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Welfare Tax Credits: Grandparents

Volume 492: debated on Tuesday 12 May 2009

To ask the Secretary of State for Work and Pensions if he will estimate the cost of introducing a national insurance credit for grandparents of working age who provide 20 hours or more childcare per week. (251938)

[holding answer 27 January 2009]: Reforms to make the state pension fairer and more widely available will be implemented in April 2010 including a reduction to 30 qualifying years required for entitlement to the full basic state pension and reforms to the system for crediting those with caring responsibilities to reflect the different ways in which people contribute to society. As a result of these changes around 75 per cent. of women reaching state pension age from April 2010 will be entitled to a full basic state pension compared to 50 per cent. without reform. By 2025 over 90 per cent. of both men and women reaching state pension age will be entitled to a full basic state pension.

Building on these reforms, the Government announced in the Budget 2009 that working age grandparents and other adult family members, who care for their grandchildren or other members of their family aged 12 or younger for 20 hours or more a week, will be able to gain national insurance credits toward the basic state pension from April 2011 at an estimated total cost of £35 million to 2050 (Net Present Value, 2009-10 price terms).

Notes:

1. The estimate is consistent with Treasury Economic assumptions from the Budget Report 2009, are in 2009-10 prices, have been rounded to the nearest £5 million.

2. Estimates of the cost of particular elements of coverage reform, such as the “grandparent’s credit”, depend on the order in which they are modelled. Following the approach used in the Regulatory Impact Assessment accompanying the Pensions Bill, costs presented in this answer refer to the estimated expenditure on a “grandparent’s credit” on top of the reforms to coverage set out in the Pensions Acts 2007 and 2008.

3. Figures quoted relate only to benefit expenditure and do not take account of administration costs.

Source:

DWP estimates based on evidence from the Family Resources Survey, demographic projections, and administrative data.