Catherine McKinnell
MP for Newcastle upon Tyne North · Labour · United Kingdom
“The family of a terminally ill constituent contacted me in desperation last month after trying to resolve the pension issues of their family member since January. She died yesterday, with her pension still unresolved. Can the Minister be more specific for that family about what will be done to resolve this issue?”
“As the UK trade envoy to Italy, I thank the Secretary of State for confirming the GCAP funding in his statement. As MP for Newcastle upon Tyne North, I add my voice to those who want to see this as an opportunity to genuinely spread investment and opportunity that will build strength and resilience in our people right across the UK—they a…”
“This report is welcome, but that does not make its existence any less tragic. Far too many mothers and babies have been failed, including mothers like my constituent Amie, who late last year was turned away repeatedly, despite reporting reduced movements. Her baby Seren was born stillborn.”
“Failures to address these issues have significant effects, both on the public finances and on the most vulnerable people in society, and, indeed, they are issues that are often reflected in our constituency mailboxes. I was contacted recently by a young woman who had reported child sexual abuse to the police last year.”
“Her husband was the victim of an assault by the defendant, who had raped his wife. They were forced to wait four hours for the trial to begin. They were eventually told that the defendant would arrive and that the delay to his delivery was causing the delay, but it had a knock-on effect on additional days in court.”
“Friend has said, we need a court estate that is fit for purpose in order to maximise the use of these additional days. I too have visited my local court, in this instance Newcastle Crown court.”
The complete record
Every one of 4,961 lines we hold for Catherine McKinnell, in date order, each linked to its source. Free to read, in full, without an account. Page 68 of 100.
“Ministers urgently need to look again at their approach to tackling economic crime, because without change, the prospect of ensuring that justice is served to those who have mis-sold financial products, evaded tax, laundered money and defrauded seems as remote as ever, and the risk of the scandals of recent years being repeated has far from disappeared.”
“On the senior managers regime, the commission recommended that the regime place a burden of proof on those named executives. The recommendation was accepted by the Government and enshrined in the Financial Services (Banking Reform) Act 2013. However, the Bank of England and Financial Services Bill, which is currently in the other place, is set to reverse that burden of proof, meaning that instead, the regulator—the Financial Conduct Authority—will be required to prove that senior managers have failed in their duty to prevent misconduct or prudential failings. The onus will be back on the regulator, and not on the named senior executives. Is that just more backtracking from the Government, who seem to be going soft on economic crime? I would be grateful if the Minister provided reassurance that that is not the case.”
“My hon. Friend raises a concern relating to the Bribery Act, but there are two ways of looking at the Act’s implementation and the fact that no prosecutions have yet happened under it. There is evidence that it has already brought about significant changes in corporate culture and that the managers tasked with the responsibility of ensuring that they have taken all the steps they could reasonably be expected to have taken to prevent bribery in their organisations have taken those steps. Some positives can therefore certainly be derived from the situation, but I agree that a very close eye needs to be kept on prosecutions. I note that there are already murmurings from the Government about backtracking on the Bribery Act and trying to weaken that legislation, and we must stay vigilant about that.”
“It does not sound as though the Minister will go on to explain how he intends the Government to live up to their manifesto pledge. He indicated earlier that it was in relation to tax evasion only, but the Government did in their manifesto state: “We are also making it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion, in their organisations and making sure that the penalties are large enough to…deter.” If the Minister explains how the Government will fulfil that manifesto pledge, that will give hon. Members reassurance today.”
“I agree with the Minister that a gung-ho approach should never be taken to any of those matters, but does he acknowledge that significant concerns have been raised about the DPA tool not being as effective as it could be, while it remains so difficult to bring prosecutions against corporations, because the identification principle has set the bar for prosecution so high?”
“Successfully prosecuting rape and domestic violence cases clearly requires a properly resourced CPS, yet the budget has been slashed by 25% since 2010 and the rate of ineffective and cracked trials owing to prosecution issues is at a five-year high. With senior respected personnel leaving and expressing grave concerns, do the Solicitor General and the Attorney General really believe that the CPS can sustain more cuts on the same scale and still deliver justice?”
“The recent drone strike in Syria was described by the Prime Minister as a “new departure” and a first in modern times. The Prime Minister said he is “happy to look at what other ways there may be of making sure these sorts of acts are scrutinised”. —[ Official Report , 7 September 2015; Vol. 599, c. 31.] Given that any action must be necessary and proportionate to meet the key legal tests, will the Attorney General update us on the discussions between the Government and the Intelligence and Security Committee on reviewing the action and any framework that will be put in place to ensure proper scrutiny in future?”
“1611.] I could not agree more, but when we hear of cases like those of Mr Shabir and Mr Richards, who—like many thousands of businesses across the country—appear to have been badly let down by the system, such statements are understandably thrown into doubt. We need to know that the Serious Fraud Office does not just take such matters seriously but has the will, capacity and resources to investigate and then prosecute where appropriate. I look forward to hearing the Solicitor General’s reassurances in that regard.”
“Indeed, Transparency International has stated its concern about that situation: “The process for additional budget approval may present a substantial risk of political influence.” Again, I would appreciate an assurance from the Solicitor General that there is no need for such concerns, in particular with regard to the case we are discussing. During questions to the Attorney General in July, the Solicitor General stated: “It is important that we give our full-throated support to the work of the SFO because, as the hon. Gentleman says, if there are doubts about the integrity and efficacy of that important arm of the prosecutorial authorities, we are in serious trouble indeed.” —[ Official Report , 2 July 2015; Vol. 597, c.”
“Although allegations such as those made by Mr Richards and Mr Shabir may make for uncomfortable listening for the Government, it is deeply concerning that every time the Serious Fraud Office wants to take on a major case—LIBOR rigging being a prime example—it now has to effectively go cap in hand to the Treasury to apply for additional funding, sometimes referred to as blockbuster funding, in order to do the job. That clearly has implications for the vital independence of the SFO, as the Chancellor of the Exchequer potentially has a veto on what is investigated.”
“In addition, since 2010, the Serious Fraud Office’s funding has been cut by just over 12%, with potential serious implications for its ability to prosecute serious and complex cases of fraud and bribery effectively and in a timely manner. In the light of what we have heard this afternoon, hon. Members need urgent reassurances from the Government Law Officers that the SFO does in fact have the resources it needs to investigate such cases. That question is even more pressing given the further £20 billion of cuts to public spending anticipated at the forthcoming spending review, with the Chancellor reportedly requiring Departments to model budget cuts of up to 40% by 2019-20.”
“In his response, also dated 7 November 2014, David Green stated: “I can assure you that we are taking appropriate steps to pursue this serious issue.” Like my hon. Friends the Member for Cardiff Central and for Ogmore, I look forward to receiving an update from the Solicitor General—or, subsequent to the debate, in writing from the Attorney General—on the actual progress that has been made in investigating these serious allegations. We all appreciate their complexity, but it is now two years since the matter was first referred to the SFO. There is also clearly a significant public interest in the matter, not least because we are, after all, discussing a bank that was bailed out by the British taxpayer and remains part-owned by the public purse.”
“Two meetings were held with the SFO, during which a substantial amount of evidence was provided to corroborate the allegations, but it was not until 7 November 2014 that the SFO’s director, David Green QC, responded and acknowledged the gravity of the issues raised. I understand that nothing has been heard from the SFO since, some 10 months on from that communication. Of course, Mr Shabir and Mr Richards are not the only ones making such allegations about the activities of Lloyds bank and Alder King. As my hon. Friend the Member for Cardiff Central mentioned earlier, when my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) was shadow Attorney General, she wrote to the SFO director about this issue on behalf of two other Labour Members of Parliament and their constituents.”
“Yet Alder King also had staff seconded to Lloyds, working within the bank’s recoveries department—the very department that was responsible for receivership appointments. As reported by both the Financial Times and The Times , such staff were engaged directly in work on the cases of Mr Shabir and Mr Richards, but allegedly gave the impression that they worked directly for the bank, not Alder King LLP, the firm that was to benefit financially from the businesses going into receivership. It is that alleged conflict of interest, and its very significant consequences, about which Mr Shabir and Mr Richards have lodged their complaints to the Serious Fraud Office. As we have heard, as no response had been received from Lloyds to the complaints since September 2011, Mr Shabir’s and Mr Richards’s cases were referred to the SFO in September 2013.”
“Often, much of a valuer’s work will come from the banks and there is therefore an inherent conflict of interest as there is a natural incentive for the valuer to act in the interest of the bank.” In March, the Business, Innovation and Skills Committee took evidence as part of its inquiry into the insolvency industry. Witnesses conceded that it is becoming more common for property receivers to be seconded to banks. Sometimes even surveyors and receivers have been known to be seconded within lenders’ restructuring divisions, therefore working on lenders’ distressed loans books. As even the industry witnesses to that inquiry conceded, in such a situation there is potential for a serious conflict of interest. In both the cases we have heard about this afternoon, Lloyds bank utilised Alder King LLP for its property valuations.”
“Revaluation of assets appears to be used on frequent occasions to put businesses into default of their loan agreements.” He went on: “Many businesses have submitted evidence demonstrating what appear to be unquestionable under-valuations of properties. They are so stark compared to original and current values of the property that their accuracy has to be called into question as well as the reason behind such an inaccuracy.” The report concluded—and this is the crux of the matter, particularly in the cases we are considering: “Not only is the undervaluation itself a concern, so is the relationship between the bank and the valuers.”
“Friends for Cardiff Central and for Ogmore have explained, the cases of Mr Richards and Mr Shabir involve allegations of the deliberate under- valuing by Lloyds of their properties—known as down valuation—in order to put them in breach of their loan-to-value ratios on secured debts, and thereby engineer defaults on their loans. That in itself is an extremely serious allegation. I believe it has been rejected by Lloyds, but was covered in some detail by the 2013 Tomlinson report commissioned by the Business Secretary in the coalition Government, Dr Vince Cable. In his report into banks’ lending practices and treatment of businesses in distress, Lawrence Tomlinson commented: “This has been one of the most common complaints in the evidence received for this report.”
“Indeed, I have a constituency case involving the now acknowledged mis-selling of interest rate hedging products, or swaps; my constituent’s family, and the many who rely on them for good, skilled employment, have been reeling from the consequences of that ever since. We are not discussing the swap mis-selling scandal today, but the activities alleged by Mr Richards and Mr Shabir, and the consequences of those activities, bear a striking resemblance to the situation suffered by my constituent. I have a real fear that that indicates a systemic failure in our banking system across the country. As my hon.”
“Friends. There is much to be passionate about. As many of us know from our constituency postbags and surgeries, there are many more cases such as those we have heard about today throughout the country. Since the financial crisis, small, medium and even large firms have been brought to their knees by the banking system, with serious allegations of malpractice being made. Good and credible businesspeople such as Mr Richards and Mr Shabir have seen their credit ratings destroyed, after having worked hard for years and decades to build up their businesses. We only need to look at the Bully Banks campaign to see just how many firms and individuals have been affected by allegations of malpractice over the past few years.”
“It is a pleasure to serve under your chairmanship, Mrs Main, and I congratulate my hon. Friend the Member for Cardiff Central (Jo Stevens) on securing this afternoon’s extremely important debate on behalf of her constituent, Mr Kashif Shabir, and the constituent of my hon. Friend the Member for Ogmore (Huw Irranca-Davies), Mr Alun Richards. This is my first outing in the role of shadow Attorney General, which I am pleased to be taking on, in particular in a shadow Cabinet that for the first time has a majority of women. I am thoroughly looking forward to holding the Attorney General and the Solicitor General’s feet to the fire, but also working constructively with them when appropriate. As with all Serious Fraud Office cases, those of Mr Richards and Mr Shabir are complex, but they have been carefully and passionately set out by my hon.”
“Instead, in order to prevent further hold-ups, it was agreed by the Government that, while LEPs will now have an advisory role, the actual decisions on how that money will be spent will have to be taken in Whitehall. That is a complete contradiction of the idea of decentralisation and empowering local areas. Of course, that is set against the backdrop of massive cuts to local government, which I spoke about at length in the previous Parliament and I will continue to do so in this Parliament. Who are these powers for? They are for the communities and people we represent, who risk being so hollowed out by the cuts to local government funding that, even if they have those powers, they will not be able to deliver on them.”
“Like many other parts of the UK, the north-east benefits significantly from European Union money through the European regional development fund and the European social fund. However, until very recently, we faced the prospect of losing £724 million, because the coalition removed regional development agencies without ensuring that something was put in their place. Hundreds and millions of pounds of funding intended to address unemployment, support business growth and provide training in the north-east were put in jeopardy because the LEPs lacked the appropriate powers, resources and accountability necessary to unlock that funding.”
“He goes on to describe city-wide, directly elected mayors, but how would that operate in the North East LEP area, which has three cities—Newcastle, Sunderland and Durham—as well as the conurbations of Gateshead, North Tyneside and South Tyneside? The Chancellor frequently refers to metro mayors, but how does that proposal apply to those other areas that the North East LEP encompasses—Northumberland and County Durham —which include some of the most rural and sparsely populated parts of England? Some clarity is needed on those issues, and it is needed quick. Meanwhile, in a development that appears to have slipped under many people’s radars, the Government have agreed to remove a significant amount of power from regions in the very policy area under consideration.”
“But nor will I settle for less.” He is clearly ignoring the 68% of voters in Newcastle who voted against a mayor only three years ago. That is an interesting take on localism by centrally mandated diktat. We will be allowed to find a mayoral model that works for us, but only as long as it involves “a city-wide elected executive mayor.” The famous Henry Ford phrase, “You can have any colour as long as it’s black”, springs to mind. Given the Government’s determination on this issue, it would be really helpful if the Minister set out how he sees it working for the north-east. The Chancellor talks of devolving power to cities, but does he mean cities or areas covered by local enterprise partnerships?”
“Member for Stockton South (James Wharton), is the Minister for Local Growth and the Northern Powerhouse, to give him his full title, and I hope he will be able to convince the Chancellor that the north of England extends north of the Pennines. The Cities and Local Government Devolution Bill was announced in last week’s Gracious Speech and its headline measure is to “devolve powers and budgets to boost local growth in England”, but—and it is a pretty hefty but—only for those cities that agree to have a directly elected, so-called metro mayor. Indeed, the Chancellor set out how deadly serious he is about this condition in a speech in Manchester last month, saying: “So with these new powers for cities must come new city-wide elected mayors who work with local councils. I will not impose this model on anyone.”
“As the North East Chamber of Commerce emphasised: “Whitehall has shown itself to be incapable of delivering an approach that benefits the whole county and that is why we must ensure the North East has the chance to make those decisions for itself.” That view is clearly shared by local people. When the Chronicle asked readers about general election policy, they said that their No. 1 priority was more devolved spending. What is the Government’s response to that pressing call for change? We have heard many warm words from the Chancellor about a northern powerhouse, but we are yet to find out whether it means anything at all for north-east England. The Under-Secretary of State for Communities and Local Government, the hon.”
“While our region has so much to offer the UK, we still have the highest regional unemployment levels and the highest number of young people out of work. It is little wonder that far too many of our young people still sadly feel they need to leave Newcastle and our region to fulfil their potential, despite the opportunities they should have. That is one of the things that drove me to stand for Parliament back in 2010, to ensure that children in my part of the world and, indeed, my own children—I now have a third since I last spoke in this Chamber—have the same opportunities as children in any other part of the country.”
“I sincerely thank you, Mr Speaker, for calling me to speak in this debate on what I believe will be one of the defining issues of this Parliament. I commend the hon. Member for South Suffolk (James Cartlidge) for his excellent maiden speech. I can assure him that I have recently been using Avent bottles, for my newborn baby, but I must confess that we are a Tommee Tippee household. I remember my maiden speech five years ago, which focused heavily on regional development, a subject to which we return once again today. For cities like Newcastle and regions like the north-east, the way in which we devolve meaningful powers and real funding from Whitehall to local areas is absolutely key to better supporting and funding private sector growth and creating skilled, sustainable jobs.”
“My hon. Friend is making a very powerful speech. He mentioned adult social care workers. A constituent who came to see me highlighted just how little economic sense zero-hours contracts make for the taxpayer as well. From one week to the next, he may or may not be able to pay his rent and may need housing benefit support. That creates a total mess for the systems that have to provide support to these people on very insecure work contracts. The cost to the taxpayer of sorting out that mess is adding to the problem. Employers need to step up to the mark.”
“It is clear from this debate that there is a whole range of issues to consider, but our focus is that the banks need to be tightly and correctly regulated to ensure that they work for the whole economy, including individuals and small and large businesses. That is the key issue that we face at present. Only when the banks operate in that way and work in the interests of the whole economy will we find our way out of the cost of living crisis that so many people are facing. I thank hon. Members for securing this very important debate and for the very interesting contributions that have been made from all sides of the House. I am pretty certain that this is not the end of the conversation. The debate will go on.”
“Members with an interest in this area know, we tabled a number of amendments to try to strengthen the Bill, and to prevent banks from overreaching themselves and taking greater risks, by ensuring that the leverage ratio is effective. That goes to the heart of many of the issues we are debating today. The Government rejected our proposals to impose on all those working in the banking industry a duty of care to customers. That would help to reform banking so that it works in the interests of customers and the economy, and not solely those of the banks. Those are the areas on which we still feel that reform is needed in the sector.”
“Those issues were debated at great length when the Financial Services (Banking Reform) Act 2013 made its way through Parliament, following recommendations from Sir John Vickers’ Independent Commission on Banking and the Parliamentary Commission on Banking Standards, which considered professional standards and culture in the industry. The 2013 Act created the Prudential Regulation Authority and gives regulators the power to split up banks to safeguard their future, to name just two examples of changes that were made. However, we feel that it did not go far enough. The Opposition’s concern is that the Government’s actions to date in this area have fallen short of the mark. They have failed to boost sufficient competition in the banking industry to raise those standards and to create public confidence in the sector. As hon.”
“It remains our view that the central issue, the instability of money supply within the banking system, is less to do with the powers banks hold and how they create money than with how they conduct themselves and whether they act in the public interest in other ways too. We believe the issues relate to the incentives in place for banks to ensure that loans and debts are repaid, and granted only when there is a strong likelihood of repayment. When the money supply increases rapidly with no certainty of repayment, that is when real risks emerge in the economy.”
“Those regulators, some of which are—rightly—independent, are the stewards of “safety and soundness” in financial institutions, especially regarding banks’ money-creating practices. Banks are compelled to manage the liabilities on their balance sheets to ensure that they have capital and longer-term liabilities precisely to mitigate risks and prevent them from effectively having a licence to print money. Banks must adhere to a leverage ratio—the limit on their balance sheets, compared with the actual equity or capital they hold—and we strongly support that. Limiting a bank’s balance sheet limits the amount of money it can create through lending or deposits. There are a series of checks and balances in place when it comes to creating money, some of which the Opposition strongly supported when we debated legislative changes in recent years.”
“That obviously increases the amount of money available to borrowers and within the wider economy. As the Bank of England made clear in an article accompanying its first quarterly bulletin in 2014: “When a bank makes a loan to one of its customers it simply credits the customer’s account with a higher deposit balance. At that instant, new money is created.” Bank loans and deposits are essentially IOUs from banks, and therefore a form of money creation. Commercial banks do not have unlimited ability to create money, and monetary policy, financial stability and regulation all influence the amount of money they can create. In that sense, banks are regulated by the Prudential Regulation Authority, part of the Bank of England, and the Financial Conduct Authority.”
“There are questions about how money is created, how money or credit is used by banks and others, how our financial system can be more transparent and accountable, and particularly how it can benefit the country as a whole. That latter point is something that Labour Members have been acutely focused on. How do we re-work our economy, whether in banking or in relation to jobs and wages, so that it works for the country as a whole? It is worth reflecting on our current system and what it means for money creation. As the hon. Member for Wycombe set out eloquently in his opening speech, we know that currency is created in the conventional sense of being printed by the Bank of England, but commercial banks can create money through account holders depositing money in their accounts, or by issuing loans to borrowers.”
“I congratulate the hon. Member for Wycombe (Steve Baker) on his thoughtful and thorough opening speech, as well as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) on his remarks. In their absence I also congratulate the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Clacton (Douglas Carswell) on securing today’s important debate. This debate follows a significant campaign by Positive Money, which has raised important issues about how we ensure financial stability, and how we as parliamentarians and members of the public can gain a greater understanding of the way our economy works, in particular how money is supplied not just in this country but around the world. Some important questions have been highlighted in the debate, although not all have been answered.”
“Will the Prime Minister update the House on specific progress on delivering transparency in extractive industries, which we know cause so much corruption that is damaging to developing countries?”
“The principle that every child matters was at the centre of the Labour Government’s work across all Departments. We are the party that, in government, made no apology for focusing our efforts on, and redirecting any available support to, the children and families who needed our help the most. We are the party that, in government, made it its business to tackle disadvantage and to improve the life chances of every single child from the earliest possible age to give them the best possible start in life.”
“New clause 1 stands in my name and that of my hon. Friend the Member for Wirral South (Alison McGovern), whom I wish to congratulate on her new role. It calls on the Government to consider the necessary help that hundreds of thousands of parents of three to four-year-olds need now to cover the ever-rising costs of child care. Before I elaborate on the new clause further, I wish to reiterate a point that the Opposition have stressed throughout proceedings on the Bill. We welcome any new investment in child care and, in particular, any extra support for hard-pressed parents and families up and down the country who are struggling to juggle work and family life. That is worth remembering because, after all, we are the party which, in government, pioneered investment in early years.”
“Despite the Conservatives’ claim of creating the most family-friendly country and the Liberal Democrats’ supposed belief that families should get the support they need to thrive, the Government have not been family-friendly and they have not stepped in to provide families with the help they so desperately need to get to grips with the soaring costs of child care. Far from stepping in, they have pulled the rug from under the feet of many families. Any extra help for parents struggling with the cost of child care is clearly to be welcomed. However, not only is the Bill too little too late for hundreds of thousands of families, we are disappointed that the Government have so far refused to consider that additional support could be offered to families right now. That is why we have tabled new clause 1.”
“Tax credits are a vital part of income for many working parents, especially those on the most modest incomes. When we look at all the tax and benefit changes since 2010, including the Government’s much-lauded and touted personal allowance increases, we see that families have clearly been hit hardest of all, and that will remain the case right up to the general election. A family with both parents in work will be about £2,073 a year worse off and a family with a single parent in work will be about £1,300 a year worse off.”
“The research found that the Government’s tax and benefit changes have seen the poorest lose about 3% of their incomes, while the richest half of the country have actually seen their incomes increase by 1% to 2%. That blows away the Government’s claims from the start that we are somehow all in this together. The research highlighted the fact that families with children have fared worst of all, which confirms our worst fears. Single parent families, in particular, have lost far more through cuts to tax credits and other support than they may have gained through any tax changes, proving that the Government have given with one hand but taken away far more with the other—so much for being the most family-friendly country. Families have lost out on up to £1,500 a year due to changes to tax credits alone.”
“Based on the Family and Childcare Trust’s annual survey, we know that child care costs have risen five times faster than wages since 2010, at a time when wages have lagged behind prices, leaving people £1,600 a year worse off on average. This support is even more vital when we see how much parents have lost out as a result of the Government’s choices: the decisions to cut tax credits, child benefit and maternity pay, and to close thousands of Sure Start centres. As we saw and read in the news yesterday, research from the London School of Economics and the Institute for Social and Economic Research at the university of Essex shows clearly how the burden of austerity under this Government has fallen most heavily on those with lower incomes.”
“My hon. Friend makes a very valuable point and I was just about to come to that. We are the party of Sure Start and the thousands of Sure Start centres that existed in 2010. It is not specifically relevant to this debate, but we could not allow it to pass without mentioning the very deep concern up and down the country about the future of our Sure Start centres. There are concerns, which were made abundantly clear by a number of witnesses in Committee last month, that the Bill does not go anywhere near far enough to provide the support that thousands of parents and families desperately need right now. They need that support now, not in 12 months’ time, which is why we tabled new clause 1.”
“In contrast, many child care experts agree that Labour’s child care plans, as outlined in new clause 1, meet these twin aims.”
“We heard evidence from a wide range of witnesses in Committee last month who cited the Resolution Foundation’s work. It is worrying that the Resolution Foundation had to undertake that work because the Government have not done sufficient work to look at the true impact on parents. The Resolution Foundation suggests that 80% of the families who will benefit from top-up payments are in the top 40% of income distribution. The remaining 20% will go to those in the middle of the distribution scale. If the key aims of the Bill are to support parents with the cost of child care and to help more parents back into work by making work an economically viable option, those figures raise questions about whether its aims are achievable through this Government scheme alone.”
“The impact assessment suggests that families can retain their ESC vouchers if they wish, but goes on to list a whole range of caveats relating to whether parents will be able to continue to qualify, whether they would be better off remaining under the current voucher scheme, or whether the new top-up scheme might be better for them. Clauses 62 and 63 seek to wind down the ESC scheme over the next few years, closing it to new entrants. Presumably, ESC vouchers will eventually vanish completely. If a parent changes jobs or if their employer stops offering vouchers—this could well happen, as voucher providers are set to see the majority of their business disappear—they will have no choice but to switch to top-up payments, leaving many worse off.”
“We know from the Government’s impact assessment that of those families who will be newly eligible for support under the Bill—those who are self-employed, or those whose employers do not currently offer employer supported child care vouchers—the average benefit will be about £600 a year. Clearly, that is far lower than the £2,000 per child that the Government have been touting ever since they announced the policy for top-up payments in March. It is worth remembering that some 520,000 families currently benefit from ESC vouchers. The Government’s impact assessment sets out a number of case studies where families might be better off or, indeed, worse off under the new top-up payments.”
“The free entitlement introduced under the Labour Government, which happily has been continued under this Government, makes a real difference to hard-pressed families. The simple truth is that, months after the Bill was first published and introduced, we are still none the wiser about exactly how many parents will be better off as a result of the top-up payments, or, crucially, by how much. That stands in marked contrast to our plans to extend the free entitlement for three and four-year-olds, which will be worth £40 a week, or £1,500 a year, to about half a million children.”