Early years: progress in developing high quality childcare and early education accessible to all (444-i) Public Accounts Committee 10 Mar 2004

Evidence given by Mr David Norrington CB, Permanent Secretary, and Ms Naomi Elsenstadt, Head, Sure Start Unit, Department for Education and Skills.

Q55 Mr. Gerry Steinberg (City of Durham): I was listening very carefully to what you had to say and I totally agree with what you are saying. Twenty years ago I might have adopted the same argument as Jon Trickett, but having been a head teacher of a school catering for deprived children, it was very important that there was a mix in the school; the better the mix, the more progress you made. My wife was a teacher in a nursery unit in a very, very deprived area and I once challenged Chris Woodhead to come to teach there, but he would not come. Actually he did say he would come but I was rung up by the headmaster for issuing the invitation without telling him. A mix is vitally important. I am going to come back to that but one of the bones of contention at the moment regarding childcare is the cost of childcare. I have been listening to the arguments put forward and all we hear about is the importance of deprived areas getting the vast majority of the money, that the money should go to deprived areas. I have no truck with that whatsoever. In the meantime I do get a bit concerned that middle class areas and lower middle class areas do lose out. Do you think that childcare costs are going to be solved with the new child tax credit? Do you think this is going to be a great improvement for childcare? You would hope so, would you not?

Mr Normington: I would hope so, because it is costing money. It is putting money into the hands of the parent, which seems to me a very good thing to do. That gives them choices on where they spend it. The problem always when government subsidises something where there is a market is that if you are not careful you force the price up and that is a serious issue which we are looking at all the time really, otherwise, if the Chancellor changes or is more generous on this element of the working tax credit, if we are not careful, it will force the price up.

Q56 Mr. Gerry Steinberg (City of Durham): Exactly; exactly. That is better articulated that I could have done. I had a couple of teachers come to me and they earned between them something like £58,000 a year and they were playing hell because they could not get a penny in childcare. I was not interested. I thought "£58,000 a year? Tough. I do really feel sorry for you!". Then they went and my secretary, who I suspect, with her husband who has a very good job, probably gets the same, said "You weren't fair there". I asked what she meant. She said I should work it out. They had two children in 100% childcare and they do not receive one penny. It costs them £1,000 a month in childcare, 20% of their income. So they cannot afford it, although they have to, but it reduces their standard of living. The same two people can have £53,000 a year and get virtually a fortune in childcare, yet there is only a difference of £2,000 or £3,000 in their actual income. The cut-off point is always the problem and here it creates a dreadful anomaly where people with the same salaries are getting virtually all childcare paid for them but the other family is getting absolutely nothing. What makes the situation even worse is that some families are getting child tax credits with the childcare part in it and have no children in childcare. So they are actually getting money for childcare and not even using it. This cannot be a fair system.

Mr Normington: I have to be a bit careful here, because this is really the Treasury's territory. I will make a stab. The cut-off point for the childcare element of the working tax credit is £58,000 but that is for childcare. The child tax credit is not really the same, it is a different benefit. It is not a cliff edge in quite the way you describe, because it is tapered and therefore you do not get all that much help with a £53,000 income; you do if you have a much lower income.

Q57 Mr. Gerry Steinberg (City of Durham): If you have four kids do you not?

Mr Normington: You only receive credits for two, so in fact if you have a big family that is an issue too. In the end this is a question of resource and how much government can afford to put in to this element. There is certainly a demand for it. That is all I can say in a way. This is a big issue of how the tax and benefit system works really and what you are incentivising and what you are not. Clearly there are always people who are just outside a benefit who feel very hard done by.

Q58 Mr. Gerry Steinberg (City of Durham): These people who do not get any help at all come to me and say that they have paid as much tax as anybody else and more than the people who are in the deprived areas, yet they are getting absolutely no help whatsoever. They have reached their position from a working class family, their Dad went down the pit, sent them to college and they managed to get to college and are now currently in exactly the same situation. They have worked all their life very hard, they have two kids and get no help whatsoever. Here they are, so-called deprived families. Again, do not get me wrong, as a head teacher of a deprived school I see the need for it. What I do not see the need for is unfairness and I think this system is totally unfair.

Mr Normington: I hope it is not unfair, because there has to be a cut-off somewhere and it has to be tapered to that cut-off. All tax systems are to some extent redistributive; it is just a question of how much they are.

Q59 Mr. Gerry Steinberg (City of Durham): One of the things which I was also worried about when I read the report was the availability of childcare and nursery places as well. In the 1980s, when I first got into here and came from a school, I can remember doing a report for the Education Select Committee, along with other colleagues, where we could not even convince a lot of people that nursery provision was worthwhile. We went round the countryside and were told by many, many schools and many, many local authorities, that it was a waste of money and they were using nursery provision money, which was in the SSA, or whatever it was called in those days, to build roads. In my local authority in Durham, we had been spending more money on nursery provision than anywhere else in the country. What amazes me, if you look at page 7, Figure 4, is how it is that the North East of England now has 25 places per 100 children. I remember making visits to schools in places like Gloucestershire and Berkshire and they were saying they did not even believe in nursery provision it was a waste of time, they were throwing good money after bad, yet the South East and the South West have almost twice as many nursery places and childcare places than we have in the North East. What is the reason for that? Is it, as I suspect, that money has been put into those areas?

Mr Normington: No, that is because there are many affluent people in the South East and the South West who are paying for childcare themselves and are therefore creating a very vigorous market in childcare and there are not so many people with the ability to pay in the North East and therefore it is not as vigorous.

Q60 Mr. Gerry Steinberg (City of Durham): Is it not your responsibility, as the Permanent Secretary, the Accounting Officer, to take notice of statistics like that? If that is the case where there are more affluent people benefiting from the system, then more public money should be directed to places like the North East where we are not as affluent.

Mr Normington: That is what we are trying to do.

Q61 Mr. Gerry Steinberg (City of Durham): You are not very successful.

Mr Normington: It depends. It is your point about where we started here. A lot of this provision is very recent, very recent; we have only had this drive to improve nursery education and childcare in the last five or six years. We started from a base of a big differential and that gap has closed, but it is still a huge gap and that is what we are trying to tackle. May I just say to you that the one answer to your two teachers is that the government has provided for everyone an entitlement to part-time nursery education for three- and four-year-olds, so there is an entitlement for the whole population and that is the base. What we are talking about here on this chart is on top of that. It is partly an answer to them and what they are getting for their taxes.

Q62 Mr. Gerry Steinberg (City of Durham): Finally, as a matter of interest, following on from Figure 9 on page 23, who are those local authorities below the line?

Mr Normington: I would have to give you a note on that. All those local authorities below the line are going to be on the line in the next few weeks except for the two I mentioned.

Q63 Mr. Gerry Steinberg (City of Durham): That still does not answer the question about who they are.

Mr Normington: I would have to provide a note.

Q64 Mr. Gerry Steinberg (City of Durham): Will you let us know?

Mr Normington: Of course; yes.

Q65 Mr. Gerry Steinberg (City of Durham): I suppose the NAO will know that, will they not?

Mr Normington: He has the list.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

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