Childcare Bill

I was going to come on to the hon. Member for Reading, East. It is partly a privilege to speak because this is the first child care Bill to be considered by the House, as I think the Secretary of State confirmed. It arises from the 10-year plan published a year ago at the time of the pre-Budget report of 2004. Like any legislation, it is worth asking a simple question at the outset: why is it necessary? My central case is that it is necessary because it explicitly sets out the state’s responsibility for child care provision in statute for the first time. It strikes the right balance between the responsibilities of the Government, who need to plan provision at local level, and the role of voluntary and private sector providers, which other hon. Members mentioned. I want to argue that the Bill is, first, necessary on the grounds of equality; secondly, justified by considerations of efficiency—in particular, an analysis of the child care market and its imperfections; thirdly, necessary given the progress made since 1997 and the lessons that we have learned about child care and child care policy; and, fourthly, right in its choice of local authorities as the body responsible for planning provision and for being accountable to parents. So the first argument for the Bill is on grounds of equality—the need for more equal life chances for children and equal access to the labour market for women, who tend to be primary carers. Labour Members believe that although parents have the primary responsibility for children, it is, as Beveridge said 60 years ago,"““in the national interest to help parents discharge that responsibility . . . ””" Today, we know from research that life chances are shaped not at four or five, as we used to think, but much earlier in life, with the differences apparent at 22 months. We know that the right kind of intervention—Sure Start and other policy measures—can make a difference, which is why it is right that clause 1 sets out a new duty on local authorities not just to improve children’s well-being but to reduce inequalities, as my hon. Friend the Member for Bishop Auckland said. The case for the Bill is also based on the dramatic transformation of the role of women in the labour market. Fifty years ago, just one third of women worked; today, more than two thirds do. In the context of that change, the role for public policy is to give parents and women in particular real choice, so that they can both be at work but also have time off after the birth of a child, so that they can work part-time, and so that some can choose to work full-time and have the child care available when they need it. The hon. Member for Reading, East said in his interesting remarks that the Government were forcing women out to work. Perhaps I can be so bold as to suggest a bit of homework. He should look at the 10-year strategy on child care. Chart B7 on page 77 makes it clear what has happened to the position of mothers with children under five. In 1990, less than 50 per cent. of them were in work. By 2001—in just 10 years—nearly 60 per cent. were in work. The Labour Government did not force them to do that; it is mothers who want to do that. A large amount of bunkum—I hope that that is not unparliamentary language—has been talked about how the Government favour forcing women out to work and do nothing for mothers who want to stay at home. The pre-Budget report of 2004 allocated £600 million by 2007–08, around 40 per cent. of which went, I think, on extending paid maternity leave for mothers from six to nine months. That is nearly half the amount of money. Some of it went on the transformation fund and some on nursery education. We are helping to give mothers who want to go out to work a choice, but far from being prejudiced simply in favour of them, we are, within limited resources, helping to extend choices for mothers who want to stay at home. My second argument is about efficiency. For me, that is the nub of the debate—the essential reason for the Bill. It turns on whether we believe that the market on its own—Conservative Members will be interested to hear this because they are great believers in the market—can deliver the choices that we want for parents and women. In a debate in the House, Lord Lamont of Lerwick, then the right hon. Member for Kingston upon Thames and the Financial Secretary to the Treasury, summed up what was then the prevailing view of the Conservative party. He said:"““if married women want to work and if employers want to employ them, the market will work and employers will pay the necessary wage to encourage married women to return to work.””—[Official Report, 11 July 1989; Vol. 156, c. 892.]" I welcome the Bill because the initial clauses in particular represent a profound break with that position. I believe that to be right and I want to explain why. On its own, the market has not delivered and will not deliver. There are three reasons for that. First, there are major gains to our society of child care and education for the under-fives which are simply not priced in the market. Economists, and I count myself as sort of an economist, would call those positive externalities. It makes the case for making child care more affordable, as the Bill will do, than it would be if it were simply left to the market. For parents, in particular mothers, we know the long-term costs of being out of the labour market for a number of years. Each year of interruption to hourly employment has been estimated to reduce hourly earnings by 4 per cent. The danger for our society is that if mothers are forced to stay out of the labour market, we lose their skills and talents. In the real world, the costs of child care are so high that an individual would have too low a financial gain from work in the short term without the Government playing a role. That is part of the case, which, I am sorry to say, the previous Government never accepted, for a general subsidy for lower and middle-income families—currently expressed through the child care tax credit—for the costs of child care so that the choice of whether to go out to work is real, especially for mothers with young children. Externalities apply not just to parents but to children. Every additional month of quality pre-school care from the age of two has been shown to improve cognitive performance at the start of school. The country has an interest in promoting integrated high-quality care and education, because that is in the long-term interests of our nation. There is a second market failure. Perfect markets rely on the presence of perfect information, and in child care there are significant imbalances of information. That is addressed by clauses 12 and 13. It is hard for parents truly to know the quality of their kids’ child care settings. In addition, research suggests that parents facing tight cost constraints may not be fully aware of the long-term benefits of quality—hence the role for Government to ensure that the work force are properly trained and to subsidise quality. That will lead to better long-term outcomes and give parents the confidence to use child care if they wish to do so. The third problem with simply leaving child care to the market concerns availability. In most markets, there are low costs involved in switching from one provider to another, but clearly that is not so in child care, given the disruption faced by children and parents. I regret to say that turnover of child care providers is high. In ideal theory, there are many consumers of and providers of child care, but in many areas of our country that is not the case, so small changes in demand have very disruptive effects. There are real costs and problems in relation to sustainability, hence the need for a role for Government to try to ensure greater sustainability and continuity in the child care market. That is what clause 6, in particular, seeks to do. So the case for the Bill on the grounds of equality and efficiency is clear.