Labour plans to force Commons vote on childcare ratios

The party seeks to set the coalition parties against each other after Clegg warns that relaxing ratios could damage the quality of childcare.

Labour has moved quickly to exploit the coalition split over childcare ratios by announcing plans to trigger a Commons vote on the issue. The party plans to table an amendment to the Children and Families Bill, which will move to Report Stage later this month. 

Earlier today, in response to an urgent question from Labour, childcare minister Liz Truss said that the government was considering responses to its consultation exercise and would "make further announcements in due course" after Nick Clegg warned that relaxing child-to-staff ratios could damage the quality of childcare and fail to achieve savings. On his phone-in show on LBC this morning, Clegg said: "It is not a great ideological thing, it is about getting it right for parents up and down the country. When the last government changed the so-called ratios for three-and four-year-olds, it had almost no effect in reducing the costs for parents whatsoever, so you do need to be led by the evidence and that is what I will continue to be in the debate."

Truss had proposed increasing the number of under-ones each adult can look after from three to four and the number of two-year-olds from four to six. This morning, Clegg sardonically remarked to LBC host Nick Ferrari,  "I would challenge you to spend a morning look after six two-year-olds". 

Shadow education secretary Stephen Twigg said: 

David Cameron and Nick Clegg are creating chaos and confusion on childcare.

Nobody supports the plans to weaken childcare standards. Expert academics have told the Government that these changes would risk child safety and will not reduce costs to parents.

And it’s not just the experts of course. As any parent will tell you, young children are demanding and they need lots of attention, so while a childminder can have the very best qualifications, they still only have one pair of hands.

Labour have been campaigning on this issue for months, warning that the changes would risk the quality of care and even child safety.

David Cameron is presiding over a crisis in childcare. Tax credits have been cut by £1560 and there are 401 fewer Sure Start centres than in 2010. The Government is doing nothing to help helping hard working families with the cost of childcare.

The question now is how the Lib Dems will respond if and when a Commons vote is triggered. The last time Labour tried to use this tactic to divide the coalition, in the case of a mansion tax, Cameron and Clegg responded by tabling their own amendment acknowledging the differences between their parties on the issue, while noting their shared support for the increase in the personal allowance. But judging by Clegg's remarks this morning, they may find it harder to find common ground on childcare. 

Childcare minister Liz Truss said the government would "make further announcements in due course" on childcare ratios.

George Eaton is political editor of the New Statesman.

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Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: products-and-investments/ pensions/pensions2015/