PM told to adopt Swedish tax breaks for parents

Working parents would be offered tax breaks for hiring babysitters, cleaners and gardeners under plans to be examined by David Cameron.

The Prime Minister expressed his interest in a Swedish scheme that cuts the cost of employing domestic staff, making it easier for parents to go out to work themselves.

During a summit with Baltic and Nordic leaders in Stockholm, he also enthusiastically endorsed a Norwegian initiative to increase the state pension age in line with life expectancy.

The tax-break initiative operated in Sweden effectively halves the expense of taking on help with housework and could curb the numbers of people paid cash in hand. But Mr Cameron was accused last night of pursuing the wrong priorities by suggesting easing the tax burden of the well-off.

The Prime Minister made clear at the conference that, if adopted in Britain, the scheme would not apply to formal child carers such as nannies, for whom working parents can already claim tax relief.

But a registration scheme could be set up for other categories of staff enabling parents to claim back some of the cost of their salaries.

Mr Cameron told the Northern Future Forum: "What you do in Sweden in terms of tax help and tax relief, not so much on child care but on other things that help women go out to work, I thought that was a very interesting idea that I want to look at further."

His comments followed a presentation by Stina Honkamaa, Google's executive manager in Sweden, who was the original champion of the initiative.

She said: "The actual cost is halved, which makes it easier to promote people to get help at home."

The Government is sensitive to the charge that women have been hard hit by its austerity measures, including removing child benefit from higher earners, and is known to be seeking initiatives to appeal to working mothers.

Jessica Morden, the Labour MP for Newport East, said he was out of touch with women. She said: "He is suggesting tax breaks for people who can afford domestic workers at the same time as he is cutting tax credits for working parents and removing child benefit from squeezed families."

Mr Cameron also gave fulsome support for Norwegian plans to link the pension age to average life expectancy.

The retirement age is due to rise to 66 in 2020 and to 67 about five years later.

But the Prime Minister went further yesterday, backing the establishment of an automatic connection between longevity and the pension age. He said: "I love the idea."

David Halpern, a senior Downing Street adviser, told the forum that the elderly should be encouraged to return to work and move to smaller homes. He also suggested that loneliness was a greater danger to the over-75s than smoking.

Life the Nordic way: Suggestions for UK

Sweden Mothers who work are given tax breaks which cover up to half the cost of employing domestic help. It has attracted widespread support and is seen as a success for hard-working families.

Norway As life expectancy gets higher, then the state pension age is raised, taking a pragmatic decision out of the political sphere.