Anne Longfield, Sarah Jackson and Katie O'Donovan gave evidence.

If we can go from left to right, please, will the witnesses introduce themselves for the record?

Anne Longfield: I am Anne Longfield, the chief executive of 4Children.

Sarah Jackson: I am Sarah Jackson, the chief executive of Working Families.

Katie O'Donovan: I am Katie O'Donovan, the head of campaigns and press at Mumsnet.

Are you all okay for us to call you by your first names?

All witnesses indicated assent.

Q 85

Thank you very much for coming. By way of introduction, would each of you say a little bit about your overall views of the scheme, highlighting any concerns you may have? I will then ask some other questions. Shall we start with you, Anne?

Anne Longfield: Thank you. 4Children welcomes the additional help for parents to help pay for the costs of child care. We have been aware for a long time that child care costs are a really debilitating factor for an awful lot of parents—indeed, that they were quite prohibitive in terms of work. We valued employers’ involvement in the employers’ schemes, so we would not want to lose their engagement, however it was run. None the less, we welcome the fact that this is universal. It becomes part of the way we do things in this country and, not wanting to undermine the comments made about its implementation, it is easily understandable for parents, which we think is very good.

In terms of some areas to highlight that we think you need to keep a careful eye on, one is a need to create some very smooth links between those who are on universal credit and those who are not, because there is potential to fall through some of the cracks there. We think there is a need to include a review for potential annual uprating, year on year, because it is a set amount at the moment and child care costs will change over time. We think there is a strong argument about looking at whether the upper age should be 14 rather than 12, because that is the age up to which most parents are seeking child care. The final point was about not losing employer engagement in that.

Sarah Jackson: I broadly echo all those headlines. I am very pleased that there is additional help. Where an amount of money has to be spread very thinly, I am sorry that it is not absolutely focused on the poorest families; it is a shame that we have gone above basic rate taxpayers on this. I am very anxious about the loss of the employer link, which I would be happy to talk about later.

Although Anne said that it is simple, I think it is simple if you qualify, but it is very complicated if you are borderline between universal credit and tax-free child care. It is difficult there.

We are particularly concerned about the additional costs faced by parents who have disabled children. We would like to see, for example, qualification going up to the age of 18, not 16, and we would certainly like to look at some way of increasing the percentage that is drawn down by parents who have got disabled children.

We are concerned that this scheme involves the necessity for both parents to be in work. There is a risk when someone drops out of work for any reason—if they are made redundant or if they are training—and I would like to look at what we could do to help in that situation.

Finally, there is a really big issue about the messaging around the whole scheme. It must be made clear to parents so they understand that it is a contribution towards what they pay, up to a maximum of £2,000, and that it is 20% of what they actually pay. Otherwise, there is a real risk of great disappointment and a backlash once parents understand that it is not a £2,000 cheque from the Government.

Katie O'Donovan: I would like to echo lots of those points. I will not go into detail about how significant this issue is for parents because you are all aware of the cost of child care, but I want to highlight one statistic. We did a report with the Resolution Foundation earlier this year and found that 67% of mothers in work and 64% of those out of work see child care costs as the biggest barrier to taking on more employment, which highlights the economic gain for everyone. Mumsnet recognises that this is a significant contribution to the child care costs that people face. We thought the representation and consultation worked well to include over-fives from the beginning of the programme and to increase the limit.

We are concerned that there is no opportunity for costs to be reviewed on an annual basis. Good work from colleagues in the sector shows how fast child care costs rise, and if there is no incentive or safeguard to prevent providers from putting up their costs, we could quickly see this significant investment not making a big change to parents’ costs. We are pleased to see that there is a provision in the Bill to ensure there is no charging to parents for the contribution. It would be a significant concern if that were to change.

We would like to echo the points that have been made. Mumsnet is the biggest online support network in the country for parents with disabled children and children with special education needs. Being able to use child care support when you need respite is an important factor that could be included in the Bill. Others are tabling amendments, and it would be good to see support for them and for extending the age provision from 16 to 18.

Q 86

Thank you. I will pick up a couple of points. Katie, perhaps we can all expand on the point you were just talking about. We all know that child care costs are rising exponentially, and that the supply of places is at best flat, if not in decline. There is a supply and demand issue as it is, and this scheme will pump money and more demand into the system. What is your assessment of the impact it will have on the child care market and prices?

Katie O'Donovan: I am probably not best placed to talk about what impact it will have on the child care market. It will help parents to meet existing costs, but they are at the mercy of the market at the moment. In  places where demand outstrips supply, they will have to meet increasing costs, as they have done over the past five years, during which it has gone up by about 27%.

Although the extra support is welcome, if there is no guarantee that supply will increase we must pose a big question about what will happen over the next five years. When we ask our users whether they would prefer universal provision, or a tax incentive or tax support, they have previously supported increased food vouchers or food benefits, similar to this scheme. Part of the problem is that when they collect what should be the provision at the moment—the 15-hour free entitlement—it is not there in many cases, which gives you a real credibility gap. If universal provision were extended, it would actually meaningfully be there in their communities. It would not be there theoretically for other people.

Could I just ask you to keep the answers a little shorter, because quite a lot of Members would like to probe and there are three of you, so there may be trouble getting all the points in?

Sarah Jackson: I would back up what Katie said on that.

Anne Longfield: It is untested. We do not know yet. There is such fluidity around parents’ choices that we do not know what the impact will be. What we do know is that a lot of families make decisions about the volume of work based on the hours of child care they can afford, and the scheme will hopefully enable them to extend that. One of the things that parents say is that is not only about re-entering the workplace, but about extending their employment.

We are still talking about the need for a parent to find 80%. I do not want to be churlish about the 20%, but 80% is still a significant amount for parents to find. I do not think there is going to be a sky-high increase in demand, but it could be steady over time. It could be about extending employment, rather than about bringing new people back into the field.

Q 87

Maybe this one is more for you, Sarah. Can you perhaps expand a bit on what you said about the interaction of this system with the current tax credits, soon to be universal credit, and any feedback you have had from working families about how they might manage those parallel systems and moving between them?

Sarah Jackson: The difficulty about moving between the two systems is that it is enormously complicated. It is not really as simple as saying, “Would you be better off on universal credit or would you be better off using tax-free child care?” What parents really want to think about is the number of hours that they want to work to be with their children.

The kind of calls that we get are from people saying, “I would quite like to change my working hours.” I spoke to the advisors who said that today they had a call from someone whose family income is £40,000. She is not currently claiming any help from tax credits at all and her weekly child care costs are such that she probably could. She did not understand that there was any help that she could get and I think that parents find that sort of partial help, the percentage, quite difficult to get their heads around. She was also quite convinced that although she wanted to reduce her working hours from  four days to three, she would not be able to afford to do so. She was finding it very difficult to get her head around the fact that if she reduced her hours, she would reduce her income and therefore increase the amount of help that she would get from the state.

It is an issue now between tax credits and vouchers, but it is going to be more complicated between the new system and universal credit. One of the big things that we have got to think about is how do we create an information system that makes it very simple for parents to be able to work out what is the best opportunity, or the best combination of working hours and help from the state, for their family. The real difficulty is that there are so many variables, as I understand from colleagues more involved in the advice giving than I am, that they are not sure that one could build an online model.

What parents need to be able to do is scenario planning; they need to be able to say, “What would happen if?” I suspect that we could have an online tool for parents to access where at the very least they would know whether tax-free child care or universal credit was for them and where the people in the middle were just signposted and told, “You are going to have to speak to an advisor.” My benefits advisors are saying it is probably a 40 minute conversation to really unpick it for people.

People’s incomes change. When you are in that group, they change. We get a lot of people who phone up and say, “I am on a flexible contract,” which may or may not be zero-hours, but people’s working hours change a lot and so their incomes change frequently.

Q 88

Sarah, building on that point and from the conversation we were having this morning about how to get information most readily to parents so that they can make those informed decisions, you mentioned an online service there. Could we broaden out that conversation to the other two panellists here so that they give us their thoughts on that? Getting good information to parents is really important.

In the interests of time, may I pose my other question as well? It is about disabled children, who I think Katie was talking about. I know that short break funding is often used to support after-school clubs, but what other information could the witnesses give to help us understand how important short break and respite care funding is for working parents? It can so often make the difference between staying in work and not being in work.

Anne Longfield: Starting with the information, we need to ensure that this is understood, valued and accepted by all those people who come into contact with families who could possibly benefit. That is one of the crucial things. We are talking health visitors, schools and the whole remit of people to whom families might come for help and advice or to talk about other things. That is one thing: using and getting that good information out to others.

You cannot overestimate the value of public information campaigns, which are running really well in some areas around the two year-olds and have, in the past, around other forms of child care help—buses, bus stops and all of those things. People start to see them and notice them, and it starts to become an area of discussion. We know that word of mouth is very important with that. Certainly, there are some key points where parents are—schools, health centres and GPs—and it is really important that this information gets out there.

In terms of the after-school club, I think what we are talking about is a high-quality environment where there are trusted, skilled individuals who can help to support children and help them to learn, develop and flourish as individuals. What all parents want is to be able to work with peace of mind, and those with disabled children are no different. The capacity to do that in after-school clubs is immense, and at the moment it is not really maximised.

Sarah Jackson: When we are specifically looking at children with disabilities, it is worth reminding ourselves of the difference in costs. The average cost per hour of child care for a child who does not have disabilities is £4.50. When we have done surveys on children with disabilities, we have seen that 86% pay above average, 38% are paying between £11 and £20 an hour, and 5% are paying more than £20 an hour. That impacts on parents’ ability not only to work but to pay for respite care or, indeed, for swimming lessons at the weekend for the child. There is every good reason for thinking that here is a group of families who really need and can benefit from additional financial support from the system.

Katie O'Donovan: I think that that extends to families who have children with special educational needs and without special educational needs. Sometimes it is very difficult to have quality time with either child when you are constantly also caring for someone with additional needs. There is tale after tale on Mumsnet of people who are not able to access the free provision available to them because there is no one in the area who provides that specialist care, or they say, “We have to care for your child on a one-to-one basis, and the free 15 hours just does not cover that so we will not take your child.” There are two elements: one is really about the well-being of the family as a unit, and the other is about there being a place where you can access the child care that you should be entitled to.

What has been said on information is absolutely right. I think an online tool sounds good, but if you build it, people have to come. If there are no traffic drivers or advertising to send people to the site, it simply will not work. We have an old saying—I am from Mumsnet, but there are other sites like Mumsnet—“You’ve got to fish where the fish are.” If you are building something for parents, it does not need to be a brand new website. It does not need to be a new, exciting, brave world out there. Harness where parents are already online and really give them that information.

I am going to call Catherine McKinnell. After that, could we ask one question each? We can always have another bite at the cherry if we have time left at the end.

Q 89

You have all mentioned the importance of having employer engagement in the provision of child care support. Do you feel that will be lost under the new scheme? What would you recommend or advise the Government to do, to try to mitigate that?

Anne Longfield: I will start in broad terms, and I am sure that Sarah will add to this in some detail. We have seen employer engagement in child care fluctuate hugely over the past 20 years. There have been some times when it has been seen as a labour force issue and there has been a shortage, so employers have got more involved;  then they have gone away, and they have come back again. Certainly, it is something that is there at the moment.

As one of the stakeholders, if you like, who benefit from child care, I do think employers have a role to play. What we do not want is for employers to think that the state is looking after the matter now, so there is no role for them. I think that employers have a valuable contribution to make. Some of that might be financial, and it certainly will be around working conditions, flexible working and the like. It might be about support and practice. Certainly, in terms of keeping that engagement, there needs to be some proactive work from the centre to reach out to employers and find a way of linking them in and keeping that profile and good practice about their engagement.

Sarah Jackson: If we think back—we have been around this block rather often—to the mid ’90s, there was a campaign called Employers for Childcare, which was led by the then Lloyds TSB. That was concerned with building a business case for why child care was important to British business and saying what business could do to support it. That contributed significantly to the 1997 Government’s national child care strategy. All that was being done at a time when flexibility as we know it today was completely undreamed of. The then child care strategies were based around child care being needed from 9 to 5, Monday to Friday, but we are now in a world where parents are being asked to work early mornings, late night shifts and weekends. We really need to go back to what the business case is. Why does business, and why should the public sector as an employer, care about child care? There is a real role for Government in talking up child care as part of the economic infrastructure and the necessity for employers to become engaged.

The other thing is an issue of equality at home and work, and about support for fathers at work. At present, not only do employers who provide vouchers know their parents, but many know the fathers, who are usually the invisible parents at work, and I feel that by unpicking this link, by taking employers out of the new system, we are pushing against the policy objectives of shared parental leave, which is about fathers and mothers being brought into focus at work and being able to take part in child care. It is unfortunate that we have lost that link.

Katie O'Donovan: The only thing I would add is that employers are perhaps part of the public information message about how parents decide which is the right system for them to be in. That is part of the conversation that they know is essential for their employers to have, too.

Q 90

That takes us back to the universal credit issues that you were raising and some of those complexities. You mentioned, Sarah, that the new system is likely to make things much more complicated. I want to understand what it is about the new system that adds to the complexity—

We will need a very brief answer, because so many Members wish to ask questions.

Is it the fact that it is now on a per-child basis? Obviously, that is a fluctuating requirement for parents, but now we also have a much more flexible work force—zero hours contracts are a reality for large working families as well.

Sarah Jackson: It is because low-income families’ situations change so rapidly, so it is difficult to get a hold on the best option. You may have things to add, Anne, but I know that the Committee probably has better witnesses than us in the next session.

Anne Longfield: Yes. I guess that one of the things is that there is huge fluidity about being in work or out of work. There is also very temporary work that families are taking on. If the two systems are not seamless, we do not want families to get stuck in one, not being able to get support to get through to the other. If a journey is there to be made, we want a system that can help families through it, with those who can advise and help people to get through it.

Q 91

One point that several of you made was about the need for annual uprating. I have a “stupid boy” question. I am well aware that thresholds and caps often get out of date if they are not uprated, but we are told that this £10,000 cap is way beyond the average spend at the moment. First, if we had an annual uprating, would you expect any movement in the foreseeable future? Secondly, ought the contribution percentage—the 25%—to be subject to annual assessment also?

Anne Longfield: My answer would be yes to both those questions. Yes, most people might work part time and be drawing part time, but a lone parent in London would be claiming the full amount if in need of the child care costs, because that is how much they would be. We are talking £200 for a nursery easily, and that is not the top end.

In Somerset, we cannot find a nursery at all, so we are ignorant about these things.

Anne Longfield: In terms of the amount, one child and a £200-a-week nursery easily gets people to that position, so we would expect the amount to go up. Actually, it did go up during the period when it was being considered. We would expect it to go up year on year, so there is an issue of just keeping up with price, but there is also another issue of reflecting on whether £2,000 is enough and is the right amount to be a driver for all the things that we want to see, which is to do with parents being able to flourish at work and at home.

Katie O'Donovan: I think that is a really important point, because the assumption can easily be made that the richest people have the most expensive child care. I have looked for evidence of that and found it difficult to find. If people are paying for a full-time nursery place in London, or in about 25 local authorities that the Family and Childcare Trust looked at, then they are paying £10,000 a year, and they could be doing that on a relatively low income in order to stay in work.

Q 92

I might have misunderstood this, but you seemed to suggest that higher-income families would benefit more from this than lower-income families. Is that right? If so, is there anything we can do to address that?

Anne Longfield: I can give you some analyses that show that. I think Resolution is the main organisation that has put some of those forward.

Katie O'Donovan: I am not sure if the point is that they will benefit more, because everyone will benefit at the same level. It is about whether, if you look proportionally at how you are spending the whole envelope of funding, it is spread across people who earn up to £300,000, rather than focused on people who earn up to £50,000.

Anne Longfield: Two parents can earn £150,000, so it is in-built.

Sarah Jackson: Whereas two parents earning £40,000 is £80,000 a year, and that is a pretty good family income.

Katie O'Donovan: That is the difference between where the thresholds are set for this and, for example, child benefits—something that is very much at the front of parents’ minds in their analysis of it.

Q 93

Anne, you put it really well when you said that this is about more parents being able to flourish at work and at home, and that is the whole aim of the Bill. As we all know, child care is a major issue for parents and a large cost. I heard the wish list of additional things at the beginning. If we get the communication right, which is extremely important, do you think that this will reach out to and help more families and children across the spectrum? We are trying to get to many more families, to help them flourish at home and at work.

Anne Longfield: I think that, by making this a part of life and universal, it becomes part of the way we do things; that is the benefit of universality. We can talk about the starting point, the 20% and other aspects of it, but by making it part of life, it becomes an accepted norm that people expect. Expectation is a great thing when you are looking at your plans for the future, in terms of work and parenting. This is a significant move, in terms of both the amount and the cultural step that Government and society take if parents are able to work and bring in income. I do not have the estimates at my fingertips, but the amount that an increase in the maternal labour force would bring in is certainly quite significant. It is something that will pay for itself, but it is also a big cultural step.

Q 94

I agree entirely that families, parents and societies are stronger if people are working. The universal credit is having a trial roll-out in my constituency; it has gone extremely well and has been well received by users, the jobcentre and employers. I am very keen to know why you think people might fall through the cracks—that was the phrase you used in your introductory remarks—and why you think the interface between this and the tax-free child care system will be very complicated, particularly as the system has not yet been designed.

Anne Longfield: The issue with the transition of universal credit is about two systems and people not being clear how they work, as well as the fluidity of jobs—people being in or out of work. Where there is good back-to-work support, which might be from local employment agencies or Jobcentre Plus, we see that families can find their way through that very confidently. Without that support, however, it starts to become quite unwieldy for people and they might not be able to make the leap into employment and make the journey towards financial independence that we want them to make. That was my point.

Sarah Jackson: There is also the difficulty, when you are on universal credit, that there is a disincentive for the second earner to work. You want the family to get to the point where both parents are able to work a certain number of hours a week if they wish to. Families  will face cliff edges and will need real help to understand the point at which they should move from universal credit to tax-free child care, so as to optimise their family incomes and their time with their children.

Another thing we are very worried about, which is not just about universal credit, is people dropping out of the work force. To have tax-free child care, you both have to be working. With vouchers, only one parent needs to work. If one of you is made redundant, you have a three-month reassessment period. It is fine if you lose your job on day two—it is never fine if you lose your job, but if you lose your job on day two of your reassessment period, you have very nearly three months to find a new job before you have to notify someone of your change in circumstances. However, if you lose your job on day 89, you will notify someone of your change in circumstances and you will drop out of eligibility for tax-free child care. That could hold the person who has lost their job back from ever re-entering the labour market. We have a real worry there that we would like to see addressed.

Q 95

There is a lot of mood music, particularly from working families, that suggests that employers being aware of and involved in the child care requirements of staff is to be welcomed and promoted, but many of my constituents say to me that they feel that, frankly, with tax credits and child care arrangements, their employers know too much about their lives. What do you have to say to them?

Sarah Jackson: I would say that when we see people who are working for good employers, it helps the relationship at work if the manager knows at least a bit about their employees’ family lives. We have campaigned hard, and we are very pleased that the Government extended the right to request flexible working to all employees. The basic tenet of that is that your request for flexible working should be reason-neutral. That makes it a lot easier for a manager to manage, because he or she can think just about the business reasons. However, it is also true that it really helps a team if everybody understands everybody else’s family commitments. It means that you are less likely to get the kinds of distressed calls that we take on the helpline, in which somebody has a change in their contracted hours imposed on them; for example, a father who is used to being able to take his child to school in the morning is suddenly told by his manager, “You have to start half an hour earlier.” That can lead to somebody dropping out of the work force. I understand, because we take calls from parents who have bad relationships with their managers, that parents will often feel that they do not want their employer to know too much about their personal lives, but actually, in a well functioning workplace it really helps.

Q 96

Do you accept that parents should have a right to privacy, and not have a level of intrusion by their employers into their personal lives that many parents do not want?

Sarah Jackson: Absolutely, and under the present voucher system it is the parent’s choice to say, if the employer is offering vouchers, whether they would like child care vouchers or not. Where they have chosen to take child care vouchers, it benefits them and the employer if the employer can see the pattern of family responsibilities  across their work force, so that when the organisation is thinking about changes and redeployments, they understand the family and personal impact that changes might have.

Anne Longfield: I understand your point about parents not wanting to have their employers scrutinising all the interiors of their lives, but I think that what they do want, if they want a certain response or a change in working from their employer, is to know that their employer is going to give them an informed and hopefully sympathetic response, in the broadest sense. That does not necessarily mean that they have to know everything about their life, but it does mean that if someone says, “I have a particular issue at the moment, and it would really help me if I could do this for the next four weeks; can we give it a go?”, the employer is informed enough about what that means to be able to come back with a good management decision, which will hopefully be, “Yes, we will go with it for now and then review it.” It does not necessarily have to be the ins and outs of every intricacy of personal life; it just has to be about a broad context and an understanding of that.

Q 97

One of the issues that arose in evidence this morning was not just the quantity—the supply-side—of child care, but the quality. Obviously, with additional welcome money being put into the child care support system, the nannies association, in particular, would like an increase in the quality of child care as a reflection of that. Do you have any thoughts on that? Do you have similar feedback, for example, to Mumsnet or other organisations?

In answering that, please focus on the remit of the Bill.

Katie O'Donovan: Within the remit of the Bill, I am not sure that there is anything that directly relates to what our users are concerned about or talk about with child care quality. When people have made a decision and are undertaking that child care, they usually report high satisfaction levels to us. They look to external organisations such as Ofsted to reinforce their views, and they look for peer-to-peer recommendations, too.

Sorry, but I just want to clarify how this relates to the Bill. Obviously, to access child care, the Bill requires you to register with Ofsted.

Katie O'Donovan: Some pockets of the country have real difficulty accessing what parents and Ofsted see as good child care. Changes to Ofsted’s inspections of early-years provision mean that parents can go quite a long time without having up-to-date Ofsted reports. That is interesting, and it is one to watch, but it is not front of mind in relation to the Bill.

Q 98

We have also been looking at the delivery. I would be interested to hear your thoughts about parents’ experience of the simplicity of the processes involved. We have looked at the complexities of universal credit, but under the current proposal, NS&I would be a sole provider of this new provision. There are concerns that this is a very large undertaking for one organisation to process, and many, many families could potentially be looking to register in a very short period of time as the provision opens up to a wider  number of parents than are currently accessing the vouchers. What are your thoughts on that? Should there be contingency plans, given that there is a legal wrangle about who should provide this, which could possibly delay the 2015 implementation date?

Katie O'Donovan: In terms of the implementation date, when the proposal was floated and refined in 2013, one of the biggest criticisms was the long wait. Anything that further delays it will cause massive frustration among parents, because this is good jam, but it is jam tomorrow at the moment. We have encouraged parents to think about whom they would like as providers, and they are pretty much agnostic. They want a system that works and that they can trust, they want something confidential, and they want something that will not end in a farce. Whether one provider can do that or whether there is a need for more providers is a question for the specialists. Parents do not want much more than you would expect.

Sarah Jackson: I read the HMRC research that was published last week. In the focus groups, parents were clearly saying that it does not have to be a single, monolithic provider; a few providers would be fine. If having a few providers sped up delivery, I think it would be more acceptable to parents.

Anne Longfield: It has to be accessible for parents, and it has to be free. We should not underestimate the interest from parents. We are doing this for a reason, which is to help parents work. We are doing this to try to change the level of support, and we should therefore plan to maximise it and ensure that there is plenty of information out front. We should plan for it to be working on day one, because if it is not working, many parents will feel let down. Going back to your last question about quality, there is another piece of work that probably lives in the Department for Education. That work is about using this impetus on child care to look again at quality and how to support flexibility. As Sarah was saying, we know that a lot of child care is still operating on a model based on office hours, but we are talking about flexible working, which needs flexible child care. That is another piece of development work that we should look at holistically.

Are there any further questions from the Committee? In that case, I thank the panel on behalf of the Committee. We will now move on to the next group.