Should the government pay grandparents who provide childcare?

When it comes to looking after children, in many cases, parents have to rely on help from their own parents. The cost of raising a child is on the rise, thanks largely to an increase in average childcare costs. While some might currently qualify for 30 hours free childcare, there are those with children aged two and under who don’t and find it incredibly difficult to find affordable childcare. 

While the government has recently announced changes to make free childcare available to more people, those changes will take a while to come into effect. September 2025 is the deadline for the new scheme to be up and running. This means that more parents will be forced to rely on family members for help in the meantime.

But while some grandparents may qualify for an often overlooked benefit that could add thousands to their state pension, many believe that grandparents providing childcare should receive more from the government.

Should the government pay grandparents who provide childcare?  

The government doesn’t currently pay grandparents who provide childcare, although many people think it’s a good idea. MPs were told at House of Commons Treasury Committee on 21 March 2023, that they should consider paying grandparents who provide childcare, in order to help make up for a labour shortage in the childcare industry. 

Co-director of the Bennett Institute for Public Policy at the University of Cambridge, Professor Diane Coyle, told MPs that payments to grandparents were worth considering. She said: "One of the issues is the labour supply in the care sector, so perhaps thinking about a modest payment to grandparents instead would be a good alternative."

According to the Childcare and early years survey of parents, conducted by the government, just over two in five (22%) children aged 0-14 used informal childcare, such as grandparents, in 2021. Of those children, 17% were most likely to receive informal childcare from grandparents. That percentage is higher when looking at pre-school children who were cared for by grandparents at 24%. 

But while grandparents don't get paid by the government, there is a little known benefit for grandparents who look after their grandchildren while the parents work, which money saving expert Martin Lewis is trying to bring to light.

If you are a working parent with a child under 12 years old, and your parent provides childcare, you can apply for Specified Adult Childcare Credit. 

Specified Adult Childcare credits mean you can transfer the national insurance credit attached to your Child Benefit to a family member who is providing care for your child. This can add £1,000s to a state pension.

Eligibility criteria

According to the government website, you can apply for Specified Adult Childcare credits if:

• you are a grandparent, or other family member caring for a child under 12
• you were over 16, and under state pension age when you cared for the child
• you are ordinarily resident in the United Kingdom, meaning England, Scotland, Wales and Northern Ireland, but not the Channel Islands or the Isle of Man
• the child’s parent (or main carer) is entitled to Child Benefit and has a qualifying year for National Insurance without needing the parent’s class 3 NI credits which they receive automatically from Child Benefit (they can check their National Insurance record online to see if they have any gaps in contributions)
• the child’s parent (or main carer) agrees to your application by countersigning the form to confirm that:
  • you cared for their child for the period stated
  • you can have the Class 3 NI credit for the period stated.

Specified Adult Childcare credits can be backdated to 6 April 2011 at the earliest. But you can’t apply for the credits for a particular tax year, which runs from 6 April one year until 5 April the next, until the following October. This is so the government has time to run adequate checks. 

So if you want to apply for Specified Adult Childcare credits for the 2022-23 tax year, which ends on 5 April 2023, the earliest you can apply is October 2023. 

“We had to turn to my mum for childcare help” 

We spoke to some mums who rely on their own parents or in-laws to provide childcare and asked them to share their experiences.

Charlotte, mum-of-two, pays her mum to look after her two daughters. She says: “We had to turn to my mum for childcare help otherwise it wouldn’t have been worth me going back to work as all of my wages would have gone on childcare. There were no nurseries in my local area that seemed to provide a suitable solution for shift workers, so I would have had to pay for the girls to be in the nursery full time, even if I didn’t need it. I worked it out that, with my shift pattern, I actually only needed childcare help for about six days a month. But my mum was more than happy to help out. 

“I pay her £25 a day if she has both girls all day, and £15 a day if she does if she has them part of the day. I feel like that that covers fuel and any activities that they might do and it evens out over the course of the month. 

“I feel a responsibility to pay her, even though other members of my family don’t, as I don’t want her to feel taken advantage of - especially when official childcare is so much more expensive.”

Grace, mum-of-one, also relies on her mother-in-law to help with childcare: “It was really important to me to go back to work after I had my son, but nursery was really expensive and it would have been too much for him to go there full time. 

“But luckily, my mother-in-law retired just as I went back to work and she was really keen to help us with childcare. She looks after my son twice a week which is really helpful. She won’t let us pay her, but instead we try to treat her to the odd meal out, and when we go on a holiday together in the summer, my husband and I are going to pay for her travel and accommodation to show how much we appreciate her. Even when we tot up the price of that, it’s cheaper than nursery for another couple of days a week.”