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Carers: Credits

Volume 684: debated on Tuesday 25 July 2006

asked Her Majesty’s Government:

How many additional men and women would qualify for a national insurance credit by (a) 2010; (b) 2020; and (c) 2030 as carers of more than 20 hours per week for people on (i) incapacity benefit; (ii) lower rates of disability living allowance; (iii) income support disability premiums; (iv) any other disability benefit; and (v) all disability benefits; and how many additional years of national insurance credit would be gained as a result by carers, by median quintiles; and at what additional gross and net cost; and [HL 6695]

If carers of more than 20 hours per week were eligible for up to five years’ worth of backdated credits for caring responsibilities incurred before 2010 for a person on (a) middle and higher rate disability living allowance, and (b) on any other disability benefit, what additional number and percentage of men and women would gain; how many would be eligible for a full basic state pension in (i) 2010; (ii) 2020; and (iii) 2030; and what would be the gross and net costs. [HL 6696]

The information is not available in the format requested.

The White Paper Security in retirement: towards a new pensions system (Cm 6841) includes proposals to ensure more carers are able to build up better state pensions. To do this we are proposing to introduce a new carer's credit for those reaching state pension age from 2010. It would be available for relevant weeks of caring within a tax year allowing a person to build entitlement to basic state pension (BSP) and state second pension (S2P) if they are caring: for 20 hours or more a week; and for one or more persons receiving the middle or highest rate of disability living allowance care component, attendance allowance, or constant attendance allowance.

We have proposed to link the new carer's credit to those caring for someone in receipt of specified disability benefits. We estimate that around 70,000 people a year could gain a credit for BSP from this proposal, and over half of these will be women. The new credit should also mean around 110,000 more women and 50,000 more men will be accruing entitlement to S2P.

We estimate that this may leave around 60,000 people in 2010 who report themselves to be caring for 20 hours or more who may not be accruing BSP through paid contributions or credits, including the new carer's credit. The equivalent figure for S2P is around 180,000 people. It is not possible to break down these figures further by the individual benefits received by the person being cared for.

The potential costs of awarding these extra people a credit for BSP and S2P build up slowly over time. They could reach some £200 million in 2030, over and above expenditure on the current system.

With existing data sources, it is difficult reliably to estimate the intensity of care that someone in receipt of a disability benefit such as incapacity benefit or the disability premium in income support, may be receiving from a particular carer. It is also unclear what care needs, if any, those in receipt of these benefits might have.

For the purposes of estimating the cost of the new carer's credit in the White Paper, it was assumed that all those in receipt of the middle or higher rate care component of AA/DLA, or CAA, would have a carer providing more than 20 hours’ care per week. Although this is not a precondition for the receipt of those benefits, entitlement provides a clear indication that the recipient has a significant level of care needs.

As with any reform, the timing of change to the state pension system involves striking a balance: to achieve fair outcomes for tomorrow's pensioners, while ensuring that the transition from the current arrangements is affordable, avoids complexity and is delivered successfully. Backdating the carers credit to make it available on the basis of self certification for past periods of caring activity would not be feasible; to do so would be intrusive and forfeit any checks and balances in the scheme.

It is not possible to make accurate estimates. However, assuming that all those eligible for the proposed carer’s credit from 2010 were automatically awarded five years worth of backdated credits, costs of the new carer's credit could reach around £200 million, over and above expenditure on the current system in 2030.

Notes:

1. Source: Family Resources Survey 2003-04 and 2004-05, with DWP forecasting assumptions for population changes. Costs: DWP estimates, 2006 prices.

2. Numbers of people are rounded to the nearest 10,000. Estimated costs are rounded to the nearest £100 million.

3. Costs presented refer to the estimated additional expenditure required over and above estimated expenditure on the White Paper reform proposal. They are net of offsetting savings in expenditure on income-related benefits.

4. Costs presented are likely to be overestimates, since they assume that all people eligible for the carer's credit need to use this credit to enhance their state pension record. However for BSP, there has been an adjustment made for the reduction of qualifying years.