Select Committee on Work and Pensions Fourth Report

3  Carers' income and benefits

Impact of caring on earnings income

101.  Caring has a considerable impact on carers' income. A Carers UK survey of 3000 carers found that 72% were worse off since becoming a carer. Carers UK stressed that despite improvements in several areas of policy aimed at improving carers' incomes and helping them to combine caring with paid work, too many carers are struggling financially.[80]

102.  One in five carers gives up work to care and Carers UK research has found that carers had lost out on an average of £11,000 each year as a result of giving up work, reducing their hours or taking a more junior position.[81] The National Family Care Network stressed that economic losses are also incurred by carers as a result of the loss of pension contributions during working age and as a result of the cost of living with a disability.[82]

103.  Carers UK believe that an additional factor is carers' inability to move themselves out of poverty without significant additional support, and therefore the potential for this poverty to be longstanding.[83] Ms Pearlman of Citizens Advice Bureau agreed that this is what distinguishes carers from other groups living in poverty: "carers are in a unique position where they find it almost impossible often to earn their way out of debt or other money problems because of their caring responsibilities."[84]

104.  In its Carers Strategy, the Government highlighted figures which show that while carers are no more likely to be living in poverty than the general population, they do tend to have lower incomes.[85] This finding is based on a comparison of carers (of all ages) with 'non-carers'. However, detailed analysis of the DWP HBAI (Households Below Average Incomes) data on which this is based reveals the importance of age and intensity of caring as contributory factors in poverty amongst carers and highlights the need for more sophisticated analysis. [86] Among those aged 25-34, carers (often caring for sick or disabled children) are more likely to be at risk of poverty than non-carers (19% compared with 13% before housing costs; 11% compared with 8% after housing costs). By contrast, among those aged 75 and over, those who provide care are less likely (14% compared with 24% before housing costs; 7% compared with 14% after housing costs) to be in poverty than non-carers of the same age (among whom many are sick or disabled themselves). [87]

105.  Those caring for more than 20 hours per week are more likely to be in poverty than the general population. Those caring for 35-50 hours per week are even more likely, with significant levels also faced by those caring for more than 50 hours who are not receiving Carer's Allowance. While the evidence in Figure 7 suggests that Carer's Allowance makes a modest contribution to reducing poverty among carers, further exploration of this data is needed to examine how far the differences shown are related to uneven take-up of this benefit; ineligibility for CA when the cared for person or persons are not recipients of relevant benefits themselves; and issues relating to age, which (as shown above) needs to be carefully taken into account to avoid drawing misleading conclusions from this data.[88]

Figure 7: Relative poverty amongst general population and carers

Source: Households Below Average Income series 2004/05

Note: relative poverty defined as income less than 60% of median household income

106.  Many submissions stressed that no carers should be living in poverty, given that they are fulfilling an important social function and that the value of the care provided has been estimated at £87 billion per annum.[89] Carers UK was critical that the Government says that it values the work that carers do, yet it has not committed itself to a targeted anti-poverty strategy for carers. It suggests that an anti-poverty strategy for carers would help the Government meet its target of eliminating child poverty by 2020.[90]

Cost of disability and caring

107.  DWP acknowledges that there is not enough research evidence on the extra costs incurred by caring. In particular, the Department suggests, it is not easy to distinguish between the costs of caring and the costs of disability. The Department states that it continues to review available evidence on whether there are separate extra costs for caring, what they are and what their impact is.[91]

108.  Ms Redmond of Carers UK argued that the distinction between the costs of disability and caring "is a bit of an artificial distinction. I understand why it happens, because we have a benefit system that is about individuals, and so you have a disabled person and you have a carer. That is actually not how people live. […] carers will say to us 'The cost to my family is enormous, the washing bill, the heating on constantly, special food.' That is the cost of disability. We do not of course say to them 'I'm afraid that is the cost of disability and therefore we shan't help you,' but they do not feel that there is enough recompense for all those additional costs."[92]

109.  This reflects what most organisations have told us. Examples of additional costs of caring include costs for heating, particularly when caring for a child or elderly person who is at home all day, washing clothes and bed clothes (a particular problem when caring for someone who is incontinent), special food which people with certain conditions need and transport and parking costs (many carers need to run a car, either to transport the person they care for or to travel to them). Many carers also pay for dressings and other medical equipment which is not provided by health services. Families often struggle to get adaptations to their homes and can end up paying for them themselves rather than waiting months for access to the Disabled Facilities Grant. [93]

110.  DWP pointed out that in cases where the care component of Disability Living Allowance is paid, some funds may be used towards the costs incurred by carers.[94] However, a Carers UK survey for the Real change not short change report showed 49% of respondents reported that the benefits the family received did not cover all the costs of disability.[95]

111.  We recommended in our report The best start in life?, that Disability Living Allowance be reviewed to ensure it more closely reflects the additional cost of disability.[96] DWP stated in its response to our report that the Government acknowledges that studies which have attempted to measure the extra costs associated with disability often conclude that DLA rates should be increased. It added: "However, that ignores the basis on which DLA is founded; to provide a broad-brush contribution towards the generality of extra costs faced by disabled people."[97]

112.  Ms Batten of the National Autistic Society noted that: "the costs to carers are twofold. There is that impact on income and the impact on spending to meet the additional and long-term costs of caring for someone [with autism]. For carers for people with autism those expenses are so significant because people are not always able to access the service and support they need because of their disability, so the carers make up the shortfall. For example, 60% of adults say they are reliant on their families for financial support and 40% still live at home with their parents."[98]

113.  She added: "Equally, people that live independently or in supported living, about 45% in a recent survey said to us that they rely on their families for most of their support. So not just some but most. That may be financial support, that can be going in and providing help with the washing, help managing bills, social contact, those sort of things, and obviously there is no flexibility in the system to recognize that role."[99]

114.  The National Autistic Society provided us with a case study of the financial burden on the parents of two sons with autism aged 22 and 6 years old, illustrating that the costs of caring for a child do not stop when the child goes into residential care: "We lost all Richard's allowances when he went into care, which we understand of course, but we still have all the outgoings and more and will do until we die. How will we cope if our younger son needs similar care? How will we be able to support 2 adult children when we are pensioners?"[100]

115.  We do not believe that families receive sufficient recognition and compensation for the additional costs of disability. Carers consistently face costs that are not covered by Disability Living Allowance or Attendance Allowance (and in some cases disabled or older people cannot claim DLA or AA). We call on the Department to review the level of DLA to ensure that it provides an appropriate contribution to the extra costs faced by disabled people. We share the belief that the current level of support for carers is too low and call on the Government to commission an independent review of the impact of caring on carers' incomes and of the long-term costs of caring for an older person or someone with a disability. The additional costs incurred by carers need to be recognised in the Government's review of benefits for carers.

Carers' benefits


116.  Until April 2003, Carer's Allowance was known as Invalid Care Allowance (ICA). ICA was introduced in November 1975, following the 1974 White Paper, Social Security Provision for Chronically Sick and Disabled People.[101] It was - and still is - the principal social security benefit for individuals looking after chronically sick, disabled and older people in England, Scotland and Wales. It was intended to be an income replacement benefit, and reflected the fact that it was considered important that those who provided care should have an income of their own rather than be financially dependent on the person being cared for. An important element of the original intention was to protect carers' pension entitlements, and the new benefit facilitated this protection through National Insurance credits. It was introduced with a range of other new non-contributory benefits, all of which were set at 60 per cent of contributory long-term benefit rates.[102]

117.  When first introduced, ICA was available to men and single women of working age who were no longer 'breadwinners' because they had given up paid employment to care for at least 35 hours per week for a disabled person in receipt of Attendance Allowance (a benefit not payable until the disability had lasted for six months). In addition, eligibility criteria were such that the care recipient had to be a close relative; however in 1981, availability was extended to individuals caring for distant kin and friends. Initially married and cohabiting women, as well as certain categories of unmarried women (not considered breadwinners) were excluded from claiming the benefit, even if they too had quit work to care; however ICA was extended to include married women in 1986.[103]

118.  As noted above, ICA was renamed Carer's Allowance in 2003. Amendments to Section 70 of the Social Security Contributions and Benefits Act 1992, that came into effect on 28 October 2002, allowed carers aged 65 and over to claim the benefit, and extended entitlement for up to eight weeks following the death of the care recipient. Mr Vaux of the ADASS and LGA said "the original purpose of Carer's Allowance was as an income replacement benefit, but for a very targeted group of individuals, basically spinster daughters caring for elderly parents […]. It was set at a very low level and has never really been pushed up from that level […]. As the scope of the Allowance has been increased, to include married women initially and then to include people over pensionable age, Carer's Allowance has become almost a hybrid. On the one hand it is an earnings replacement benefit, on the other it becomes an additional costs compensation, and it fails on both scores because of that."[104]

119.  The then Department of Social Security commissioned research into the targeting and effectiveness of ICA in the late 1980s.[105] The study identified a number of issues that have also emerged in this inquiry: eligibility criteria were complex; the nature and level of care provided by claimants had adverse implications for their independence, social and employment activities; the majority of carers reported additional expenditure related to disability and caring; a substantial proportion of claimants had been affected by overlapping benefit regulations; very few carers had heard about ICA when they began to provide high levels of care; and take up of the benefit appeared to have been very low prior to 1986 (reflecting the publicity about ICA's extension to married women). On the basis of the research evidence, the author's suggestions to improve the effectiveness and targeting of ICA included increasing its value, and permitting higher levels of earnings from part-time work in combination with receipt of ICA - issues that are still current and have been argued for powerfully by contributors to the present inquiry.

Carer's Allowance - amount

120.  About 470,000 carers are receiving Carer's Allowance. To be eligible for Carer's Allowance, a carer must provide at least 35 hours of (unpaid) care to a person receiving a qualifying disability benefit. The numbers of claimants by age are given in Figure 8 below.

Figure 8: Carer's Allowance - cases in payment caseload (thousands): Age of claimant by gender of claimant/ November 2007

Age of Claimant Total Caseload
Female Caseload
Male Caseload


Under 181.25 0.770.48
18-2418.47 12.905.58
25-2927.21 22.374.84
30-3442.71 35.936.78
35-3965.90 54.5911.31
40-4472.53 57.6414.90
45-4965.71 49.6716.04
50-5460.29 43.5116.78
55-5967.24 47.6119.63
60-6436.49 14.0422.45
65 and over14.60 11.822.78
Total472.42 350.83121.58

Definitions and Conventions: Caseload figures are rounded to the nearest ten; some additional disclosure control has also been applied. Average amounts are shown as pounds per week and rounded to the nearest penny. Total may not sum due to rounding.
Note: Totals show the number of people in receipt of an allowance, and excludes people with entitlement where the payment had been suspended.

Source: DWP Information Directorate: Work and Pensions Longitudinal Study

121.  Carers UK stated that "carers are insulted by the low level of Carer's Allowance".[106] At £50.55 (from 7th April 2008; previously £48.65) it is the lowest of all income replacement benefits. Ms Batten of the National Autistic Society said: "Just to demonstrate how inadequate Carer's Allowance is, even if you did the minimum caring hours of 35 hours a week, that is equivalent to £1.44 an hour compared to a minimum wage of £5.52, which really demonstrates how we value that role. So the rate is inadequate, it sends a message to carers about how we value their role."[107]

122.  Most submissions argued that the purpose of Carer's Allowance is unclear as it does not provide an income sufficient to live on or prevent poverty (the poorest carers have to claim Income Support with a carer premium for an income replacement benefit), but neither is it a benefit paid in recognition of the role of carers or the costs incurred as it is not paid to all who fulfil a caring role (we address eligibility in the following sections).[108] Ms Redmond of Carers UK said "It is something that is trapped back in the Seventies as if it is a bit of pin money or something, but it is not a proper income replacement benefit. If we are talking about a flat rate income replacement benefit, it has to be of a decent level that replaces income." [109]

123.  The National Family Care Network echoed the argument that the current low level of the Allowance and the limited permitted earnings are both unfair to carers in terms of their day-to-day responsibilities and too low to lift families out of poverty.[110] The Office of the former Mayor of London pointed out that the local authorities in London with the highest proportions of the population providing intensive unpaid care (20 hours or more per week) are Barking and Dagenham, Newham and Tower Hamlets and are also those with the lowest household incomes. He concluded that the level for Carer's Allowance is set too low to lift families out of poverty.[111]

124.  The Government stated in its 2008 Carers Strategy that "Carers will be supported so that they are not forced into financial hardship by their caring role."[112] However, it makes no short-term commitment to reform benefits for carers. It identified the long term priority (from 2011 onwards) as:

"Reviewing the structure of the benefits available to carers in the context of wider benefit reform and the fundamental review of the care and support system." [113]

125.  We believe that Carer's Allowance is outdated. We welcome the Government's review of the benefits available to carers and recommend that carers' benefits should be radically overhauled at the earliest opportunity to recognise the contribution carers make and to be more flexible to reflect carers' different circumstances. We make a number of recommendations in this report about how the benefits could be reformed.

Carer's Allowance - underlying entitlements

126.  Entitlement to Carer's Allowance is dependent on the person cared for receiving the higher or middle rate of Disability Living Allowance (DLA) or Attendance Allowance (AA). The Citizens Advice Bureau (CAB) reports numerous instances of family finances being thrown into disarray when a DLA award to the person cared for is reduced to the lower rate (from a high or medium award), or withdrawn altogether.[114]

127.  CAB suggested that the current system of medical assessments and decision-making for DLA/AA is not working satisfactorily, either for clients or the DWP: "Many original decisions to refuse or withdraw benefits are incorrect, and the reconsideration process is not working effectively. Too many cases go to appeal and success rates are very high - 57 per cent of DLA decisions that go to appeal are overturned at oral hearings, rising to almost 70 per cent when clients are represented by advisers. People with mental health problems appear to be especially likely to suffer from low quality assessments."[115] However, the Minister for Disabled People, Anne McGuire, stressed that "it is probably around about two per cent of our total application load that goes to appeal, so the figures are not quite as horrific."[116]

128.  The National Autistic Society (NAS) criticised the fact that many carers of people affected by autism will not be entitled to Carer's Allowance, as the person they care for is not receiving the middle or higher rate care component of DLA. It argued that autism, and in particular Asperger's syndrome, does not fit easily within the legislative framework for the components of DLA. As a consequence, many people caring for those on the autism spectrum find themselves excluded from Carer's Allowance because the person they care for is deemed not to have the attention and supervision needs required for the relevant award of DLA - even though caring for children and adults with autism is often extremely demanding and challenging work.[117]

129.  Ms Pearlman of the NAS said "That is often a problem, where individually they do not quite meet the threshold for middle or higher rate care, but collectively the work is clearly more because you are caring for two or more moderately disabled persons."[118]

130.  In Australia, to be eligible for Carer Payment (the income replacement component of the carer's benefit) a claimant must be providing care in the home of the person or persons being cared for and also providing one of the following levels of care:

  • full-time care to an adult who has a disability or medical condition which is long term and severe and has a minimum level of care needs assessed by the Adult Disability Assessment Tool;
  • care for a person whose care requirements are less severe but who has a dependent child that needs care, so their combined care needs are equivalent to the care needs of a person with a severe disability or medical condition;
  • full-time care permanently or for at least six months to a child under 16 with a profound disability;
  • full-time care permanently or for an extended period to two or more children under 16 with a disability who, together, need a level of care that is at least equivalent to the level of care needed by a child with a profound disability.

131.  These criteria take account of the caring demands on an individual who cares for more than one person, neither or none of whom would individually meet the threshold of care required for the carer to qualify for a carer benefit.


132.  The Chair of the Standing Commission on Carers, Philippa Russell, stressed that "It is a very daunting process to apply for the DLA or the Attendance Allowance or indeed to seek a higher level of the DLA […] Perhaps inevitably - perhaps not inevitably - the questions asked in an application form are extremely negative. Therefore, there needs to be proactive encouragement from a relevant professional or, very importantly, from a local voluntary organisation if the family know about it to complete the form for an entitlement and the process towards hopefully having a better life with less financial worry."[119]

133.  Every Disabled Child Matters (EDCM) highlighted problems with take-up of DLA in the context of our inquiry into child poverty and social mobility, The best start in life?, as many families with disabled children are not aware they are eligible. We recommended that DWP take steps to improve the take-up of Disability Living Allowance amongst both disabled adults and the parents of disabled children.[120]

134.  In response to the report, the Government agreed with us that take-up of DLA is an important issue and reported that it will continue to build on the existing, targeted measures which seek to ensure that as many disabled people as possible receive the support to which they are entitled: "These proactive measures have already resulted in an increase of over 50 per cent in the numbers of people in receipt of DLA in the ten year period ending May 2007." It added that "Information on benefits is also available from Citizens Advice Bureau and other advice agencies. DWP is also increasingly working with partners such as local authority social services and welfare rights organisations to increase the awareness of benefits."[121]


135.  The Association of Directors of Adult Services and the Local Government Association (ADASS and the LGA) call for a review of the rule that links one CA claim to one AA/DLA claim, arguing that there are circumstances where one carer is caring for two or more disabled people but can only receive one CA. Similarly, there are some severely disabled adults and children who require almost constant care and attention and receive it from two or more family members, yet only one person can claim CA for caring for them.[122] The Minister for Disabled People, Anne McGuire, responded by saying "I recognise the criticism, […] but the Carer's Allowance is legally, technically, and in all senses, an income replacement allowance. Therefore, the basic rules of our social security system […] are that you cannot pay more than one replacement allowance benefit at the [same] time."[123]

136.  The National Autistic Society states that the rule is restrictive and leads to further financial hardship, as autism often affects more than one child within the family.[124] The National Family Care Network claims that it is an anomaly that Carer's Allowance is only paid on this 'one per family basis' when DLA is paid on an individual basis and a family with multiple disabled family members will receive it for each eligible individual. "A growing number of people are now caring for several generations of family members, and the Carer's Allowance is totally inadequate in these situations."[125] Mr Vaux, representing the ADASS and LGA, added: "There is a sense that they feel abused by the system, that they are receiving at most £50 a week for caring for more than one disabled person. They do have a sense of unfairness regarding that."[126]


137.  Attendance Allowance and the higher two rates of DLA (Care) both have a qualifying period for which care must be required - six months and three months respectively. Until those qualifying periods have elapsed, a carer cannot access Carer's Allowance, and payment of CA only commences from the start date of the AA or DLA award, at best. This means some carers have had to do 3-6 months 'unpaid' caring at the start of their responsibilities, when CA is not payable.

138.  Ms West, of Age Concern, said a carer's "income drops very suddenly without the necessary time to plan and it will be six months before the person, their parent, can get Attendance Allowance, and then that links them into the Carer's Allowance."[127] Ms Pearlman, of CAB, added: "For that period, whether it is three months or six months, they are effectively doing their work unrecognised and yet very often at the beginning of that caring relationship, that is where the greatest costs are immediately incurred."[128] CLIC Sargent, for example, reported that from the diagnosis of their child's cancer to the first payment of benefit, the average family will spend more than £1,500 to provide the care and support that their child requires while undergoing treatment.[129]


139.  ADASS and the LGA suggested there needs to be consideration of whether and how this link between the qualifying benefit and CA can be broken, for example, by verification from a social or health care professional that care is being provided.[130] Ms Pearlman of CAB agreed that "we should give serious consideration to how that might work, because the vagaries of the benefits system are such that household income can be thrown into disarray if one part of that jigsaw is removed."[131]

140.   Mr Vaux, representing ADASS and LGA, pointed out that there is already a precedent for a certification scheme through healthcare professionals: "In the pensions reform that is coming up, the proposal is that the State Pension credit that would be created for carers would be based on an assessment by a healthcare or social work professional and that would be the validation of somebody receiving the credit for their national insurance contribution record. That is already part of the welfare reform package for national insurance contributions and that would seem to provide an alternative method of verification that somebody is a bona fide carer."[132]

141.  However, the Minister for Disabled People, Anne McGuire, said that she is "not sure what added value we would get with a certification process. I may be wrong in that, but at the moment I cannot see what else it would bring in terms of supporting carers."[133]

142.  The rule that links one CA claim to one AA/DLA claim provides no recognition for carers who look after more than one disabled person or carers who have to share the caring role for a severely disabled person. This could be reflected in our proposed reform of carers' benefits which we make later in this chapter.

143.  The eligibility rules for Carer's Allowance also do not take into account those who care for more than one person with a disability, none of whom meets the criteria for CA, but who nevertheless face a very substantial demand for care. We call on the Department to examine the case for extending entitlement to Carer's Allowance to those who care for more than one person, none of whom qualify them for Carer's Allowance, but who, nonetheless, face a burden of care equivalent to a carer eligible for Carer's Allowance.

144.  Qualifying periods that apply for AA and DLA are also problematic for some carers. We believe that there is a case for introducing a fast-track procedure for Carer's Allowance applicants in emergency circumstances, and we call on the Department to look at ways to introduce such a provision.

145.  We have received evidence that supports a new accreditation scheme for the purpose of establishing eligibility for benefits for carers. However, because linking carers' benefits to qualifying benefits for disabled people has the great advantage of simplicity, we are not convinced by the proposals for such a scheme. We recommend that DWP addresses the problems of lack of awareness of disability benefits by investing in a large-scale awareness raising campaign.

Carer's Allowance - overlapping entitlements

146.  The DWP's view is that Carer's Allowance is not a 'carer's wage' or a 'reward for caring':

"Rather, it is one of a number of income-maintenance benefits, including State Pension, Incapacity Benefit, contribution-based Jobseeker's Allowance, Widows and Bereavement Benefits and Maternity Allowance, for those unable to fully participate in the labour market. State Pension, for example, replaces income in retirement. Carer's Allowance replaces income where the carer is retired or has given up the opportunity to engage in full-time work in order to care for a severely disabled person. In both cases the need is the same even though the person qualifies for two different benefits. Hence the overlapping benefit rule operates to prevent both benefits being paid in full at the same time."[134]

Carer's Allowance and its overlapping benefits are shown in Annex C of this report.

147.  Where a carer claims Carer's Allowance in addition to one of these 'overlapping' benefits, the higher of the two benefits is paid. Effectively, the overlapping benefit is paid in full; if it is payable at a lower rate than Carer's Allowance, a portion of the Carer's Allowance is also paid to bring the total benefit payment up to the Carer's Allowance rate, currently £50.55 p.w.[135]

148.  Where someone qualifies for Carer's Allowance, whether or not an overlapping benefit is paid instead, a Carer Premium (£27.75) is included in the assessment of their income-related benefits, and an additional amount for caring (also £27.75) in the assessment of their Pension Credit.[136]


149.  There is no age limit for claiming Carer's Allowance but because it 'overlaps' with the State Pension it is not paid to a person who receives £50.55 or more State Pension. The numbers of customers who were awarded CA and were over State Pension age are:[137]

2004/05 : 71,737

2005/06 : 67,313

2006/07 : 66,384

2007/08 : 63,969

150.  Carerwatch and Age Concern, among others, state that carers who have previously been entitled to Carer's Allowance and find that it is 'removed' when they reach State Pension age can experience distress and anger; this can happen after decades of caring for a sick or disabled relative has prevented them from making pension provisions that would ensure that they did not experience an impoverished old age.[138] The National Family Care Network stressed that "People are often still providing regular and substantial care well into their 90s and are not able to 'retire'."[139]

151.  People may receive additional payments within the income-related benefits system but only if they are entitled to Carer's Allowance. For many older people this means going through the process of claiming Carer's Allowance, even though it cannot be paid, in order to then apply for additional support through means-tested benefits. Mr Vaux, representing ADASS and LGA, said: "At the moment it is an illogical system where we are having to put people through a claiming process for a benefit that we know in advance they are going to be refused; I cannot think of any other part of the benefits system where you have to go through a completely pointless exercise to establish the fact that you are not entitled to a benefit but you have underlying entitlement to a benefit."[140] Neil Bateman added "not surprisingly, many carers and their advisers find this concept and the process involved totally perplexing. It is quite Kafkaesque."[141]

152.  Ms Pearlman of CAB said: "We know that staff in the Carer's Allowance Unit, like our own organisations, spend an awful lot of time explaining the system to people." Not only does this complexity have a very significant administrative cost, but also, as Mr Vaux stated: "You also lose people on the journey. […] we have to go back to them, say 'Oh, you have been turned down? Good, now we can apply for Pension Credit because you get the Carer Premium' or 'Have you notified the council tax benefit section?'"[142]

153.  The Minister for Disabled People, Anne McGuire, acknowledged the pattern: "I appreciate that when you say to somebody, 'You are entitled to something but you're not going to get it,' it can cause some confusion. We are working to try to improve that message, particularly working with organisations that have front-facing involvement with individuals."[143]

154.  Age Concern has made proposals for the systems to be streamlined so that people could claim Pension Credit and Carer's Allowance through one telephone call; or alternatively they have advocated changes to Pension Credit legislation to enable the carer addition to be paid to people fulfilling certain caring criteria. So far the DWP has not decided to take this forward. Furthermore, the DWP are piloting a scheme whereby the local Pension Service will complete applications for both Pension Credit and Carer's Allowance and provide decisions straightaway.[144] Ms West of Age Concern said: "I think that is positive, we hope the pilot works and that it will be extended but we would also like to see all people who really need to claim benefits get that holistic service."[145]


155.  Another anomaly is that when a carer becomes eligible for Carer's Allowance, the cared for person loses the Severe Disability Premium from their Pension Guarantee Credit.[146] Carerwatch suggests that the removal of the Severe Disability Premium from the means-tested benefits of a cared for person can act as a deterrent to carers claiming Carer's Allowance.[147] It argued that the cared for person is effectively paying the carer via the DWP.

156.  However, where the carer qualifies for Carer's Allowance but it is not paid because of an overlapping benefit (such as State Pension), the person being cared for retains their entitlement to the extra amounts for severe disability. This is the case even if the carer qualifies for the Carer Premium in an income-related benefit, or for the additional amount for caring in Pension Credit.[148]

157.  The overlapping entitlement rules are confusing and over-complicated and DWP therefore 'loses people along the way' in the process of claiming carers' benefits. The system of having to apply for a benefit you know you are not going to get in order to be eligible for a benefit you are not yet claiming is counter-intuitive. The administrative costs to the Department of dealing with almost 64,000 Carer's Allowance claimants above State Pension age must be substantial. We recommend that the Department urgently streamlines the application process for benefit entitlements for carers of State Pension age. Our recommendations below, on how best to reform Carer's Allowance in the longer term, aim to address the complexities of overlapping entitlements. We believe that this should be an urgent priority for DWP's Benefit Simplification Unit and any simplification of benefits for carers should be in line with our recommendations.

Carer's Allowance: incentives to work, study and volunteer


158.  Carer's Allowance is withdrawn if a carer embarks on an educational course that entails more than 21 hours study per week. This rule has been much criticised by a number of organisations, as it creates a barrier to carers wishing to engage in education and training in order to update their skills with a view to entering or re-entering the labour market. A number of submissions called for those on Carer's Allowance to be exempt from this rule.[149]

159.  Many carers report that their caring responsibilities necessitate training for a new form of employment. However, many vocational and academic courses only attract funding if the participant studies full time and within a particular timescale. This may be impossible for a carer.[150]

160.  At present 16 and 17 year old carers can receive Carer's Allowance, but only if they are not in education for 21 hours or more a week, forcing them to choose between caring and being educated. Ms Redmond of Carers UK said: "The 21-hours study rule really should go. It does not make any sense at all. Why we should penalise people for studying I have no idea at all."[151]

161.  Carerwatch added that many financially-assisted educational courses do not have Carer's Allowance on their list of qualifying benefits for reduced fees, making engaging in education unaffordable. A student in receipt of Income Support, which is paid at a higher rate than Carer's Allowance, will pay less than someone in receipt of Carer's Allowance.[152]

162.  The Minister for Disabled People, Anne McGuire, acknowledged that "We need to look at how we dismantle some of the barriers. If we want to encourage people into training and education, to build up skills, to move into the employment market, then we need to look at how some of the elements of our rules perhaps disadvantage people in that respect."[153]

163.  Carers currently face a stark choice between engaging in education and training without any financial support or living on benefits. Many carers would be able to undertake education or training in addition to providing in excess of 35 hours of care per week. We recommend that the Department evaluates the effect of lifting the 21 hour study rule for carers on Carer's Allowance to enable carers to engage in education and training as a route into paid employment. We also recommend that the Department evaluates the effect of adding Carer's Allowance to the list of qualifying benefits for reduced education and training fees.


164.  Citizens Advice Bureau (CAB), the Office of the former Mayor of London and Carerwatch, amongst others, report that the earnings limit on Carer's Allowance makes it almost impossible for carers to combine paid work with their caring responsibilities, because the earnings limit is set at too low a level.[154] At present, the earnings limit is £95 a week (2007/08), and the National Minimum Wage (NMW) is set at £5.52 an hour, for workers aged 22 and over. If a worker earns anything above the earnings limit for CA it is removed in full. This means that a working carer, earning the NMW, can work only 17 hours a week before losing their Carer's Allowance. For anyone who earns more than the NMW, the number of hours they can work declines dramatically.

165.  USDAW argued that "The rule fails to reflect the needs of carers working in our industries, most notably retail, nor does it reflect the needs of employers operating in the fast moving, responsive and high turnover retail industry."[155] USDAW said that it has the support of a major national retailer in its campaign to change the earnings limit: "They are behind our campaign precisely because they want the working carers they employ to have the flexibility to earn extra money where possible, instead of being stuck in a benefits trap."[156]

166.  Ms George of USDAW stressed that "The Benefits Agency is demanding weekly letters regarding their income if it comes up near the £95 a week limit, as they often do, and that is an extra burden for a personnel manager to have to write letters on people's behalf to a Benefits Agency. It does trap carers in that either you work and get no recognition or you do very few hours and claim Carer's Allowance."[157]

167.  ADASS and the LGA suggest that CA should be 'tapered' away as income rises, not removed in full. It accepts that this may cause problems in the interplay with other means-tested benefits that the carer may be receiving, such as housing and council tax benefit (and possibly WTC), creating very high marginal 'tax rates' of 90 per cent or more. However, it believes that such a measure should be costed, modelled and considered.[158] Ms Redmond of Carers UK agreed: "A taper would be much better so that people have much more flexibility."[159]

168.  Ms Waters of BT added that employees would like to "be able to gradually build up their working hours so that they find that 'sweet spot' where they can adequately manage work and it gives gainful employment and a reasonable level of income, and they can manage their caring responsibilities. It is not the case for BT workers generally but for those who are on lower income, the £95 earnings […] cap really does not give carers that choice, and I think that is something that needs to be looked at perhaps in a slightly different perspective on the cliff edge."[160]

169.  The Minister for Disabled People, Anne McGuire, commented however that "It is not just an issue of finance but there are knock-on costs if you increase the earnings' limit. It is not a no-cost solution, because there are knock-on effects for other parts of the benefits system."[161]

170.  CAB offered a different solution, suggesting that increasing the earnings limit would help many carers to combine paid work with their caring responsibilities, without undermining their family income.[162] ADASS and the LGA added that increasing the earnings limit to £150 a week would actually add very little to the social security budget as it would only add a relatively small number of carers to the total number who are claiming CA (those currently earning between £95 and £150 a week). Those who currently limit their hours (and pay) to the present threshold would simply have the capacity to earn more, whilst retaining the same level of CA as at present.[163] Mr Vaux, representing ADASS and LGA explained:

"The carers who are working would be able to work longer hours and earn more, it does not actually bring more people into Carer's Allowance apart from that small group who are currently earning between £95 and £150. If a carer is currently getting £50 a week Carer's Allowance and earning £94.99, if they can earn £149.99 it does not affect the amount of Carer's Allowance that is in payment, so there is actually very little additional cost to increasing the earnings disregard apart from that group who are currently in that bracket."[164]

171.  We asked the Department for costings and the estimates are as follows:

Figure 9: Cost of raising or abolishing the earnings limit

Raise the earnings limit to £150 pw[165] Abolishing the earnings limit[166]
Year 1£12m £80m
Year 2£24m £163m
Year 3£36m £248m
Year 4£49m £336m
Year 5£62m £427m

Source: DWP

172.  Currently the earnings limit also causes other problems, as the earnings limit goes up each year in April, but the NMW is uprated each October. In April, carers whose earnings are just below the limit become eligible for Carer's Allowance but, when the NMW is uprated in October, they lose their Carer's Allowance because they are then earning slightly more than the earnings limit.[167] Ms Pearlman of CAB said "What it means really is that from April to October you can earn slightly more or you can do slightly more hours work, but then the minimum wage goes up and you are back where you started again. It is almost impossible to manage a budget on that sort of insecurity."[168]

173.  DWP said that increases in NMW are implemented in October by the Department for Business, Enterprise and Regulatory Reform: "There are technical reasons for this, notably the time needed to undertake research into wage rates in the various industrial sectors, study the findings and submit the proposed increases in the NMW to the Treasury for approval. This means that October is the earliest practical date for implementation."[169]

174.  Despite recent increases to the earnings limit, its level still represents a major barrier for carers to combine work and care, and/or progress in employment. We recommend that the Department urgently commissions and publishes a thorough analysis of the costs and benefits of increasing the earnings limit and introducing a taper.

175.   The different timetable for Carer's Allowance earnings limit uprating and the uprating of the National Minimum Wage is still a cause of great anxiety for claimants and causes problems for employers. We recommend that the Department finds ways of synchronising the increases in the level of the Carer's Allowance earnings limit with increases in the National Minimum Wage.


176.  Neil Bateman points out that while currently people can earn up to £95 per week net when receiving Carer's Allowance, this earnings figure is effectively over-ridden by the much lower £20 earnings disregard for means-tested benefits if they are in receipt of a means-tested benefit to top up their Carer's Allowance (as many carers are): "Not surprisingly, claimants also get confused about this."[170]

177.  ADASS and LGA stressed that it is the poorest carers who claim Income Support and other means-tested benefits: "It is therefore ironic that they have the least ability to improve their position by taking paid work."[171] At present, carers on Income Support lose the benefit at the rate of £1 reduction in benefit for every £1 earned over £20. Mr Vaux said that "a pound for pound reduction above £20 a week is still a major disincentive for carers who are on Income Support - who are often the poorest carers obviously - to retain employment or to move back into employment"[172]

178.  ADASS and LGA argued that there is a strong case for aligning the earnings disregard with that which applies to CA itself: "There also is a precedent for this - the new Employment and Support Allowance will have a common disregard for permitted earnings (currently set at £88.50 a week but rising in October) whether the claimant is getting ESA through their contribution record or a means-test."[173]

179.  Neil Bateman suggested that the different earnings rules are not only a recipe for overpayments because people think the higher Carer's Allowance limit applies to means tested benefits, but they are also a disincentive for carers who wish to work part-time: "I believe this raises a wider issue about the way that earnings are treated for social security benefits and that there is an overwhelming case not only to increase the level of earnings disregards in means tested benefits to a realistic level but to have a single earnings rule and amount across the entire social security system. This would be a major simplification measure, reduce the scope for fraud and overpayment and also provide incentives for people to engage in the labour market."[174]

180.  Different earnings rules for carers claiming Carer's Allowance and means-tested benefits are confusing and increase the risk of overpayments. We believe that there is a case for a complete review of earnings rules across the range of benefits in the social security system to reduce the scope for fraud and overpayment, dramatically simplifying the benefit system and also provide incentives for people to engage in the labour market.


181.  We understand that, in addition, carers are deterred or prevented from becoming involved in volunteering because:

We have also heard that inconsistent advice from Jobcentre Plus advisers can deter carers from involvement in such activities.

182.  The Minister for Disabled People, Anne McGuire, said that "There are certain costs that we take off before we impose an earnings limit. Certainly I am always prepared to look at whether or not we can adjust those costs to meet the needs of carers. This is an opportunity for us to go back and look at the costs that we can deduct before the earnings limit."[176]

183.  We have been very impressed by the voluntary engagement of carers in carers' centres and organisations and in developing local carers' strategies. We believe that it is important for carers to be supported in their voluntary work to help others and to remain in touch with people and organisations outside their caring role. We recommend that DWP take steps to remove obstacles for carers to engage in voluntary work, including ensuring that reimbursed travel costs and the costs of replacement care are not counted as income in calculation of Carer's Allowance or means-tested benefits.


184.  In contrast to other income-replacement benefits (Jobseeker's Allowance (JSA), Income Support, and the Employment and Support Allowance (ESA)), Carer's Allowance is 'passive'. CA does not provide a package of support to enable people to combine care with employment, and it does not support carers' engagement with the labour market by encouraging take-up of skills training or employment support. Work-focused interviews are voluntary for those in receipt of CA. As the Government recognised in its Welfare Reform Green Paper, "periods of caring vary significantly, so raising the issue of work-related activity when caring starts may be inappropriate in many circumstances"[177]

185.  Ms Pearlman of CAB said that "Describing Carer's Allowance as a passive benefit always causes me worry because although you do not have to be looking for work to get Carer's Allowance you do have to be caring for 35 hours a week or more."[178] Mr Burke of Counsel and Care argued that the system "at the moment is rather passive, and it needs to become a lot more proactive. There is quite a lot that Jobcentre Plus can do, […] all advisers, for example, being trained and having knowledge about issues that face carers who want to work. We could learn also from the role of the childcare partnership managers in developing perhaps carers partnership managers who understand at a strategic level the Jobcentre Plus area, the issues that carers face, the services that they need, and so on, to be able to return to work."[179]

186.  Ms Redmond of Carers UK stressed that back to work support for carers "needs to be light touch because these are often people under an enormous amount of strain, who will not necessarily trust that the system has their best interests at heart. These people are battling day and night for basic things, like sorting out their incontinence pads, sorting out a day centre a day a week. They battle, battle, battle. So I think any compulsion would actually make it incredibly stressful for people."[180] Mr Vaux, representing ADASS and LGA, added that if compulsion on carers to seek employment "was done in isolation and if it was done on top of the existing benefits system it would be received very badly by many carers […]. If it was part of a broader reform of Carer's Allowance and a system of recognition for carers who are working then there may be a place for it, but just sitting it on top of the existing Carer's Allowance system would send out a very negative message to many carers."[181]

187.  We recognise that although some carers are in receipt of income replacement benefits, they are not 'unemployed'. We do not believe it would be in the interests of the carer or those they care for, to place the same compulsion on carers to seek employment as those on ESA. We recommend that carers who seek training or employment should be better supported to enter the labour market, but that there should be no conditionality about seeking employment for people with care-giving responsibilities in excess of 35 hours a week.

Replacing Carer's Allowance


188.  Many witnesses have emphasised that Carer's Allowance, as currently designed, is not fit for purpose, and we are aware that many carers were disappointed that this issue was not directly addressed in the Carers Strategy (2008). We have received evidence about the desirability of introducing two 'tiers' of support for carers, offering: (i) income replacement support for carers unable to work, or working only part-time; and (ii) compensation for the additional costs of caring for all carers in intensive caring roles (which would also provide some support in maintaining a 'life of their own'). [182] Examples include Incapacity Benefit and DLA and State Pension and Attendance Allowance.

189.  The Australian Commonwealth Government operates a two-tier system of carer benefits (this is outlined in greater detail in Annex A). Carer Payment is an income-replacement benefit paid to carers, means-tested on all income and assets other than the family home. It is paid at the same rate as other income replacement benefits. The payment "ensures carers have an adequate level of income and maximises the opportunities available to carers to participate in their community". The maximum single rate is $548.80 per fortnight (approximately £264); the couples rate is a maximum $456.80 per fortnight (approximately £220).

190.  The Australian Carer Allowance is an income supplement available to people who provide daily care and attention at home to a person who has a disability or severe medical condition and is meant to cover the additional costs incurred through caring for that individual. Carer Allowance is not taxable or means tested. It is paid at the rate of $100.60 per fortnight (approximately £48). An individual can claim Carer's Allowance for each person that they care for (but can only receive one Carer Payment). Virtually all recipients of Carer Payment are entitled to Carer Allowance.

191.  ADASS and LGA advocated a similar carers benefit scheme that has two distinct elements, which could be claimed jointly or independently of each other but on one form:

  • "a basic Carer's Allowance at around the ESA higher rate figure (the rate paid to those in the support group, who are not expected to be in employment). This is the earnings-replacement element for carers who are unable to work.
  • "In addition, there would be a caring costs allowance which recognises the additional costs that carers incur. It also acts as a recognition to all carers that their contribution as carers is valued."[183]

192.  Ms Batten of the National Autistic Society agreed that the income replacement element should be paid at the same rate as the ESA support group, because "the ESA support group are looking at people who are not expected to get back into the labour market in the short term."[184] Mr Vaux, representing ADASS and LGA, added that the additional costs element would need to be set, as a minimum, at the level of the existing Carer Premium within means-tested benefits, to act as a recognition that the work of carers is valued and to provide some form of monetary compensation for the additional costs of caring.[185]

193.  The Minister for Disabled People, Anne McGuire, was cautious about the two-tiered proposal, stressing that "you cannot change Carer's Allowance overnight. There are so many implications. Once you start to deal with one benefit, the knock-on effect both for individuals and for the benefit system as a whole can be quite profound."[186] She added: "We want to look at how it fits in with other working age benefits, for example. The social care reforms have been led by the Department of Health and there may be implications there depending on what comes out of that consultation."[187] While she was cautious about the two-tiered proposal,[188] she emphasised that 'tinkering' with the system would not be appropriate:

"We want to get the right support for carers without doing some of the tinkering which will add complexity both to the benefits system and to the life of the individual carer. That is why we want to have time to look at how we do this in the context of some of the other changes that potentially will be coming in our working age benefits system."[189]

194.  We asked DWP for an estimate of the cost of raising CA to the same level as Jobseeker's Allowance (JSA), the level for the Employment and Support Allowance (ESA) (support group) and State Pension level. The Department's estimates are as follows:

Figure 10: Cost of raising Carer's Allowance to the same level as state pension, ESA and JSA

To equal Jobseekers'
Allowance at £60.50
To equal state pension
at £90.70 pw[191]
To equal Employment
Support Allowance at
£102.10 pw[192]
Year 1£149m £573m£730m
Year 2£174m £652m£830m
Year 3£227m £738m£935m
Year 4£240m £831m£1050m
Year 5£254m £931m£1175m

Source: DWP

195.  The Institute for Public Policy Research (IPPR) suggested that Carer's Allowance should become part of a single income-replacement benefit, replacing Jobseekers' Allowance, Income Support and Employment and Support Allowance as well as CA. This single income-replacement benefit would be available to people out of work for whatever reason. Conditionality would be personalised, based on discussions with a Personal Adviser.[193] Counsel and Care have supported this proposal.[194]

196.  IPPR argued that there are two key benefits to this proposal:

"The benefit would be active and personalised. Income-replacement and employment support for carers would be on a par with those for other groups out of paid employment for any other reason. Conditions around work-related activity would be personalised in relation to the intensity of caring; with caring across the life-course clearly a legitimate reason to be out-of-work. Personal advisers would have discretion, in dialogue with the carer, to broker employment and training services for the carer, and carers could top-up their benefit with some level of work

"Individuals caring would be able to access a simple, single, flat rate benefit, rather than navigate complex eligibility criteria. By not requiring people to self-identify as carers to access support, it would provide support over the spectrum of caring across the life-course and over caring transitions."[195]

197.  While strongly supporting simplification of the benefits system (which many carers currently find hard to understand and difficult to negotiate), we believe carers' contribution needs to be properly recognised in the benefits system, and reject the suggestion that Carer's Allowance be replaced by a universal income replacement benefit to which carers would be entitled alongside other (non-carer) claimants.

198.  We endorse the commitment in the 2008 Carers Strategy to review carers' benefits as part of a wider process of welfare reform. We believe that this review should be guided by the principles that carers who are not able to work due to their caring responsibilities should be entitled to an income replacement benefit comparable to other income replacement benefits; and that an additional payment should recognise the additional costs of caring for one or more people.

199.  We ask DWP to give urgent and detailed consideration to replacing Carer's Allowance with a two-tiered benefit for carers, and cost our proposals as soon as possible. They would operate as follows:

Carer Support Allowance, to be paid at the same rate as Jobseekers' Allowance, with the opportunity to earn a modest amount in a paid job (offering reasonable consistency with CA and in line with the permitted earnings rules). As this will be an income replacement benefit we do not think it should be payable in addition to other income replacement benefits; however we do not believe it is necessary, or desirable, to 'means-test' Carer Support Allowance, as carers entitled to receive it will need to be fully occupied by their caring role (for at least 35 hours per week).

Caring Costs Payment, available to all carers in intensive caring roles (35+ hours per week, consistent with existing Carer's Allowance), but payable also to those over State Pension age, to compensate them for the additional costs of caring, and/or to enable them to buy in some help, goods or services to ease their caring situation. We recommend that CCP should be set at a level commensurate with other parallel payments in the UK social protection system (such as Child Benefit); this would make it likely that CCP could be set somewhere between £25 (£1,300 p.a.) and £50 per week (£2,600 p.a.).

200.  The Green Paper, No one written off: reforming welfare to reward responsibility, was published on the day that we agreed our Report. We ask the Department to consider and take into account our report as part of its consultation on the Green Paper.

Concession cards

201.  The Government reported that a number of local authorities run schemes that recognise the contribution carers make to society. Some offer discount schemes for transport and leisure facilities for carers, regardless of whether the carer is accompanied by the person they care for; this goes beyond the discounts available to carers when they are accompanying the person they support through schemes such as the disabled person's railcard and concessionary bus fare schemes. It acknowledged that "these discounts can play a big part in allowing carers to take part in the sort of activities that others take for granted, and can help to address carers' isolation."[196]

202.  The Princess Royal Trust Salford Carers Centre, for example, is piloting a Carers Leisure Pass, which gives carers unlimited access to council swimming, gym and leisure facilities. Following a carer's assessment, the assessment worker can request a pass electronically from Salford Leisure. Use of the pass is monitored and if it is not used for a continuous period of two months, the Carers Centre is informed and contacts the carer to check that they are well, or if they are having difficulty using the pass or if they no longer want it. The pass has improved the health of a wide range of carers, including working carers, as it is not limited to off-peak use.[197]

203.  In its Carers Strategy the Government stated that "in recognition that much good work is already happening, we will be working with local government to make sure that this good practice is spread more widely."[198]

204.  In Australia, extensive provision is made at State and local authority level to provide concessionary rates for carers. Recipients of Carer Payment are entitled to a pensioner concession card from the Commonwealth Government, which entitles the holder to reduced cost medicines. Additional concessions vary depending on the state and local authority but include:

  • reductions in property and water rates and utility bills;
  • a telephone allowance;
  • reduced fares on public transport;
  • reductions on motor vehicle registration; and
  • free rail journeys within the state each year.

205.  We welcome the Government's commitment to work with local authorities to spread the idea of concession cards for carers more widely. We recommend that the Government follows Australia's good example and proactively negotiates concession cards for carers for travel, parking, leisure and other activities with local authorities, business and transport operators to help carers cope with the financial burden of caring.

Impact of caring responsibilities on pensions

206.  The impact of caring on employment and earnings has a knock on effect on the carer's ability to build up state and private pensions. Many women, carers, disabled people and people with varied work patterns currently qualify for much less than the full basic State Pension because they have incomplete National Insurance records. This contributes to pensioner poverty.[199]

207.  Gaps in employment records, decreased earnings due to caring and health problems caused by caring, which then become a barrier to work, all affect carers' abilities to build up a pension. One in five carers give up work to care, and many more will reduce their hours - with part time working having a long-term impact on earning ability.[200]

208.  There is also a gender aspect to pensioner poverty and the provision of care. Women in their 40s are the group identified as least likely to be contributing to a private pension. Caring responsibilities are an additional barrier to pension provision for many women (in addition to forgone earnings for many through childcare).[201]

209.  Over 600 women responded to Age Concern's survey on women and pensions. Around three out of ten said that caring for a disabled or older person had probably or definitely affected (or was affecting) their ability to build up a pension. One respondent stated that "Women are worse off when it comes to pensions. I have to stop work soon as mum is getting old and I have to look after her. I could not start working full time because I had to look after my children."[202]


210.  Carers under State Pension age who are entitled to Carer's Allowance are awarded a National Insurance Class 1 credit each week, which protects their entitlement to State Pension.[203] Carers under State Pension age can also accrue entitlement to a State Second Pension if they are entitled to Carer's Allowance.[204]

211.  From 2010, a new carer's credit will be introduced for people under State Pension age who are caring, for 20 hours or more a week, for one or more severely disabled person(s) receiving qualifying benefit. The new carer's credit will mean that around 70,000 extra carers a year could be credited into the basic State Pension and around 180,000 people may accrue a State Second Pension.[205]

212.  The Government has agreed that the carer's credit should be based on the carer's own circumstances, rather than those of the person they care for. Entitlement should not be linked exclusively to disability benefits. A health or social care professional (GP, social worker, health visitor) should be able to certify that someone is a carer for 20 hours a week or more. This would ensure that all carers caring for 20 hours a week or more will benefit.[206]

213.  In a House of Commons debate on 18 April 2007 James Purnell, the then Pension Minister said:

"I am pleased to be able to announce that we will explore how health and social care professionals might be involved in certifying that someone is caring for at least 20 hours a week through the review of the 1999 National Carers Strategy, and that we will report back before the end of the year. We are committed to doing that; it is not a question of whether this can be done, but of how."[207]

214.  The Minister for Disabled People, Anne McGuire, added that "We are looking at hopefully laying the regulations on the 20 hours later on this year. […] Our intention is to maximise the coverage in terms of individual carers accumulating the credits for their pension."[208]

215.  We welcome recent reforms to the State Pension which will recognise carers' contributions to society and begin to ensure that they do not suffer poverty in retirement. We particularly welcome the introduction of a new Carer's Credit for people caring for 20 hours a week or more for someone who is severely disabled. This will ensure that carers caring for 20 hours or more per week are less likely to experience negative impacts on the value of their State Pension.


216.  Age Concern and Carers UK added that carers will still be at a disadvantage in terms of private provision and argued that more needs to be done to ensure that carers have the opportunities to build up additional private pensions.[209] The new system of Personal Accounts is designed to meet the needs of people with interrupted working lives - for example by introducing flexibility so that those who have time out of the labour force can make additional contributions at a later date if they are able to.

217.  The Minister for Disabled People, Anne McGuire, acknowledged that "Most carers move in and out of a job at different points in their lives", but added that "the portability element of Personal Accounts will help that. There are other ways in which people can save for their future retirement but, as I say, we think that Personal Accounts are a significant improvement in the coverage that carers will have in terms of provision for their retirement because of the portability."[210]

218.  Ms West of Age Concern suggested that "there ought to be a possibility of paying a lump sum in. So if you were caring for somebody who perhaps died, you may have a modest inheritance. That might be the time when you think you would like to be putting that additional modest lump sum into a Personal Account, so we have argued for, in addition to the annual limits, the possibility of a lump sum payment to run alongside. I think both the Government and also the Personal Accounts Delivery Authority have had concerns because of the additional costs of complexity."[211]

219.  We recommended in March 2007 in our report on Personal Accounts that "if there is to be a cap it should incorporate a certain amount of flexibility, allowing people to make greater contributions at certain times, either because they have a lump sum to invest or because they want to make up for years when they did not contribute."[212]

220.  In its response to our report the Government acknowledged that "there will be some individuals in the Personal Accounts target market who will take breaks from paid employment to raise families or care for relatives, who might be restrained by a lower limit. Additionally, some individuals may wish to pay one-off lump sum contributions into their pension. We will therefore ask the Personal Accounts Delivery Authority to explore the possibility of an additional lump sum contribution limit, to run alongside the annual limit. This additional limit could operate on a lifetime basis. The Delivery Authority will advise on the operational cost and feasibility of this option, and also on what an appropriate level might be. The Delivery Authority would need to be satisfied that the benefits of this added flexibility were not outweighed by the costs of designing and administering this addition."[213]

221.  The Committee believes that Personal Accounts will benefit many carers with unstable working patterns and help them to save for retirement. However, we restate our earlier recommendation that the Government examines possibilities for further reform to the system to allow carers to pay in lump sums to save for their pension.

80   Ev 141 Back

81   Ev 141 Back

82   Ev 116 Back

83   Ev 143 Back

84   Q79 Back

85   HM Government, Carers at the heart of 21st century families and communities, 2008, p 24.  Back

86   'Adult Informal Carers - risk of living in households with less than 60% of contemporary median household income' data tables supplied in response to request by University of Leeds, December 2007. (A key point here is the need to compare carers with others who are like them in other respects. This would mean excluding from the 'non-carer' group those carers who are caring for sick and disabled people. It would also need to take into account that the household income needed by someone who is a carer is higher than that of non-sick/disabled non-carers, a factor currently not addressed in the data. Comparison by age is particularly important because caring is not evenly distributed across age groups, and because the non-carer group, as currently defined, will contain many more sick and disabled people at older ages.) Back

87   The 2001 Census showed that among those aged 75-84 who were NOT carers, 25% of men and 27% of women were in poor health, and that 55% of men and 60% of women had a limiting long-term illness (Buckner and Yeandle, 2005 Older Carers in the UK London: Carers UK). Excluding those with very demanding caring roles, carers in this age group were less likely to be in poor health, and less likely to have a limiting long-term illness than those in the non-carer group. Back

88   Households Below Average Income series 2004/05 as cited in Ev 143 Back

89   Ev 65; Ev 72; Ev 111; Ev 133; Ev 146; Ev 152 quoting findings from L Buckner and S Yeandle, Valuing Carers: calculating the value of unpaid care, Carers UK, 2007. Back

90   Ev 143 Back

91   Ev 106 Back

92   Q 14 Back

93   Ev 141; Ev 101; Ev 110; Ev 128; Ev 133 Back

94   Ev 106 Back

95   Ev 141 Back

96   Work and Pensions Committee, The best start in life? Alleviating deprivation, improving social mobility and eradicating child poverty, Second Report 2007-08 (HC 42-I), March 2008, p47. Back

97   Work and Pensions Committee, The Best Start in Life? Alleviating deprivation, improving social mobility and eradicating child poverty: Government Response to the Committee's Second Report of Session 2006-07, HC580, June 2008, p12. Back

98   Q 15 Back

99   Q 16 Back

100   Ev 162 Back

101   Department of Health and Social Security (DHSS), Social Security Provision for Chronically Sick and Disabled People, HC 276, 1974. Back

102   E McLaughlin, Social Security and Community Care: The Case of the Invalid Care Allowance, Department of Social Security Research Report no 4, 1990. Back

103   DHSS, Social Security Provision for Chronically Sick and Disabled People, HC 276, 1974, p. 19, para 60. Back

104   Q 82 Back

105   E McLaughlin, Social Security and Community Care: The Case of the Invalid Care Allowance, Department of Social Security Research Report no 4, 1990. Back

106   Ev 142 Back

107   Q 20 Back

108   Ev 65; Ev 73; Ev 163; Ev 158; Ev 152; Ev 101; Ev 128 Back

109   Q17 Back

110   Ev 117 Back

111   Ev 92 Back

112   HM Government, Carers at the Heart of 21st-Century Families and Communities: A Caring System on Your Side. A Life of Your Own, 2008, p83. Back

113   HM Government, Carers at the Heart of 21st-Century Families and Communities: A Caring System on Your Side. A Life of Your Own, 2008, p99. Back

114   Ev 75 Back

115   Ev 75 Back

116   Q 171 Back

117   Ev 158 Back

118   Q 91 Back

119   Q60 Back

120   Work and Pensions Committee, The best start in life? Alleviating deprivation, improving social mobility and eradicating child poverty, Second Report 2007-08 (HC 42-I), March 2008, p47. Back

121   Work and Pensions Committee, The Best Start in Life? Alleviating deprivation, improving social mobility and eradicating child poverty: Government Response to the Committee's Second Report of Session 2006-07, HC580, June 2008, p13 and 29. Back

122   Ev 69 Back

123   Q 169 Back

124   Ev 158 Back

125   Ev 117 Back

126   Q 91 Back

127   Q 88 Back

128   Q 88 Back

129   Ev 85 Back

130   Ev 69 Back

131   Q 87 Back

132   Q84 Back

133   Q 172 Back

134   Ev 169  Back

135   Ev 170 Back

136   Ev 170 Back

137   Ev 172 Back

138   Ev 128; Ev 111 Back

139   Ev 116 Back

140   Q 93 Back

141   Ev 163 Back

142   Q 95 Back

143   Q 174 Back

144   Ev 112 Back

145   Q 76 Back

146   Ev 65 Back

147   Ev 128 Back

148   Ev 170 Back

149   Ev 61; Ev 68; Ev 101; Ev 119 Back

150   Ev 119 [National Family Care Network], p6, quoting Philippa Russell's study of the implementation of the Carers (Equal Opportunities) Act 2004 on behalf of the Nuffield Foundation, 2007 Back

151   Q 20 Back

152   Ev 129 Back

153   Q 209 Back

154   Ev 74; Ev 92; Ev 129 Back

155   Ev 166 Back

156   Ev 166 Back

157   Q 130 Back

158   Ev 68 Back

159   Q 20 Back

160   Q 130 Back

161   Q 181 Back

162   Ev 74 Back

163   Ev 68 Back

164   Q 103 Back

165   Ev 171 Back

166   Ev 172 Back

167   Ev 75 Back

168   Q 100 Back

169   Ev 173 Back

170   Ev 164 Back

171   Ev 68 Back

172   Q 99 Back

173   Ev 68 Back

174   Ev 164 Back

175   Ev 58 Back

176   Q 183 Back

177   Department for Work and Pensions, In work, better off: next steps to full employment, Cm 7130, July 2007, p48. Back

178   Q 107 Back

179   Q 34 Back

180   Q 34 Back

181   Q 108 Back

182   Ev 70; Ev 83; Ev 146 Back

183   Ev 70 Back

184   Q 17 Back

185   Q 83 Back

186   Q 164 Back

187   Q 165 Back

188   Q 166 Back

189   Q 181 Back

190   Ev 171 Back

191   Ev 171 Back

192   Ev 187 Back

193   Ev 82 Back

194   Ev 65 Back

195   Ev 83 Back

196   HM Government, Carers at the Heart of 21st-Century Families and Communities: A Caring System on Your Side. A Life of Your Own, 2008, p80. Back

197   The Princess Royal Trust for Carers and Crossroads Caring for Carers, Putting people first, without putting carers second, 2008, p17. Back

198   HM Government, Carers at the Heart of 21st-Century Families and Communities: A Caring System on Your Side. A Life of Your Own, 2008, p80. Back

199   Ev 76 Back

200   Ev 76 Back

201   Ev 76 Back

202   Ev 112 Back

203   These arrangements do not apply to married women who elected to pay reduced rate contributions Back

204   Ev 106 Back

205   Ev 106 Back

206   Ev 77 Back

207   Official Report, 18 April 2007: col 396. Back

208   Q 189 Back

209   Ev 112; Ev 143 Back

210   Q 191 Back

211   Q 120 Back

212   Work and Pensions Committee, Personal Accounts, Fifth Report in session 2006/07, HC220-I, March 2007, p51. Back

213   Department for Work and Pensions, Report on Personal Accounts, Government response to the Fifth Report of the Work and Pensions Select Committee, Session 2006-07, HC 220-1, Cm 7122, June 2007, page 17. Back

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