Considered in Grand Committee
That the Grand Committee do report to the House that it has considered the Social Security (Contributions Credits for Parents and Carers) Regulations 2009.
Relevant Document: 22nd Report, Session 2008-09, from the Joint Committee on Statutory Instruments.
My Lords, the regulations were laid before the House on 12 October. Before I proceed further, I wish to state that in my view this statutory instrument is compatible with the European Convention on Human Rights.
The background to the regulations is the credits for parents and carers, introduced into the Social Security Contributions and Benefits Act 1992 by the Pensions Act 2007, which both replaces and builds on the home responsibilities protection provisions. The Act introduced a new carer’s credit available to people engaged in caring, which the regulations provide to include caring for one or more persons for a total of 20 hours a week or more.
The Committee may recall that, when the credit was first proposed, it was to be available only where the persons cared for were in receipt of a relevant disability-related benefit. However, following discussions with carers’ representatives, it was decided to extend the provision to those caring for at least 20 hours a week for people without a qualifying benefit, but where the need for care was certified by a health or social care professional. The provisions were warmly welcomed by noble Lords but there were some reservations concerning the delegation of the provisions to regulations. I hope that these regulations, which define “engaged in caring” and are the result of extensive collaboration with stakeholders, will reassure noble Lords.
The overall consensus has been that the certification arrangements should operate with a “light touch” to avoid disqualifying someone who is not in regular contact with professional health agencies. Consequently, the range of people who are able to certify the need for care is designed to be as broad as possible. There is no prescribed list of people who could certify, and this could be done, for instance, by a member of a voluntary group in regular contact with the person being cared for.
We have worked throughout with representatives from Carers UK, which has helped to produce the guidance for certifiers. I am delighted that we have also been able to work with Carers UK to produce a most successful Carers Rights Day last Friday, which this year had a theme relevant to these regulations of “Caring for your Pension”.
As a result of these credits for carers, around 160,000 more people could start to gain a credit for the basic state pension in 2010, including around 115,000 women. Also around 240,000 more people could accrue entitlement to state second pension than are currently doing so, including around 145,000 women. The Committee may have noticed that these figures are somewhat higher than those contained in the Explanatory Memorandum to the regulations. The lower figures represent those estimated to gain through caring for someone with a disability-related benefit only. They do not include those where the need for care is certified. We have arranged for the Explanatory Memorandum to be corrected and relaid.
The regulations also include some provisions to help other carers. Foster carers, defined here, and people getting child benefit for a child under 12 are expressly provided for in the Social Security Contributions and Benefits Act 1992. Also in respect of child benefit, Regulation 5(1)(a) provides for the partners of child benefit recipients to be treated as “engaged in caring” for the purposes of these credits. That is when the child benefit recipient cannot themselves benefit from the credits because he or she already has a qualifying year for basic and additional pension purposes—most usually through paid work.
From April 2008, we introduced a similar provision for transferring HRP entitlement between partners. That has proved very useful on those occasions where the “wrong person” has claimed child benefit and their partner, at home with the children, would otherwise not have received credits towards a state pension.
I need to draw noble Lords’ attention to one small drafting error in the regulations. As some may have noticed, the words,
“is in receipt of income support”,
in Regulation 10(2)(a) are superfluous. Income support carers, defined in Regulation 5(1)(c), are not required to make an application.
In summary, these regulations seek to ensure that the greatest number of genuine carers benefit from these new credits. They put in place the final piece of the legislation designed to enhance the pension prospects of carers and others with broken work records. The credits, together with the reduction in the number of qualifying years and the single contribution condition, will mean that from next April around three-quarters of women reaching pension age will qualify for a full basic state pension, compared to around half without these changes. Ultimately, around 95 per cent of women will qualify for a full basic state pension. It will become possible to obtain a full pension solely on the basis of credit so that, for the first time, caring will be fully on a par with paid employment. I recommend these regulations to the Committee.
My Lords, I thank the Minister for his full explanation of how these regulations will work. I also welcome the statutory instrument, which puts into effect measures which I know my noble friend Lord Skelmersdale strongly supported in Committee on the then Pensions Bill a little more than two years ago.
These regulations ensure that carers and foster parents obtain full contribution credits for national insurance purposes. It is clearly in the interests of the state and, indeed, of all of us, that people who take on these important and historically undervalued roles are allowed maximum flexibility in building up their rights to receive state pensions and other relevant support. To that extent, it makes a statement about the social value of the role of caring. The regulations spell out the mechanism by which carers will get carer’s credit and, in particular, whether the person they are caring for is entitled to benefit. The approach adopted here is the introduction of the care certificate and the reliance on certification by health and social care professionals, and even, in some cases, members of voluntary groups, all approved by the Secretary of State.
I note that the Minister talked about this process being conducted with a light touch. I am sure we are all aware of the current concern being expressed at the so-called light-touch regulation in so far as it applied to our ruined financial sector. I became concerned when I read the draft notes for certifiers about what was being required from them. Clearly it is a sophisticated judgment, as one can see when one looks at the definition of care. The draft states that care may take many forms; that it is important that we recognise a wide range of caring responsibilities; and that it is equally important that we take a balanced view which does not reward somebody for performing duties that would normally be considered day-to-day housekeeping. The second implication of these draft guidance notes is that it is a time-consuming requirement. The notes refer to needing to know the circumstances of the particular carer in some detail. The implication is that the certifier needs to keep in touch with developments in case circumstances change, so it is quite a sophisticated burden.
In the austere times we are facing, I hope that this new light-touch regime does two things: first, that it is effective in preventing fraudulent claims; and, secondly, that it does not bring with it a heavy burden of regulatory oversight. My concern is that if there were lurid stories in the press about people abusing the system, the reaction would be to tighten up, and make far heavier, the regulatory burden as opposed to the light touch which is envisaged. The risk with such a system is that it is expensive in the requirements it imposes and in the direct costs of operation. I shall be most interested to hear the Minister’s response on the assessment that the department has made of the issues surrounding fraud and cost in this area. I should also like to be told the absolute cost of incorporating these extra people into the state pension system, as I could not find that in the notes.
The inclusion of foster carers in the regulations makes sense in the context of the severe difficulties that we have seen in recent years in the provision of fostering places. Anything that makes fostering easier and more rewarding is to be welcomed. However, the regulations are likely to improve provision very much at the margin. The challenge to the Government remains to make sure that there is adequate and stable fostering for children. We have had warnings from those involved in the fostering sector that there is a shortage of people prepared to be foster parents—therefore, the options, when placing children, are narrowed—and that too few people are entering the area at a time when we face a looming generational changeover. Therefore, my second area of inquiry to the Minister is: how do these regulations fit into the Government’s measure to ease the shortage of foster carers?
I broaden out the question of care to refer to the Government’s current plans on providing a national care service, of which the provisions we are discussing would clearly form part. The Green Paper, Shaping the Future of Care Together, suggested strongly that this service would be paid for in part out of disability living allowance and attendance allowance. I say “suggested strongly” as no other funding alternatives were sketched out in the Green Paper. However, yesterday the Secretary of State, Andy Burnham, said in another place, at col. 170 of Commons Hansard, that there would be “no cash losers”. Therefore, my third question is: how, then, do the Government plan to fund the national care service? Subject to the response on that, I assure the Minister that we will support this instrument.
My Lords, I, too, thank the Minister for explaining the regulations so clearly. We on these Benches give them our wholehearted welcome. As the Minister said, this arises from the Pensions Act 2007, and establishes new rules for class 3 national insurance contribution credits for those bringing up children or caring for others for 20 or more hours a week. The regulations will in particular greatly improve the state pension records of women, who tend to get a raw deal from the current system. For the first time, caring is to be treated on a par with paid employment for the building up of pension entitlement.
We on these Benches are particularly pleased that the Government have taken on board the proposals in the new clause tabled by my Liberal Democrat colleagues in the other place on Report on the Pension Bill 2007. The new clause, subsequently withdrawn after the Minister promised to consider it in the context of regulations, was entitled “certification scheme for carers” and would have put in the Bill the proposals that we are now considering.
The 2006 White Paper Security in Retirement, which floated a narrower reform, pointed out that around 390,000 carers were not accruing basic pension rights. The White Paper went on to observe that 120,000 of those carers, who were caring for 20 hours or more a week, appeared to face more difficulties in the labour market, not altogether surprisingly, than those caring for fewer than 20 hours a week. The regulations will ensure that at least they are not now compromising their pension entitlement by their most valuable caring activities and not just for those disabled people on qualifying benefits. As we know, a lot of sick and disabled people just cannot face applying for, or just will not apply for, disability living allowance or attendance allowance, or are past the qualifying age for applying for DLA.
It is also welcome that the credits will be available for up to 12 weeks to cover periods of sickness, holidays and respite care, as well as occasions when the disabled person is in hospital and has had any qualifying benefit withdrawn. I presume that if no qualifying benefits have been received, under this regulation the carer will still be covered for 12 weeks. That was not entirely clear in the Explanatory Memorandum. A carer friend of mine says that she is almost busier than normal when her son is in hospital.
I, too, thank the Minister for sending the guidance notes for certifiers. I note that they are to be published on the internet. Will they be available anywhere in hard copy? I imagine that many carers are not necessarily internet literate. That brings me to my next point about how this very welcome policy is to be publicised.
My honourable friend in another place, Mr Steve Webb, made the point that the carers we are talking about may not come into contact with the benefit authorities at all. I do not think that we can assume that all carers can or will access Directgov on the internet. In many ways, healthcare professionals are likely to be key players in letting carers know about their entitlements. While on the subject of healthcare professionals, could the Minister say whether that is a term of art or just a catch-all term? I know that the certifier does not have to be a healthcare professional, but I am curious about whether the term is defined for the purposes of this legislation. What about someone who is a practitioner in the alternative health field, such as an acupuncturist or a homoeopath?
Going back to how the new scheme will be publicised, perhaps notices could be posted in GP surgeries and advertisements taken out in local newspapers. MPs could be encouraged to help disseminate information to their constituents. I note that the Government intend the certification process to be as light touch as possible. That is very welcome, as long as the publicity about the scheme is not light touch, otherwise the take-up will be disappointing. I also note that there is no time limit for claiming the credits and it may be extended indefinitely at the discretion of the Secretary of State or HMRC—a rather surprising fact given the usual strict rules on backdating. Nor is there expected to be a charge paid by the cared-for person to a healthcare professional or other person for certifying a care certificate, although that cannot be enforced. All in all, we welcome this regulation most warmly.
My Lords, it is probably more than 20 years since I started to campaign for a lifetime of caring to be treated equally to a lifetime of paid work in relation to the state pension, so I am a very happy person today. I commend the Government’s flexibility in changing legislation to allow carers to be accredited by a professional to show that they are providing the appropriate numbers of hours of care. As the Minister mentioned, he has worked very closely with Carers UK and I declare an interest as its vice president. Carers UK has argued that restricting this to those caring for those with certain disability benefits will mean that some carers miss out, for example those caring for someone with a mental health condition who refuses to claim or somebody caring for several people getting the lower rate DLA.
This is the first time that those caring for 20 hours a week will have a concrete entitlement. This is recognition that 20 hours is the threshold beyond which carers’ employment prospects are damaged. A number of measures will help carers to build up pension entitlement and will reduce reliance on means-testing in future, including, as we have heard, the introduction of a new carer’s credit for those who are caring for 20 hours or more a week for someone who is severely disabled. That should mean that thousands more carers are eligible for a full basic state pension. The reduction in the number of qualifying years for the full basic state pension means that carers with disrupted contribution records can still build up a full entitlement. The removal of the first contribution condition means that someone who has never worked can still qualify for a full basic state pension. These are hugely important steps forward in stopping carers finding themselves in poverty as a direct result of their caring.
I share the concerns of the noble Baroness about publicising this and perhaps I may link that to the questions posed by the noble Lord, Lord Freud, about fraud. Far from being notorious for defrauding the system, carers are notorious for not claiming. That is the most important reason why we have to publicise this. I am very grateful to the Minister for being prepared to work with the carers’ organisations on take-up and the Carers Rights Day.
I thank the noble Lord for that clarification. I always feel very strongly about this, as noble Lords will perhaps permit. The noble Lord also made a point about the cost. We always have to bear in mind the cost of not supporting carers, not only during their caring life but after their caring has ceased. They contribute £87 billion to the economy. The costs of this measure have to be taken in proportion. I conclude with sincere thanks and congratulations to the Minister.
I thank all noble Lords who have spoken in support of these proposals. I start with my noble friend Lady Pitkeathley and acknowledge her strong campaign over so many years. I guess that I should apologise that it has taken us so long to get to where we are, but I am delighted that she is pleased. Like both other noble Lords who spoke, she recognises the huge contribution that carers make to individuals and to our society as a whole. My noble friend also picked up on the point that this is not only about carers’ credits. Introducing only 30 years’ contributions to get a full basic state pension and dealing with the first contribution condition are important components of making sure that more people can access a basic state pension. I will come on to the point about publicity in a moment.
The noble Lord, Lord Freud, asked what the light-touch approach would entail with this increase and the likelihood of fraud. We need to balance the need to ensure that only genuine carers are awarded credits against the intention that the burden of proof to be placed on them is minimal. That is so that as many carers as possible are able to benefit through our low-key approach. We believe that the risk of fraud is very low because no cash benefit is attached to the credit and the prospect of obtaining an increase in benefit at some point in the future, as opposed to immediately, is unlikely to have much appeal for those who would otherwise seek to abuse the system. However, I agree with the point made by my noble friend about looking at the balance of things and at the huge contribution that carers make to our society.
The noble Lord asked about the certifier being responsible for notifying any change in circumstances. I think he asserted that that was the position. That is not the case; it is for the carer to inform the authorities of any change in circumstances. The certifier needs to be satisfied only that an appropriate level of care was needed at the time of certifying. He asked whether that will be a sophisticated and time-consuming process. It should not be because by having a light-touch approach and a broad approach to who might certify, we are giving opportunities for those who engage routinely in helping people. It would automatically be part of what they know and are engaged in, so they are best able to make those judgments.
The noble Lord asked about the costs of the arrangements. The total cost in terms of state pension expenditure is estimated to be £50 million to 2020. I thought a schedule outlining the costs was attached to the Explanatory Memorandum. If it was not, I shall let the noble Lord have a copy. It shows the costs claimed through the qualifying benefit route or the certification route and how they potentially build up over the period to 2050. The noble Lord raised a broader point, which is outside these regulations, about the shortage of foster carers and he made suggestions. The provisions we are making here to enable foster carers to have better access and to build up better pension rights are positive.
He also asked about proposals for the new care and support reforms, which are referred to in the Green Paper. He said that there are no costings for them nor information about the means by which they might be paid for. He will be aware that a range of options were proposed in the Green Paper and that we are consulting on them. I think the paper originally promulgated five options and dismissed two: costs being entirely paid by individuals and, at the other end of the spectrum, being entirely paid by the taxpayer. There are a range of alternatives in between. That is the fundamental point.
It was asked whether DLA and AA will be abolished to pay for the national care service. In the longer term, there may be a case for bringing some disability benefits and the adult social care system together into a single system as a better way of providing support for all older and disabled people. However, we will make changes to disability benefits only if we are certain that by doing so we can better support disabled people. We know that disability benefits are popular because they provide a universal entitlement that does not depend on where a person lives. They provide a cash budget that can be spent on the services people want, and they are often used to support lower-level needs that help people stay well for longer. These three aspects will all be important components of the new care and support system and will ensure that if disability benefits for older people are reformed as part of a national care service, people receiving the affected benefits at the time of reform will continue to receive the same level of cash support under a new and better care and support system. I think the noble Lord referred to the fact that the Secretary of State for Health gave an explicit assurance in October that we have ruled out any suggestion that DLA for the under-65s will be brought into the new national care service.
The noble Baroness, Lady Thomas, welcomed these provisions, as I knew she would. She was committed to them as we debated them during the passage of the Pensions Bill. She asked how we can ensure that carers know about these credits. We have been working in partnership with Carers UK. Carers Rights Day, which I referred to, encouraged carers to claim all the financial help and support to which they are entitled. A second burst of media activity is planned from February to raise awareness of the availability of the new carer’s credit from April. Our communications people will target broadcasters, such as “The One Show”, and news outlets and will work with them on packages. They will also work with the personal finance pages of the national and regional press to give practical advice to carers on how to apply for the new credit.
Consumer magazines such as Good Housekeeping and My Weekly, together with specialist carer magazines, will also be targeted. Information and guidance for carers will be available on the internet. The idea of information being available in GPs’ surgeries is very helpful and something that we will look to take forward. I hope we can encourage Members of Parliament to have information available in their surgeries.
The noble Baroness asked specifically whether there will be hard copies of the guidance. I think Carers UK and similar organisations would be likely to be able to provide these. At the moment we have no specific plans routinely to circulate hard copies, but we want this to be taken up as widely as possible and will do whatever we can to that effect. The noble Baroness asked specifically about 12-week breaks and how they will apply, particularly when somebody has not accessed disability benefits. Would the 12 weeks still apply? The answer is yes, they would.
The noble Baroness asked about the definition of a healthcare professional. Is it a term of art? I seem to recall that we debated this during the Welfare Reform Bill. I do not remember which one. I think the noble Baroness and her colleague—
The noble Baroness may be right. I have a feeling that we also debated it in relation to the Welfare Reform Act 2007. We have no definitive list and it is not a term of art as far as we are concerned. The regulations refer to health or social care professionals. In practice, the certifier should be a person who, in their professional capacity or as a volunteer, is familiar with the circumstances of the individual disabled person and is able to confirm that they need the amount of care that is being provided. Each application will be considered on its merits. I hope that definition also helps the noble Lord, Lord Freud.
I thank the Minister for giving way. I also thank the noble Baroness, Lady Pitkeathley, for giving way earlier. I apologise for not having thanked her at the appropriate time. I am still learning some of the procedures of the House. The Minister’s argument is an extremely powerful one. My concern about fraud is that the reward for this is so long term that it gives a new meaning to the expression “long-form fraud”, but the numbers mean that it would be well down the list of things that people indulge in. I would also be grateful for the schedule, which was not in my copy but must be available somewhere. I would be grateful for that and the costs. Given what the Minister has said, I am entirely content and strongly support the statutory instrument, as I said before.