My Lords, I am grateful to the noble Baronesses, Lady Jones and Lady King, for their amendment and for the opportunity to debate the important matter of the Childcare Payments Act. As noble Lords will be aware, this Act introduces the tax-free childcare scheme announced by the Chancellor of the Exchequer in his 2013 Budget. Once it is in place, the Government will meet 20% of eligible working families’ childcare costs up to an annual maximum of £2,000 for each child. That is the equivalent of basic-rate tax relief on childcare costs of up to £10,000 per child.
I am aware of the Labour Party’s policy to increase the 15 hours of childcare to 25 hours. The noble Baroness said that this is fully costed and will be paid for by the bank levy. That is interesting, as that would make it the 12th time that the Labour Party has spent this money and therefore it would be totally unfunded. It has also costed the increase at £800 million. However, we believe that it would cost £1.6 billion, and that is on the basis that this extra increase in demand would not put prices up, which providers tell us it would. Indeed, they say that they would struggle to provide these places. We have increased the number of places by 100,000, which is a remarkable achievement, but we do not think that it would be right to put this pressure on the system at this time. It is a question of balance between parental care and childcare.
The amendment concerns the impact of the Act within the context of the Government’s wider track record. It would require the Chancellor of the Exchequer to review its effectiveness and publish his conclusions. The 2014 Act received Royal Assent on 17 December and we now move to the important phase of implementation. I understand the noble Baroness’s desire to debate this matter here, given that the Act was a money Bill with little opportunity for such debate, and I hope that I will be able to reassure her in relation to the amendment.
Amendment 35AD would require the Chancellor of the Exchequer to publish, within three months of the passing of this Bill, an assessment of the benefits of the scheme under the Childcare Payments Act to parents of three and four year-old children. It would also require those benefits to be assessed in addition to the likely benefits of funding 25 hours of free childcare.
This Government fully understand the importance of high-quality early education for this age group. That is why we funded an increase from 12.5 to 15 hours a week of early education for three and four year-olds. However, it is important to recognise that the cost of childcare is not just an issue for children under five but also an issue for school-age children. For many working families, the high costs of childcare make this one of the largest parts of the household budget. This Government believe that there is a powerful case for improving access to childcare throughout childhood to ensure that parents are supported to work if they choose to do so.
The introduction of the new scheme provided for in the Childcare Payments Act for children up to the age of 12 will build upon the £5 billion per year that the Government already spend on early education and childcare. It will help many more parents to meet these costs, including those such as the self-employed, who cannot access support under the employer-supported childcare scheme which it will in time replace.
The Government have already made a commitment to review the impact of the new scheme two years after its full implementation. This was set out clearly in the impact assessment published last year. The scheme will become available only from the autumn of this year, and it is important to allow time for the measures to properly bed in before conducting a review. Therefore, no purpose would be served in carrying out a review so soon.
I hope that the noble Baroness will be reassured that the intention of her amendment is already being met without the need for further legislation. On that basis, I ask her to withdraw it.