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Session 2009 - 10
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Public Bill Committee Debates



The Committee consisted of the following Members:

Chairman: John Cummings
Ainsworth, Mr. Peter (East Surrey) (Con)
Baron, Mr. John (Billericay) (Con)
Battle, John (Leeds, West) (Lab)
Cawsey, Mr. Ian (Brigg and Goole) (Lab)
Chapman, Ben (Wirral, South) (Lab)
Eagle, Angela (Minister for Pensions and the Ageing Society)
Hodgson, Mrs. Sharon (Gateshead, East and Washington, West) (Lab)
Hogg, Mr. Douglas (Sleaford and North Hykeham) (Con)
Mullin, Mr. Chris (Sunderland, South) (Lab)
Munn, Meg (Sheffield, Heeley) (Lab/Co-op)
Osborne, Sandra (Ayr, Carrick and Cumnock) (Lab)
Rowen, Paul (Rochdale) (LD)
Smith, Chloe (Norwich, North) (Con)
Waterson, Mr. Nigel (Eastbourne) (Con)
Webb, Steve (Northavon) (LD)
Wright, Mr. Anthony (Great Yarmouth) (Lab)
Eliot Wilson, Committee Clerk
† attended the Committee

Sixth Delegated Legislation Committee

Wednesday 2 December 2009

[John Cummings in the Chair]

Draft Social Security (Contributions Credits for Parents and Carers) Regulations 2009
2.30 pm
The Minister for Pensions and the Ageing Society (Angela Eagle): I beg to move,
That the Committee has considered the draft Social Security (Contributions Credits for Parents and Carers) Regulations 2009.
It is a pleasure to serve under your chairmanship, Mr. Cummings. I hope that we will be able to deal appropriately this afternoon with these beneficial regulations, which were laid before the House on 12 October. I confirm that, in my view, they are compatible with the European convention on human rights.
The regulations bring into effect new arrangements for awarding national insurance credits to certain people who are bringing up children or caring for others. The Pensions Act 2007 introduced weekly credits to help individuals in receipt of child benefit for a child up to the age of 12 to build up entitlement to both basic and additional state pensions. Foster carers and people engaged in caring are defined in the regulations, and those individuals also qualify. The credits replace the home responsibilities protection arrangements, which were introduced by one of my political heroines, Barbara Castle. Those arrangements have been of tremendous benefit to many women, but have not helped people who spend most of their lives caring. It is rare that anyone gets the chance to improve on what Barbara Castle did, and it is therefore particularly gratifying for me to get that chance this afternoon.
The credits ensure that for the first time, caring is treated on a par with paid employment for pension purposes. At the outset, we planned to limit credits to carers looking after people in receipt of a disability-related benefit, but during consideration of the then Pensions Bill we undertook to take into account individuals caring for people who do not claim benefits. We agreed that there will be people who are reluctant to engage with the benefit system or who do not accept, or do not want to accept, that they need looking after, and that it would be unfair for their carers to suffer a reduced pension because of that.
The regulations incorporate an extension to our plans to cover individuals who provide 20 or more hours of care a week for people who do not receive a disability-related benefit. We have done that through a system of certification, whereby a health or social care professional with regular contact will be able to certify that, in their opinion, the person being cared for needs the level of care being given. We want certification to be inclusive, to ensure that individuals who care for people who are not in regular contact with professional health care agencies are not disqualified from access to the beneficial credits. We therefore decided that the range of people who should be able to certify whether an individual needs care should be as broad as possible, within the bounds of credibility. For that reason, we have not prescribed a list of people who can certify, which means that on occasion certification could be provided by, for example, a member of a voluntary group who is in regular contact with the person being cared for.
On the other provisions in the regulations, we have obviously linked credits for people caring for children to the receipt of child benefit; that seems the best way to deliver pension protection to millions of parents. The notes accompanying child benefit claims explain the pension link. Generally, the person claiming child benefit is the person who cares for the child, but occasionally that is not the case, which means that the person claiming the benefit is in fact working and building up their entitlement to state pensions in their own right, while their partner is the child’s primary carer. That is why we have opened up the opportunity for a child benefit recipient’s partner to have unused credits transferred to them.
Developing the regulations involved a lot of listening on the Government’s part, and I am grateful to all those who worked with us to get them into their current shape. They mean that about 160,000 more people could start to gain a credit for the basic state pension in 2010, including some 115,000 women. Also, approximately 240,000 more people than at present could accrue entitlement to the second state pension, including some 145,000 women. I am pleased that we have been able to work with Carers UK to promote carers’ rights day, which is this Friday. The debate is therefore timely.
I want to draw the Committee’s attention to a small drafting error in the regulations. Since tabling them we have discovered that 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. We have therefore drafted an amending regulation to remove those words, which we shall table shortly with a view to bringing it into force at the same time as these regulations. This is a technical change and does not imply a change of policy or intention.
Steve Webb (Northavon) (LD): These changes are welcome. The Minister gave a rough indication of the number of people who might benefit from the regulations. Can she give us an idea of their additional public expenditure implications and how much extra we will be spending on retirement pensions in future as a result of the changes?
Angela Eagle: I certainly can. I can assure the hon. Gentleman that the changes are affordable, partly because the extra rights accrued will be available long term; but the net cost of annually managed expenditure as a result of carers’ credits, which is net of income-related benefits, will be £500,000 in 2011. I am happy to write to him if he wants the figures in more detail. The cost rises to £1.25 billion by 2050.
These credits, together with the reduction in the number of qualifying years needed to obtain a full basic state pension—down to 30 from 44 for men, and from 39 for women—which will happen next April, mean that about 75 per cent. of women reaching state pension age will now qualify for a full basic state pension in their own right, compared with 45 per cent. today. That number will rise to over 90 per cent. in time. The new single contribution condition of 30 years—rather than 44 or 39, which are the figures it replaces—means that one qualifying year of contributions from credits is worth the same as one qualifying year of contributions from earnings. That will be of particular benefit to carers and others with broken work records.
I am happy to say that for the first time, it will be possible to obtain a full pension solely on the basis of credits. These changes mean that caring will be fully on a par with paid employment as a means of accessing state pension entitlements. I commend the regulations to the Committee.
2.39 pm
Mr. Nigel Waterson (Eastbourne) (Con): May I also say what a pleasure it is to serve under your chairmanship, Mr. Cummings? I hope we will not need to detain the Committee for long this afternoon.
We can all agree that carers are the unsung heroes and heroines in our society. There are an estimated 6 million of them in the UK, and they play a hugely important and vital role at a huge saving to the state. I will come to the figures in a moment, but one could notionally net off the cost to the Exchequer of informal caring—as it is sometimes tweely called—against the cost of the regulations. One could see billions of pounds saved every year.
It is important that we do more to help carers. As we have said, we think there should be a right for all carers to request a flexible working arrangement, and there should be regular planned respite care. We also want to ensure when in government that anyone who wishes to have individual budgets and direct payments can do so.
There is still more to do for carers, but we have no issues in principle with the regulations. It would be churlish if we did, given that they were foreshadowed in our 2005 election manifesto, and that there was a broad element of consensus as the Pensions Bill went through its various stages. As the Minister has explained cogently, together with the lowering of the number of qualification years to 30, this means that many more carers will now be entitled to claim a state pension. I think the Minister said that, in time, the figure would rise to 90 per cent. or thereabouts. [Interruption.] Over time; that is extremely important and valuable.
I want to be clearer about the number of people involved. I think the earlier estimates were that some 120,000 extra people could claim the full basic state pension, including 85,000 women, and that approximately 180,000 would accrue entitlement to the state second pension, including 110,000 women. The Minister was moving quite quickly at the relevant point in her speech, but I think she mentioned figures that were a bit higher. It would be helpful to have that reiterated and an explanation as to why the estimates have changed—obviously, if they are going up, that is in the right direction.
We want to be clear about how the costs of the credits will appear in the public accounts. Will they feature on a current-year basis, or will they be a liability for future taxpayers? How will they be quantified in the accounts? Perhaps the Minister can write to us about that, as I think she suggested doing.
In 2007, during the debate on the Pensions Bill, my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) drew attention to the estimates made at the time. A written answer to a question posed by the indefatigable Lady Hollis in the House of Lords mentioned a cost of £800 million by 2050. I think I heard the Minister mention an initial figure of £500,000, rising to £1.25 billion. It will be interesting to know how and why those figures have changed. Will the Minister tell us how much she thinks the extension of the credit to child benefit recipients in itself will cost? Presumably, that is in addition to the earlier £800 million estimate, and may explain the difference. Perhaps she can help us on that.
There was quite a lot of debate on certification at the time of the Bill’s passage. Broadly summing up the Government’s position, after a wide-ranging consultation, they decided on a light-touch approach to avoid unintentionally disqualifying people who are not in regular contact with professionals, such as a GP. As I understand it—the Minister may correct me if I am wrong—there is no prescribed list of people qualified to certify. As was foreshadowed in some of the debates on the Bill, members of voluntary groups may help. That flexibility is important, but having said that, has the Department estimated the level of false claims that might be submitted under a light-touch certification model?
Alternatively, how much would be saved by not tying up the time of medical professionals such as GPs with yet more paperwork? Does the Department anticipate any cost effects of appropriate persons being asked to certify carers? Whom does it anticipate will do most of the certifying? It is GPs, I suspect, but perhaps the Minister has other groups in mind. What research, if any, has been done into this issue? If GPs are to be asked to do this, will they demand payment? If so, how much? Would the Government consider this reasonable, if an amount has been suggested, and is it built into the figures the Minister has quoted?
Again, the Minister is very welcome to write to the Committee if some of these questions are a bit too difficult to deal with on the hoof. Broadly, may I emphasise not just the support of the official Opposition for the thrust of these regulations but remind you, Mr. Cummings, that we would have implemented something very similar ourselves had we been fortunate enough to win the 2005 election?
2.46 pm
 
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