HL Deb 10 November 1999 vol 606 cc1396-401

5.37 p.m.

Lord Bach rose to move, That the draft regulations laid before the House on 19th October be approved [29th Report from the Joint Committee].

The noble Lord said: My Lords, as the House knows, the working families' tax credit and the disabled person's tax credit were introduced on 5th October 1999. They will replace family credit and disability working allowance. Both WFTC and DPTC, as they are known, include a childcare tax credit. To qualify for the childcare tax credit, families will need to meet the general qualifying conditions for working families tax credit and will also have to use eligible childcare.

The current rules about eligible childcare focus almost entirely on childcare for the under-eights, but we have raised the children's age limit for help with childcare costs to 15—in line with the National Childcare Strategy—and to 16 for disabled children. Very little in the current rules caters for childcare for this older age group who have very different needs.

The older group of children need breakfast, after-school and holiday clubs. Such childcare is increasingly available and can be run by a variety of organisations. Moreover, because of the diversity of childcare being provided for these older children, there is no common feature that would identify appropriate good-quality providers from inappropriate ones. For that reason, powers were taken under Section 15 of the Tax Credits Act, which was passed by your Lordships earlier this year, in order to enable the Secretary of State to make regulations to create a category of good-quality providers. This category covers those providing childcare for children aged eight and over, so making their services eligible childcare.

The regulations will enable the Secretary of State to accredit appropriate organisations who can then administer an approval system for childcare providers. The details of the scheme are contained in the regulations. They also set out the minimum standards which childcare providers will need to meet to gain approval from an accredited organisation. These powers will come into effect from April 2000. Therefore parents of older children who meet working families' tax credit qualifying conditions can claim childcare tax credit for childcare they receive from approved providers.

The regulations will apply across the United Kingdom, although the function of approving accredited organisations will be executively devolved to Scottish Ministers and the National Assembly for Wales. There will be no accreditation scheme in Northern Ireland because its existing regulation of childcare already covers older children.

I draw attention briefly to the main provisions of the regulations. Regulation 5 sets out the criteria for accrediting quality assurance schemes. Regulations 7, 8, 9 and 10 and Schedule 2 set out how accreditation will be applied for, withdrawn and renewed. Schedule 1 of the regulations sets out those matters which an organisation applying for accreditation will need to include in its approval system. Regulation 11 sets out requirements that the accredited organisation will need to meet during the period of accreditation. This includes the provision of information to the Inland Revenue, the maintenance of records and a requirement to allow the Secretary of State or his nominee to attend meetings of the accredited organisation's approval panel.

Regulation 14 and Schedule 3 set out the minimum criteria which a childcare provider must meet to be approved by an accredited organisation. We expect that organisations will include these as part of their own criteria. Childcare providers must provide a portfolio of evidence to demonstrate that they have met the standards set out in an organisation's quality assurance scheme.

This scheme has been welcomed by the main childcare organisations and other groups whose views were sought on the regulations earlier this year. In September we also issued draft guidance to organisations which might be interested in applying for accreditation.

In England we have received eight expressions of interest from organisations who wish to seek accreditation from the Secretary of State. This includes local authorities and registered charities covering the out-of-school care and childminding sectors. Scotland and Wales expect a smaller number of applications as they have fewer childcare providers who cater for the older age group.

These regulations are to be welcomed. They will increase the number of families who will be eligible for the childcare tax credit element of working families' tax credit and disabled person's tax credit. They represent a better deal for working families, making work pay, and they provide help for lowest income families and tackle poverty. I commend the regulations to the House. I beg to move.

Moved, That the draft regulations laid before the House on 19th October be approved [29th Report from the Joint Committee].—(Lord Bach.)

Baroness Blatch

My Lords, I am grateful to the noble Lord for explaining these regulations so clearly. As he has said, the "parent" Act for these regulations before us tonight is the Tax Credits Act 1999. It will come as no surprise to the noble Lord to hear that we continue to have concerns about the Act, especially as regards the way in which it works in relation to childcare provision, which is the subject of the regulations before us.

These provisions do not treat families fairly. Some better off families receive more help than poorer families. For example, the measure fails to take into account the presence of a second adult, except, that is, for the purposes of reducing the credit. The Christian Action Research and Education Organisation states, A fair system should take account of the second adult both for fixing the basic credit as well as for calculating family income". Working families' tax credit also penalises two parent but single income families because, unlike lone parents, they do not qualify for the tax credit. No account is taken of the cost of bringing up children at home while tax credits are given to lone parents who employ another person to look after their children. A policy which discriminates against couples in this way is hardly conducive to stable two-parent families. It also has the ludicrous effect of disadvantaging mothers who look after their own children while rewarding mothers who look after their neighbours' children. This will penalise excellent, informal family arrangements and will institutionalise childcare. The whole system of WFTC has a built-in incentive not to care for one's children at home. It positively invites parents and grannies to register to look after other people's children rather than those of their own family.

As I understand the position, nannies comprise the largest group of child carers in the country, and under the system parents do not qualify for tax credits if a nanny looks after the children within the security of their own home.

The statutory instrument sets out an incredibly bureaucratic system of regulations. They appear unnecessarily complex compared with the provisions which apply to a more vulnerable age group; that is, children under the age of eight. I cannot understand why it is that parents of children who are under eight years of age can claim tax credit where the carer is a registered child minder under a perfectly respected and well understood local authority registration scheme and why it is that the scheme before us today is so necessary.

In another place when these regulations were debated the Minister was not entirely clear in her responses to questions raised. I would therefore like to ask the Minister whether it is the case that the accredited organisations will only be expected to make criminal record checks on potential childcare providers, rather than be required to do so?

It is also not clear from what was said in another place, nor from the regulations before us, who in practice will substitute for the Secretary of State and be responsible for accreditation of organisations, appointing awarding panels, monitoring health and safety and the granting and/or disqualification of providers etc. How many organisations are expected to cover England and Wales? I accept that the noble Lord has said that eight organisations have shown an interest, but how many are envisaged to cover the whole of England and Wales?

Finally, can the Minister be more forthcoming about estimated costs? I understand that it is not possible to estimate how much take-up there will be of the scheme. However, there will be start-up costs for the system to be put in place, and, of course, running costs. What are these likely to be? I have seen in a publication the figure of £250 million. This sum would allow for only a relatively modest take-up of the scheme. Therefore should the take-up be far greater, is there an open-ended budget to meet the costs, or would the scheme have to be cash limited and, if so, how would that be done?

Lord Bach

My Lords, I thank the noble Baroness for her remarks. I shall do my best to answer some of the questions that she has raised. Of course there is a difference as regards the two sides of this House in relation to the working families' tax credit. We believe that that scheme, and the childcare scheme that follows from it, will assist particularly those who are poorest and in work. For that, it should be praised. The system of family credit does not have that effect.

I wish to deal with the point about the criminal records check. I make it clear that it is expected that accredited organisations and childcare providers will check criminal records and the DfE list and the DoH list—of which the noble Baroness is aware—where that is possible under current arrangements. We expect organisations which apply for accreditation to include a requirement in their quality assurance scheme about what checks they expect childcare providers to make on the staff they employ. The Government expect this to include police checks, together with medical and qualification checks, and taking up references on staff. If an accredited organisation has doubts about the suitability of a childcare provider to work with children, it can refuse to give that childcare provider approval under the requirements of this scheme.

The back-stop is this: if the Secretary of State is not satisfied that an organisation seeking accreditation has fully met the requirements of the scheme—which may include the standard it sets on checking suitability of staff—he can reject the application.

I move on to deal with funding and the question of whether the childcare tax credit will cost a large amount of money. For the £4 billion figure quoted by the Institute of Fiscal Studies to be right, there would have to be a massive behavioural change affecting almost 1 million families. Those who do not currently incur childcare costs and who get the childcare tax credit would need to pay for at least 30 per cent of the cost out of their own pocket. Our estimate is that costs are expected to be about £200 million in the first full year. That figure steers a course between the current position with the failed childcare disregard in family credit—which costs just over £30 million—and the kind of massive charge represented by the figure of £4 billion.

I have dealt with a couple of the matters raised by the noble Baroness. If there are any matters that I have not covered, I will be happy to do so in the usual way.

We believe that the working families tax credit and its childcare provisions are very important as an encouragement to help into work those people who want to. It will particularly help some of the poorest families in our country to have a decent standard of living. It is right to say that for many years past it has not been easy or possible for many mothers, in particular, to go out to work because, if they did so, no one has been available to look after their children. We hope to at least make it easier for such people to do so and to feel secure about who will be looking after their children.

The noble Baroness mentioned families who work shifts and referred to nannies. It is important to the Government that the funding is seen to support good quality childcare. We do not support a registration scheme for nannies, which would be difficult to administer and would not, therefore, be a practical solution to the concerns that some parents have stemming from reports of recent tragic cases, which I do not need to go into. Parents need to be especially careful in their choice of nannies because there is no way that the quality of care can be assured.

Baroness Blatch

My Lords, I am grateful to the Minister for giving way. That was not the point that I raised on nannies. My point was that a nanny could register and become a child minder employed by one family and work for another family where the tax credit could be received. I said that there was an anomaly there. I did not mention shift work at all. I did ask about the start-up and running costs. While I do not expect the Minister to have the answer tonight, it would be helpful to receive it in writing.

I am profoundly disappointed that it is only "expected" that criminal checks shall be run. In schools, anyone working with children are required by law to seek that information from criminal records. We are talking about a group of vulnerable young people. It seems very unfortunate therefore that if someone does not do so, although it may be expected of them, it will not be necessarily wrong.

I did not introduce the question of the figures from the Institute of Fiscal Studies. I do not know about that. I referred to the figure that the Minister mentioned, the £250 million. It is not correct to say that poorer families are helped more than wealthier families. I gave examples of where more wealthy families received better and more help than poorer families. That is also an anomaly in the system.

Lord Bach

My Lords, I am grateful to the noble Baroness. I shall supply her with the figures she asked for by way of letter.

Perhaps I may return to the question of police criminal records. As the noble Baroness will know, at present there are three sources of information that help to assess a person's suitability to work with children; the police check of criminal records, the DfEE list 99 and the Department of Health consultancy index. We expect accredited organisations and childcare providers to check the criminal records and the other lists where that is possible under current arrangements. Local authorities which provide holiday play schemes have access to these checks. Voluntary organisations which are members of the voluntary organisations consultancy services will also have access to all three checks. The eight organisations which have registered their interests with us in applying for accreditation will all have access to these checks. As I said, if they are to be successful, they will be expected to make those checks in a very careful way.

The safety and well being of children is paramount. I know that that is behind the noble Baroness's concerns. I say again, we expect organisations who apply to the Secretary of State to include a fit person check as a requirement within their quality assurance schemes. We expect accredited organisations and childcare providers to check criminal records where that is possible under current arrangements. If an accredited organisation has doubts about the suitability of the childcare provider to work with children, it can refuse to give that childcare provider approval under the requirements of this scheme—and it is expected that it will. I commend these regulations to the House.

On Question, Motion agreed to.