The
Committee consisted of the following
Members:
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 childs primary carer. That is why we
have opened up the opportunity for a child benefit recipients
partner to have unused credits transferred to
them.
Developing
the regulations involved a lot of listening on the Governments
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 Committees 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.
On our
approach to accruing pension entitlement for individuals in their own
right who serve our society by caringeither by bringing up the
next generation or
by caring for adults who require carethere are those of us who
have argued that that ought to be recognised in the way in which we
credit them into both the basic state and second state pension. I hope
that the hon. Gentleman will agree that the price of crediting them
inensuring that they do not face a retirement on means-tested
benefits without having accrued access to the basic state pension in
their own right, after what can sometimes be a lifetime of
workis a reasonable price to
pay.
These
credits, together with the reduction in the number of qualifying years
needed to obtain a full basic state pensiondown to 30 from 44
for men, and from 39 for womenwhich 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 yearsrather
than 44 or 39, which are the figures it replacesmeans 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 caringas it is sometimes
tweely calledagainst 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.
However,
we do have some queries about some of the figures and details. I notice
that under regulation 12, applications must be received by the end of
the tax year
following the tax year for which the credit is claimed. Does that
suggest that any late claims will not be backdated? What are the
provisions for backdating? Often, carers are the last people to think
of themselves in such situations, because by definition they are mainly
thinking about someone elsethe person for whom they care. Will
the Minister give us a little more detail on
that?
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 changedobviously,
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 Bills
passage. Broadly summing up the Governments 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 itthe
Minister may correct me if I am wrongthere 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