The aim of this report is to assess the impact of parents’ basic skills in literacy and numeracy on their children’s cognitive outcomes. The relevance of the issue is justified on two counts: the severe problems of low numeracy and literacy levels for a large proportion of the UK adult population (see the Moser Report, DfEE, 1999) on the one hand, and the significant gap in the cognitive skills achieved by children from lower and higher socioeconomic groups (Cunha and Heckman, 2007; Feinstein, 2003). The first issue calls for policies aimed at improving the supply of basic skills. To this end, we want to understand whether and to what extent these basic skills may be transferred intergenerationally. If there is extensive intergenerational transmission of skills, this will also highlight the importance of a family-based approach to reducing the inequality in the cognitive skills of children coming from different family backgrounds.