seems that there is no evidence yet that the tax disadvantages of vouchers are a deterrent to their use. We are talking about something which is quite new; many of the concepts have not been fully argued. I hope that my right hon. and hon. Friends who are Ministers in the Treasury and in the Departments of Employment and of Trade and Industry will keep a wary eye on the issue and, if they feel that it is necessary in future, will come forward with their own proposals.

Ms. Hilary Armstrong (Durham, North-West)

We are grateful to the hon. Member for Berwick-upon-Tweed (Mr. Beith) for giving us the opportunity to discuss child care. I am sure that he will forgive me for saying—I do so in the friendliest of spirits—that it was easy for him to introduce the clause because he was not concerned with the problems of priorities that an incoming Government would face. It is priorities that bear upon our position on the clause. The Opposition have had to consider carefully as the next Government where we would place available moneys to ensure that we achieve the objective of increasing the number of places available while not sacrificing quality. Our thinking and proposals are based on that important first principle.

In a sense, there is a temptation to support the clause on the basis that anything is better than nothing. The Government are offering virtually no strategy for improving opportunities for women or children through a better structure and system of child care. An incoming Government must think beyond the view that anything is better than nothing, and we want to secure the best. Our policy, therefore, is based on getting the best.

It is interesting that the Financial Secretary to the Treasury has moved to the Department of Trade and Industry. As the hon. Member for Derbyshire, South (Mrs. Currie) has said, he will come across similar problems in the DTI. I recommend him to examine some of the partnership schemes that Labour local authorities and other parts of the public sector are developing with the private sector, with the support of the DTI. I am hesitant to recommend the right hon. Gentleman to take that course, however, because his reputation goes before him. If I mention good schemes that are providing more opportunities for child care, I am concerned that he will wish to stamp on them when he fully takes up his post as Secretary of State for Trade and Industry. I hope only that I am being over-cynical.

I commend to the right hon. Gentleman the scheme that is operating in north Tyneside. His new Department has made a significant contribution to the partnership that has developed, which is attracting finance from the private sector in a way which gives control and support for the best quality of opportunity and the widest choice of child care, from child minders to child minders in children's own homes, who elsewhere in the country might be called nannies. Care extends from full-day nursery provision to out-of-school and holiday care for children over five years of age.

That is precisely the sort of scheme that we in the Labour party want to support. We want to encourage partnership between the voluntary and private sectors and the public sector of the sort that removes from the employer the burden of deciding what is good child care. Most employers are honest and open enough to say that it is not their job to decide what is good child care. They say that they are experts in finance and money-making, not in child care. They argue that they must concentrate on the success of their businesses. They welcome the opportunity of being in partnership with the public sector. I know that the next Labour Government will be examining ways in which they can encourage the sort of partnership that will make available additional places and ensure that they are of the highest quality.

Even though the Government do not want to do so, they have been obliged to deal with the problem. They read the polls. They saw in The Daily Telegraph a few weeks ago that 87 per cent. of the people surveyed want more money to be devoted to child care so that women could go out to work. They also saw that 88 per cent. of the people surveyed want more money to be provided for nursery education.

The poverty of the Government's argument is there for all to see. Therefore, they are thrashing around. That is why they made their minimum concession on the workplace nurseries tax. It was not because the Government had worked out a strategy and that the concession was part of it; they did it because they were under pressure. That is the very worst sort of government. If we went down that road, which is what the new clause asks us to do, we should avoid the main question: how is the country to face up to its responsibilities both to children and women, and to ensure that opportunities are provided for them that at least bring us into line with our European competitors?

9.15 pm

This is a painful issue for the Government, but the European child care network has provided us with a framework. It says that it is the responsibility of national Governments to set the pace and the parameters and to provide a framework within which various opportunities can be encouraged. However, the Government say that that is nonsense and that we want to force women and children into a particular sort of care. The Government consistently confuse diversity with choice. Of course there is diversity of provision, but much of it is the result of the lack of basic facilities.

We want parents to be able to choose nursery education for their children, but if only certain parts of the country are able to provide it that is diversity, not choice. We believe that parents throughout the country should be able to decide what kind of care and education they want for their children. In each area, therefore, we shall develop a pattern of care. We shall hold discussions about it with local education authorities, social services departments and parents. We also want to involve industry and the voluntary sector in our plans.

Mrs. Currie

I am grateful to the hon. Lady for giving way. After a lot of waffle, she is now getting to the meat of the subject. Who is going to pay for all this?

Ms. Armstrong

I have already made it clear that it will be paid for by means of a combination of both public and voluntary sector funding. The public sector will set the pace, but it will attract money and support from the private and voluntary sector. I do not know whether the hon. Lady has spoken to representatives of industry, but I have spoken to representatives of a number of major industries. This morning, I had discussions with representatives of a number of them, who said to me, "We wish you would impose an employers' levy and make it really easy for us." We do not intend to do that, but three large industrial employers said that to me.

The Government have shown a lack of will to forge partnerships and opportunities. They cannot make up their mind what they mean by the family or by providing opportunities for children. They are not really sure that they want. to provide women with any opportunities. We have, therefore, ended up with chaos, which is described as diversity. It means that our children will lose out. Instead of giving small concessions, the Government should begin to think seriously about what they intend to do to ensure that this country can move towards 1992. They must be committed to providing opportunities for women and children.

Mr. Lilley

There have been some astonishing appointments in recent days. I thought that my own was the most surprising until I saw my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) reappointed to the Whips Bench. I then realised that there was no limit to it.

As my right hon. Friend the Chief Secretary told the Committee of the whole House, the relief for workplace nurseries, which we introduced in the Budget, is a closely focused relief. It is designed to remove a perceived obstacle to the establishment of workplace nurseries and it should, thereby, increase the supply of such places. It is designed to put the tax treatment of workplace nurseries roughly on a par with taxation on other workplace benefits in kind. Therefore, it is a minor simplification and deregulation measure.

It is always difficult to draw the borderlines of tax relief, but I am convinced that, in general, they should be drawn as tightly and narrowly as possible. I agree with the general sentiments expressed in that respect by my hon. Friend the Member for Derbyshire, South (Mrs. Currie).

The relief that we introduced is not intended as a step towards the introduction of a general child care allowance, which would be hugely expensive. The Opposition have agreed, and the hon. Member for Islington, South and Finsbury (Mr. Smith) is on record as saying, that that would not be a priority use of scarce Exchequer resources for them any more than for us.

The two new clauses proposed by the hon. Member for Berwick-upon-Tweed (Mr. Beith) concentrate on extending relief to vouchers. That would be expensive as people latched on to it as they have to similar benefits in kind. It would be essentially unfair because it would give relief to those who receive vouchers while others who received cash or spent their own cash on the same facilities would not receive relief. It would be impossible to limit it to vouchers in the way the clause suggests.

Mr. Beith

The Minister can hardly level the charge that the relief would be unfair when it is the same for workplace nurseries. That is a tax relief available only to those able to make use of a workplace nursery.

Mr. Lilley

It is simply a supply-side measure. It is not meant to be a relief for child care as such. It is designed to remove an obstacle to the provision of such facilities and allow greater supply.

Extending relief to vouchers would be perceived as unfair and would inevitably be extended to wider groups. It would also be open to abuse. People would be able to use vouchers as a form of near cash. They would be able to use them to employ members of the family who were perhaps already helping to look after the children from time to time. Therefore, there would be a tendency to use such vouchers to the maximum extent available in order to obtain the maximum tax relief. That is not desirable.

The new clause dealing with provision for the self-employed is even less tightly focused. In fact, it is open ended and goes way beyond vouchers. It would give tax relief to wives of self-employed people looking after their own children at home or even elsewhere, as I understand the clause. Once such relief had been created for the self-employed, it would be impossible not to extend it to the employed. Therefore, I do not understand why the proposal in the new clause applies simply to the self-employed. I do not think that any responsible party could seriously envisage the massive use of fiscal resources suggested in the two new clauses. Naturally, I shall urge the House to vote against them.

The hon. Member for Berwick-upon-Tweed said that he had read an article that stated that a ministerial group had endorsed his proposal. I urge him not to believe everything that he has read in the newspapers. I learned that lesson over the weekend, although I am not complaining, because many of the grossest inaccuracies in the newspapers were flattering. The hon. Gentleman said that the Government, as a matter of policy, must encourage women to go out to work rather than stay at home and look after their children. We have always made it clear that that is a sensitive and important decision that parents should make, and it is not for the Government to try to bias it one way or the other through the fiscal system.

The hon. Member for Brent, South (Mr. Boateng) said, rightly, that one should not be profligate in the use of fiscal resources, but he implicitly proposed an expensive public expenditure programme of improved pay for child minders, an increased number of child minders and increased subsidy for child minding. [Interruption.] If the hon. Gentleman said that it was not implicit but explicit, he should be a little—

Mr. Boateng

It was neither implicit nor explicit.

Mr. Lilley

That was certainly the logical concomitant of what the hon. Gentleman said.

My hon. Friend the Member for Derbyshire, South asked what provision the Government thought appropriate for school-age children. Our relief for workplace nurseries applies to workplace nurseries available to school-age children—implicitly, during the holidays. That is catered for in our relief as it stands.

The hon. Member for Durham, North-West (Ms. Armstrong) left the House bemused as to how she saw her gigantic programme of improved provision being financed. She said that she had met a number of industrialists who thought that there should be a compulsory levy to finance it. That is another way of saying that they would not pay for it unless they were forced to do so. At least they recognise that it would have to be paid for—which, apparently, the hon. Lady did not. I agree, however, that the new clauses tabled by the hon. Member for Berwick-upon-Tweed should be rejected, and I hope that the House will do so.

Mrs. Currie

Will my right hon. Friend confirm that child care vouchers are exempt from class 1 national insurance contributions? If the hon. Member for Durham, North-West (Ms. Armstrong) and her colleagues get into power, they would make them subject to national insurance contributions, which would cost everyone much more.

Mr. Lilley

My hon. Friend is correct. That is an added reason why it is inexplicable that the Liberal Democrats should propose increased tax relief for the one form of provision for child care which—not intentionally, but simply because of the nature of the collection and tax treatment of vouchers generally—already has a measure of relief from a fiscal imposition.

Mr. Beith

That is an odd argument for the Minister to deploy. No doubt, some day he will give us the benefit of his reasoning for the preservation of the separate category of national insurance and income tax. I suspect that, after he has left the Treasury, it will not be long—not because of his departure—before that curious feature of our tax system is removed and we get away from pretending that something that is not dealt with in Finance Bills and can be increased by statutory instrument is, in some way, not a tax. We know perfectly well that national insurance contributions represent a form of income tax.

We have been treated to one side of the argument that appears to be going on in the Government. It may be that the Minister is preserving an air of total innocence at the machinations that are occurring in his party at the moment, but he cannot be unaware that this is an issue of serious debate within his party—let alone more widely—and that the principle whereby employer-funded vouchers obtain tax relief has attracted wide support across the political spectrum. Although we have not tonight heard a voice from the Labour Benches in favour of that principle, some members of the parliamentary Labour party are more sympathetic to it than hon. Members who have spoken. Vouchers are one way to attract into child care provision funds from employers which are not taxed at the hand of the employee. That is a reasonably cost-effective way to encourage the provision of child care.

9.30 pm

I can understand the position of the purist, who says that there should be no tax allowances of any kind for this purpose, and that workplace nursery tax relief is equally inappropriate. I cannot, however, accept the Minister's curious distinction between what he regards as well-focused tax relief for workplace nurseries and the rest. Tax relief on workplace nurseries is not especially well focused—the hon. Member for Derbyshire, South (Mrs. Currie) knows that—and will go only to the small number of industries in which it is convenient to provide a workplace nursery, and in which employers have made that level of investment in child care.

The Minister might more honestly have said that such tax relief is relatively cheap because there are not many workplace nurseries and there are not going to be many more. He cannot honestly say that he has focused resources on the most effective and efficient way to support child care. The voucher system is a more attractive route.

I listened to the hon. Member for Durham, North-West (Ms. Armstrong) with some care. She is clearly anxious for improvements to be made in child care, and has devoted a considerable amount of time and attention to the matter. At the end of her remarks I still could not reach a conclusion as to how she was going to achieve her objective. If, as she argues, the resources cannot be found for tax relief on vouchers paid for by employers for child care, how on earth does the Labour party believe that it can find the far greater resources needed to fund child care directly—or even half-fund it, on the basis of some sort of 50:50 partnership scheme with large numbers of employers? How could Labour hope to do that within anything like the time scale that we are talking about, when the pressure for women to return to work will be greatest?

It does not seem to me that the hon. Lady can envisage that the resources will become available—many times more resources than for the type of scheme that I am talking about—to effect the sort of Rolls-Royce improvements that she wants to bring about. Sometimes the best is the enemy of the good. We should all like to have perfect child care, ideal partnership arrangements and the best possible funding, but that will not be in place in time to meet the needs of many women who are now looking for child care or to meet the labour market needs that I mentioned.

Ms. Armstrong

I do not want to interrupt the hon. Gentleman, but I am arguing that quality should not be reduced. We cannot win the argument for opening up opportunities for women at the expense of quality of opportunity for the child. In five or 10 years' time that would cost us financially and in many other ways. I said that we wanted to increase the number of places, but not at the expense of quality.

Mr. Beith

In that case the hon. Lady should not be supporting tax relief for workplace nurseries, because that can encompass a wide range of quality.

Ms. Armstrong

Registration.

Mr. Beith

If she is saying that registration is the key, that is an element in my new clause. I have sought to ensure that only registered child care would qualify for tax relief. That is a limited kind of registration.

I am bound to conclude that the hon. Lady is arguing for something that cannot be achieved in the time scale of the problem that we are discussing, or in the time which matters to the large number of women who are now concerned with child care. Frankly, they will be looking forward to seeing their grandchildren by the time that we get the scheme that the hon. Lady is talking about.

Ms. Armstrong

We know how to do it, and we know that it is possible. I have studied the problem and discussed it at great length with people in the European child care network. Other European countries have done it, because they have had a framework and they have built on the commitment and the will that exists. I know that we can do it in this country. In Spain, 13 years ago they had nothing. Now 66 per cent. of their three and four-year-olds are in full-time education and care. If Spain can do it, we can do it, by galvanising all the available resources.

Mr. Beith

I still think that it is a case of "Jam tomorrow, the day after or possibly the day after that." I believe that more resources will be directed more quickly into child care by the introduction of a voucher scheme. The Minister cannot turn away from that for much longer. He will still be concerned with the issue in his new Department. This is the ideal opportunity. He can be demob happy as the outgoing Financial Secretary. All the Whips are away at a party—that is why the hon. Member for Wolverhampton, South-West (Mr. Budgen) is sitting in the Whip's place on the Treasury Bench. As the right hon. Gentleman's appointment is now fully confirmed and there is no risk that it will be snatched from his grasp, what better chance to kick over the traces and to respond to a feeling that is present in his party, as well as in ours, and to open the way to a voucher system, in which the funds available from employers would be brought into child care without the intervention of the taxman at the point that the provision reaches the pay packet of the employee?

As the Minister has not shown any willingness to do that voluntarily, I propose to invite him—to drag him— into the Division Lobbies in support of the new clause.

Mr. Boateng

rose—[Interruption.]

Mr. Speaker

The hon. Gentleman has already spoken once. Does he have the leave of the House to speak again?

Hon. Members

No.

Mr. Speaker

Well, I am sorry, but I must now put the Question.

Question put, That the clause be read a Second time:—

The House divided: Ayes 15, Noes 179

Division No. 293]	[8.22 pm
AYES
Adams, Allen (Paisley N)	Bermingham, Gerald
Allen, Graham	Bidwell, Sydney
Anderson, Donald	Boateng, Paul
Archer, Rt Hon Peter	Boyes, Roland
Armstrong, Hilary	Bradley, Keith
Ashdown, Rt Hon Paddy	Bray, Dr Jeremy
Ashley, Rt Hon Jack	Brown, Gordon (D'mline E)
Ashton, Joe	Brown, Nicholas (Newcastle E)
Banks, Tony (Newham NW)	Brown, Ron (Edinburgh Leith)
Barnes, Harry (Derbyshire NE)	Buckley, George J.
Barnes, Mrs Rosie (Greenwich)	Caborn, Richard
Barren, Kevin	Callaghan, Jim
Beckett, Margaret	Campbell, Menzies (Fife NE)
Beith, A. J.	Campbell, Ron (Blyth Valley)
Bell, Stuart	Campbell-Savours, D. N.
Benn, Rt Hon Tony	Canavan, Dennis
Bennett, A. F. (D'nt'n & R'dish)	Carlile, Alex (Mont'g)

Carr, Michael	Litherland, Robert
Clark, Dr David (S Shields)	Lloyd, Tony (Stretford)
Clarke, Tom (Monklands W)	McAllion, John
Clay, Bob	McAvoy, Thomas
Clelland, David	McCartney, Ian
Clwyd, Mrs Ann	Macdonald, Calum A.
Cohen, Harry	McFall, John
Cook, Frank (Stockton N)	McKay, Allen (Barnsley West)
Cook, Robin (Livingston)	McKelvey, William
Corbett, Robin	McLeish, Henry
Cousins, Jim	Maclennan, Robert
Crowther, Stan	McNamara, Kevin
Cryer, Bob	McWilliam, John
Cummings, John	Madden, Max
Cunliffe, Lawrence	Mahon, Mrs Alice
Cunningham, Dr John	Marek, Dr John
Darling, Alistair	Marshall, David (Shettleston)
Davies, Rt Hon Denzil (Llanelli)	Martin, Michael J. (Springburn)
Davies, Ron (Caerphilly)	Martlew, Eric
Davis, Terry (B'ham Hodge H'I)	Maxton, John
Dewar, Donald	Meacher, Michael
Dixon, Don	Meale, Alan
Dobson, Frank	Michael, Alun
Doran, Frank	Michie, Bill (Sheffield Heeley)
Dunnachie, Jimmy	Michie, Mrs Ray (Arg'l & Bute)
Dunwoody, Hon Mrs Gwyneth	Moonie, Dr Lewis
Eadie, Alexander	Morgan, Rhodri
Eastham, Ken	Morley, Elliot
Evans, John (St Helens N)	Morris, Rt Hon A. (W'shawe)
Ewing, Harry (Falkirk E)	Morris, Rt Hon J. (Aberavon)
Fatchett, Derek	Mullin, Chris
Faulds, Andrew	Murphy, Paul
Fearn, Ronald	Nellist, Dave
Field, Frank (Birkenhead)	Oakes, Rt Hon Gordon
Fields, Terry (L'pool B G'n)	O'Brien, William
Fisher, Mark	Orme, Rt Hon Stanley
Flannery, Martin	Parry, Robert
Flynn, Paul	Patchett, Terry
Foot, Rt Hon Michael	Pendry, Tom
Foster, Derek	Pike, Peter L.
Foulkes, George	Powell, Ray (Ogmore)
Fraser, John	Prescott, John
Fyfe, Maria	Primarolo, Dawn
Galloway, George	Quin, Ms Joyce
Garrett, John (Norwich South)	Radice, Giles
George, Bruce	Randall, Stuart
Godman, Dr Norman A.	Redmond, Martin
Gordon, Mildred	Rees, Rt Hon Merlyn
Gould, Bryan	Reid, Dr John
Graham, Thomas	Richardson, Jo
Grant, Bernie (Tottenham)	Robertson, George
Griffiths, Nigel (Edinburgh S)	Robinson, Geoffrey
Griffiths, Win (Bridgend)	Rogers, Allan
Grocott, Bruce	Rooker, Jeff
Hardy, Peter	Ross, Ernie (Dundee W)
Harman, Ms Harriet	Rowlands, Ted
Hattersley, Rt Hon Roy	Ruddock, Joan
Heal, Mrs Sylvia	Sedgemore, Brian
Henderson, Doug	Sheerman, Barry
Hinchliffe, David	Sheldon, Rt Hon Robert
Hogg, N. (C'nauld & Kilsyth)	Shore, Rt Hon Peter
Home Robertson, John	Short, Clare
Howarth, George (Knowsley N)	Sillars, Jim
Howells, Geraint	Skinner, Dennis
Hoyle, Doug	Smith, Andrew (Oxford E)
Hughes, John (Coventry NE)	Smith, C. (Isl'ton & F'bury)
Hughes, Robert (Aberdeen N)	Smith, Rt Hon J. (Monk'ds E)
Hughes, Roy (Newport E)	Smith, J. P. (Vale of Glam)
Hughes, Simon (Southwark)	Spearing, Nigel
Illsley, Eric	Steinberg, Gerry
Janner, Greville	Stott, Roger
Jones, Barry (Alyn & Deeside)	Strang, Gavin
Jones, Ieuan (Ynys Môn)	Straw, Jack
Jones, Martyn (Clwyd S W)	Taylor, Mrs Ann (Dewsbury)
Kennedy, Charles	Taylor, Matthew (Truro)
Kirkwood, Archy	Thomas, Dr Dafydd Elis
Lambie, David	Turner, Dennis
Lamond, James	Wallace, James
Leighton, Ron	Walley, Joan
Lewis, Terry	Wardell, Gareth (Gower)

Wareing, Robert N.	Winnick, David
Watson, Mike (Glasgow, C)	Wise, Mrs Audrey
Welsh, Andrew (Angus E)	Worthington, Tony
Welsh, Michael (Doncaster N)	Young, David (Bolton SE)
Wigley, Dafydd
Williams, Rt Hon Alan	Tellers for the Ayes:
Williams, Alan W. (Carm'then)	Mr. Frank Haynes and
Wilson, Brian	Mrs. Llin Golding.
NOES
Alexander, Richard	Favell, Tony
Alison, Rt Hon Michael	Fenner, Dame Peggy
Allason, Rupert	Field, Barry (Isle of Wight)
Amess, David	Finsberg, Sir Geoffrey
Amos, Alan	Fishburn, John Dudley
Arnold, Jacques (Gravesham)	Fookes, Dame Janet
Ashby, David	Forman, Nigel
Aspinwall, Jack	Forsyth, Michael (Stirling)
Atkins, Robert	Forth, Eric
Atkinson, David	Fowler, Rt Hon Sir Norman
Beaumont-Dark, Anthony	Fox, Sir Marcus
Bellingham, Henry	Franks, Cecil
Bendall, Vivian	Freeman, Roger
Bennett, Nicholas (Pembroke)	French, Douglas
Benyon, W.	Fry, Peter
Bevan, David Gilroy	Gardiner, George
Blackburn, Dr John G.	Garel-Jones, Tristan
Blaker, Rt Hon Sir Peter	Glyn, Dr Sir Alan
Boscawen, Hon Robert	Goodlad, Alastair
Boswell, Tim	Gorman, Mrs Teresa
Bottomley, Mrs Virginia	Gow, Ian
Bowden, Gerald (Dulwich)	Grant, Sir Anthony (CambsSW)
Bowis, John	Greenway, Harry (Ealing N)
Boyson, Rt Hon Dr Sir Rhodes	Greenway, John (Ryedale)
Braine, Rt Hon Sir Bernard	Gregory, Conal
Brandon-Bravo, Martin	Griffiths, Peter (Portsmouth N)
Brazier, Julian	Grist, Ian
Brown, Michael (Brigg & CI't's)	Ground, Patrick
Bruce, Ian (Dorset South)	Grylls, Michael
Buck, Sir Antony	Gummer, Rt Hon John Selwyn
Budgen, Nicholas	Hague, William
Burns, Simon	Hamilton, Neil (Tatton)
Butcher, John	Hampson, Dr Keith
Butler, Chris	Hanley, Jeremy
Carlisle, John, (Luton N)	Hannam, John
Carlisle, Kenneth (Lincoln)	Hargreaves, A. (B'ham H'll Gr')
Carrington, Matthew	Hargreaves, Ken (Hyndburn)
Carttiss, Michael	Harris, David
Cash, William	Haselhurst, Alan
Channon, Rt Hon Paul	Hawkins, Christopher
Chapman, Sydney	Hayes, Jerry
Chope, Christopher	Hayhoe, Rt Hon Sir Barney
Clark, Hon Alan (Plym'th S'n)	Hayward, Robert
Clark, Dr Michael (Rochford)	Heathcoat-Amory, David
Clark, Sir W. (Croydon S)	Hicks, Mrs Maureen (Wolv' NE)
Clarke, Rt Hon K. (Rushcliffe)	Hicks, Robert (Cornwall SE)
Colvin, Michael	Higgins, Rt Hon Terence L.
Conway, Derek	Hind, Kenneth
Coombs, Anthony (Wyre F'rest)	Hordern, Sir Peter
Coombs, Simon (Swindon)	Howard, Rt Hon Michael
Cran, James	Howarth, G. (Cannock & B'wd)
Currie, Mrs Edwina	Howe, Rt Hon Sir Geoffrey
Curry, David	Howell, Ralph (North Norfolk)
Davies, Q. (Stamf'd & Spald'g)	Hughes, Robert G. (Harrow W)
Davis, David (Boothferry)	Hunter, Andrew
Day, Stephen	Irvine, Michael
Devlin, Tim	Irving, Sir Charles
Dickens, Geoffrey	Jack, Michael
Dicks, Terry	Jackson, Robert
Dorrell, Stephen	Janman, Tim
Douglas-Hamilton, Lord James	Johnson Smith, Sir Geoffrey
Dover, Den	Jones, Gwilym (Cardiff N)
Dunn, Bob	Jones, Robert B (Herts W)
Durant, Tony	Jopling, Rt Hon Michael
Dykes, Hugh	Kellett-Bowman, Dame Elaine
Eggar, Tim	Key, Robert
Emery, Sir Peter	Kilfedder, James
Evans, David (Welwyn Hatf'd)	King, Roger (B'ham N'thfield)
Evennett, David	King, Rt Hon Tom (Bridgwater)
Fallon, Michael	Kirkhope, Timothy

Knapman, Roger	Shaw, David (Dover)
Knight, Greg (Derby North)	Shaw, Sir Giles (Pudsey)
Knight, Dame Jill (Edgbaston)	Shaw, Sir Michael (Scarb')
Lawrence, Ivan	Shelton, Sir William
Lennox-Boyd, Hon Mark	Shephard, Mrs G. (Norfolk SW)
Lightbown, David	Shepherd, Colin (Hereford)
Lilley, Peter	Shepherd, Richard (Aldridge)
Lloyd, Sir Ian (Havant)	Sims, Roger
Lloyd, Peter (Fareham)	Skeet, Sir Trevor
Lord, Michael	Smith, Tim (Beaconsfield)
McCrindle, Robert	Speller, Tony
Macfarlane, Sir Neil	Spicer, Sir Jim (Dorset W)
McLoughlin, Patrick	Spicer, Michael (S Worcs)
Mans, Keith	Squire, Robin
Marlow, Tony	Stanbrook, Ivor
Maxwell-Hyslop, Robin	Stanley, Rt Hon Sir John
Miller, Sir Hal	Steen, Anthony
Mills, Iain	Stern, Michael
Miscampbell, Norman	Stevens, Lewis
Moate, Roger	Stewart, Allan (Eastwood)
Monro, Sir Hector	Stewart, Andy (Sherwood)
Montgomery, Sir Fergus	Stewart, Rt Hon Ian (Herts N)
Moore, Rt Hon John	Stradling Thomas, Sir John
Morris, M (N'hampton S)	Sumberg, David
Morrison, Sir Charles	Summerson, Hugo
Moss, Malcolm	Taylor, Ian (Esher)
Moynihan, Hon Colin	Taylor, Teddy (S'end E)
Mudd, David	Temple-Morris, Peter
Neale, Gerrard	Thompson, D. (Calder Valley)
Nelson, Anthony	Thompson, Patrick (Norwich N)
Neubert, Michael	Thorne, Neil
Newton, Rt Hon Tony	Thornton, Malcolm
Nicholls, Patrick	Thurnham, Peter
Norris, Steve	Townend, John (Bridlington)
Onslow, Rt Hon Cranley	Tracey, Richard
Oppenheim, Phillip	Trimble, David
Page, Richard	Viggers, Peter
Paice, James	Waldegrave, Rt Hon William
Parkinson, Rt Hon Cecil	Walden, George
Patnick, Irvine	Walker, Bill (T'side North)
Patten, Rt Hon Chris (Bath)	Waller, Gary
Patten, Rt Hon John	Ward, John
Pattie, Rt Hon Sir Geoffrey	Wardle, Charles (Bexhill)
Pawsey, James	Warren, Kenneth
Porter, Barry (Wirral S)	Watts, John
Porter, David (Waveney)	Wells, Bowen
Powell, William (Corby)	Wheeler, Sir John
Price, Sir David	Whitney, Ray
Raffan, Keith	Widdecombe, Ann
Raison, Rt Hon Timothy	Wiggin, Jerry
Rathbone, Tim	Wilkinson, John
Redwood, John	Wilshire, David
Rhodes James, Robert	Winterton, Mrs Ann
Riddick, Graham	Winterton, Nicholas
Ridsdale, Sir Julian	Wolfson, Mark
Roberts, Sir Wyn (Conwy)	Woodcock, Dr. Mike
Roe, Mrs Marion	Yeo, Tim
Rossi, Sir Hugh	Young, Sir George (Acton)
Rost, Peter
Rowe, Andrew	Tellers for the Noes:
Rumbold, Mrs Angela	Mr. Tom Sackville and
Ryder, Richard	Mr. Nicholas Baker.
Scott, Rt Hon Nicholas

Division No. 294]	[9.36 pm
AYES
Barnes, Mrs Rosie (Greenwich)	Livsey, Richard
Beith, A. J.	Michie, Mrs Ray (Arg'l & Bute)
Campbell, Menzies (Fife NE)	Skinner, Dennis
Cohen, Harry	Taylor, Matthew (Truro)
Cryer, Bob	Wallace, James
Fearn, Ronald
Howells, Geraint	Tellers for the Ayes:
Kennedy, Charles	Mr. Alex Carlile and
Kirkwood, Archy	Mr. Simon Hughes.
Lambie, David

Question accordingly negatived.