Childcare Bill [HL] — House of Lords, 2015-07-06
Topic: Social Welfare
Kathryn Pinnock (Liberal Democrats, Centre to centre-left): My Lords, Amendment 39 is in my name and that of my noble friend Lord German and the noble Baroness, Lady Jones of Whitchurch. The amendment is an extension of our discussion on Amendment 34 on the links between this Bill and child poverty. As we know, the Government have a way of encouraging people out of poverty by encouraging them into work, and to make work pay. One of the ways of making work pay is by providing additional free childcare. Those who have relatives with young families will know the huge cost of paying for childcare in order to go out to work. We know that some working parents currently pass over most of their income to childcare costs, so this Bill is to be greatly welcomed However, I would like to explore through this amendment the link between the Bill and the incomes that families will have, and the changes to those incomes that we know are on the cards later this week in an announcement from the Chancellor of the Exchequer. The Government have claimed, no doubt accurately, that the provisions in the Bill will see an additional benefit to families of around £2,500 a year. That would be a huge and significant saving to parents. However, the simple fact is that for those on low incomes and who most need the benefits of free childcare, all that good work could be wiped out by government cuts to tax credits of various kinds and perhaps to housing benefit I know that the Minister will be unable to tell us exactly what cuts to tax credits we are set to see in the Budget this week. Indeed, the Government have been singularly unwilling to spell out where their £12 billion of welfare savings will come from, but I think all sides of the House can agree that these cuts are likely to come at the expense of lower-income working families. The Prime Minister has already trailed that we will see cuts in tax credits, with some people suggesting that there might be up to £5 billion of projected savings. If that is the case, it would result in families with two children losing up to £1,700 a year, seriously diminishing the very welcome impact of the free additional childcare Despite what the Prime Minister suggested about companies paying more to workers to offset the impact of any cuts to tax credits, without real action on the minimum and living wage that is frankly rather more hope than expectation. We cannot assume that employers will be either able or willing to pick up the slack by paying a living wage to make up for the loss, for instance, of working tax credits. The decision about tax credits will make a huge difference to people, whether in employment or not. Cuts will mean that it is no longer financially possible for someone with high childcare costs to go out to work. That means that they will lose not only their tax credits but potentially the entitlement of free childcare, a double whammy that will do what none of us wants and punish the children of those families However, as much of this detail is still to be discussed and we may not know the Government’s intentions until Wednesday, we propose in this amendment to have a review two years hence of the financial impact on lower-income working families of the combination of the free childcare offer and any reductions in working tax credits, child tax credits and housing benefit. I made the case earlier today about the important link between this Bill, child poverty and the impact on low-income families. If the Government want to be progressive—I am sure they do—they will see that link and try to make work pay by ensuring that childcare is of benefit to low-income families. Ultimately, that is the purpose of this amendment: to consider the link between the two. I beg to move.