CHASM Research Fellow Becky Driscoll responds to the Chancellor's Autumn Budget announcement on Carer's Allowance.
The government has announced the introduction of an earnings taper to Carer’s Allowance in its Autumn Budget. This marks an important step forward because it will replace the ‘cliff edge’ which has long been one of the most punitive features of the benefits system. Currently, carers lose their entitlement to Carer’s Allowance entirely after breaching the weekly earnings threshold by one penny – this has contributed to thousands of carers unknowingly accumulating substantial overpayments debt, and even civil penalties, causing significant financial and emotional harm.
The Chancellor stated that the taper will mean that claimants lose £1 of their Carer’s Allowance for every £1 they earn through employment - a gradual rather than complete loss of the payment. However, although it will remove the harsh ‘cliff edge’, this 100% taper does not address a more fundamental issue with the social contract between carers and the state. At its current level of £86.45 per week, with the earnings restrictions, Carer’s Allowance does not support carers to have a decent standard of living, nor does it recognise the additional costs of caring, the steep income penalty experienced by carers over their life course, or the fact that our health and social care systems would simply collapse without their unpaid labour.
Introducing a taper is, of course, welcome insofar as it addresses the preventable harm caused by administrative failures, as concluded by the Sayce Review. However, this should not be mistaken for the comprehensive reform which is urgently needed as a matter of social justice and economic urgency.
The most immediate concern is the timeline for implementation. The taper will not be fully rolled out before the end of the decade; for carers facing financial insecurity and poverty today, 2030 is an unacceptably long time to wait. The government has known for years about the unfairness and profound distress that resulted from the cliff edge. Delaying implementation for 3-4 years prolongs a recognised source of administrative harm and injustice. So far, there are no further commitments from the government about how it will protect the carers who are at risk of incurring overpayments debt in this interim period.
This announcement follows an update from DWP a fortnight ago on the progress of the Carer’s Allowance overpayments reassessment exercise, which revealed that less than 2% of the cases included in scope had been reviewed. This disappointingly slow pace, combined with the timetable for the taper, brings into question the level of priority and dedicated capacity accorded by DWP to delivering reform which improves carers’ financial security and ultimately rebuilds their trust in the system. The House of Commons Work and Pensions Select Committee found a ‘culture of complacency’ which undermines confidence in the Department’s commitment to fixing systemic flaws.
The deeper issue is that we have never seriously reconsidered what the purpose of Carer’s Allowance should be in the modern world. The benefit was introduced fifty years ago, in a very different social and economic context. Originally intended primarily as partial income replacement for unmarried women who were presumed to be available to care for family members. Indeed, the last major legislative changes were in 1986, to allow married and cohabiting women to claim, and in 2002, to allow people over the age of 65 to claim (although the ‘overlapping benefits rule’ applies to the State Pension). These assumptions about gender roles, caring relationships and the nature of employment no longer hold true. Abolishing the ‘cliff edge’ is a good start but it is not enough to address the unjust and unsustainable demands placed on high-intensity carers - policy-makers must ask a bigger question: what is this benefit intended to achieve in 2026? Is it about compensation for foregone or reduced earnings, recognition of the value of unpaid care to society, support with the additional costs of caring, or to enable carers to participate in opportunities beyond caring - or likely, some combination of all of these aims?
We should also ask whether one benefit can be designed in such a way that it meets the needs of two groups of claimant: i) carers who are juggling part-time employment with their caring role and need state support to enable them to do so; and ii) carers whose caring responsibilities are so intense or unpredictable that it is not possible for them to remain in the labour market. These are questions that require proper consultation; once we articulate the purpose of carers’ benefits, the design will follow. There is a risk that focusing simply on the implementation of a taper becomes a major, slow-moving distraction from getting started with a broader reform process which addresses these larger questions.
The cliff edge is a significant design flaw, but it is far from the only one, as we argued in the Centre for Care's Case for Change:
The conversation about the taper risks diverting attention from what is lacking: a clear statement of purpose for carers’ benefits in the modern world. Following devolution of social security, the Scottish Government undertook a reform process which included in-depth consultation with carers and other stakeholders to establish what this benefit should achieve. This resulted in three stated aims for Carer Support Payment (CSP):
1) CSP ‘provides income for unpaid carers in recognition of their vital role and its impact on their lives’. This ‘takes into account that different carers have different needs, and that different caring situations have different impacts’.
2) CSP ‘provides stability and supports carers to access opportunities outside of caring, where possible, and they wish to do so’.
3) CSP ensures that ‘carers have a positive experience of the social security system’ and ‘maximises carers’ take-up of all support available to them’.
Abolition of the cliff edge is long overdue. Carers are all too often overlooked, and it is welcome that the Chancellor has included them in this Budget as an example of the ‘everyday fixes’ urgently needed to improve people’s living standards. However, if the taper were to become this Government’s main ambition for carers, that would be a missed opportunity. Carers deserve a fundamental review of what financial support for unpaid care should look like in the 21st century. A taper addresses the most visible flaw, while leaving the underlying principles untouched. The disappointingly slow timetable for both the reassessment exercise and implementation of a taper will bring little change for carers facing acute financial insecurity now.
Author: Becky Driscoll
Becky is a Research Fellow at the Centre on Household Assets and Savings Management (CHASM) and a former member of the Centre for Care team.
Research Fellow
Becky Driscoll's research explores unpaid carers' and disabled people's experiences of the welfare benefits system, the role of welfare rights services, and the financial wellbeing of kinship families.
