Who Cares?
On the scandal of Carers Allowance
Despite all the warm words of reassurance from politicians, the carers allowance scandal continues. Carers allowance provides £83.30 per week to people caring for someone with a disability for more than 35h per week. Sounds like quite a lot - until you break it down to the hourly rate - a princely sum of £2.38 per hour if you care for the minimum of 35h. Figures from 2021 estimate that more than 1.7 million carers do more than 50h per week of unpaid care. Its probably more now.
But here’s the rub, if someone earns a penny more than the earnings threshold of £196 per week, then they stand to lose the whole amount in that week. Much worse, they will probably not be aware that they are in breach, firstly because they might not know what constitutes eligible earnings and what kinds of deductions can be taken into consideration. Secondly it’s unclear whether the earnings limit is applied weekly or monthly etc.
You’d have thought that there would be a system in place to help flag up when carers might be in breach. DWP do have a system to monitor carers who might be in breach, but have often failed to let carers know. Carers can then find themselves being contacted by DWP some years later, when they might have inadvertently been in breach for months or years and accrued thousands in debt. So time after time we have heard stories of individuals being required to pay back large sums of money - having breached the earnings limit by a few pounds. The Guardian are to be congratulated for continuing to highlight this scandal.
There has been a lot of hand-wringing from many politicians…And to give the new government due credit, they have increased the earnings threshold to the current amount of £196 per week. More recently labour have committed to increasing the resources required to investigate all cases of possible overpayment and fund more investigators in DWP to let people know more quickly if they are in breach. Positive in principle, but these look like the actions of well intentioned bureaucrats wedded to the fundamentals of an existing system.
The government did launch a review in October which is due to read out in summer 2025. Let’s hope that the review makes two simple recommendations. Firstly remove the earnings limit completely and secondly cease all investigations (& forgive all outstanding debts).
This would solve the issue in its entirety, and the government and DWP could move on to more important matters relating to social care.
If the government wishes to keep the fundamentals of the system in place - then the following changes would simplify matters and ease many of the existing issues:
Calculate the earnings threshold on an annual basis, not weekly or monthly.
Ensure that carers allowance is automatically logged as potentially taxable income to HMRC. HMRC could automatically adjust tax codes where appropriate, and any carer could then see all of their “income” details if they register for a government gateway account.
Uprate the earnings limit such that it allows the equivalent of the minimum wage for the 35h of care being provided by the carer in receipt of the allowance. The new threshold would then be around £22k per annum - and I doubt any carer would then be in breach. But because carers allowance is taxable, a carer earning at the new threshold, could well be paying around £3500 annually in income tax & national insurance - so the exchequer would recover more than 80% of the carers allowance received.
There is a clear link between lack of paid work and carer poverty - so it’s no wonder that carers are seeking work to make ends meet - and it’s simply remarkable that so many do so under extraordinarily difficult circumstances. Carers should be encouraged to earn whatever they can and they deserve a system that does not penalise them for doing so.