The earnings limit placed on people who claim government support for taking care of disabled, sick and elderly loved ones will rise by £45 a week, the chancellor has announced, after a six-month Guardian investigation into the carer’s allowance scandal.
The changes will enable full-time unpaid carers who provide care for at least 35 hours a week to earn up to £196 a week from next April without forfeiting carer’s allowance benefit, currently £81.90 a week.
The move has been welcomed by campaigners and carers who said it would make “a massive difference” to helping them keep a toehold in the job market.
The Guardian uncovered the scandal at the heart of the Department for Work and Pensions (DWP) in which thousands of carers were being forced to repay life changing sums of money, and in some cases being left with criminal records after being prosecuted for minor and unwitting breaches of carer’s allowance earnings limits.
One unpaid carer, Debbie Wilman, 63, who had to repay £900 in overpayments accrued mistakenly while she juggled her part-time cleaning job with caring for her 87-year-old mother, said her immediate reaction to Reeves’s announcement was: “Wow!”
Wilman, a cleaner on a zero-hours contract at a Wetherspoon’s pub in Stockport, Greater Manchester, said the ability to earn an extra £45 a week – or about £2,340 a year – without being penalised would “make a massive difference” to unpaid carers.
“It will be a huge help although very few carers can actually earn that amount because they don’t have the time [because of their caring responsibilities],” she said. “But it certainly takes the pressure off.”
Helen Walker, the chief executive at Carers UK, said: “This is a vital poverty prevention measure helping many carers, particularly women, stay in the labour market … It will help to put much needed cash into the pockets of working carers who do so much to look after their disabled, ill and older relatives.”
The change, announced by Reeves in her budget speech, is the biggest increase in the carer’s allowance earnings limit in the benefit’s 48-year history. The change will peg the carer’s allowance earnings limit to 16 hours a week at the “national living wage”.
The chancellor confirmed a government review of carer’s allowance would look at removing “cliff edge” penalties that in effect fine claimants a whole week of carer’s allowance for overstepping the earnings limit by even a penny.
The changes would give unpaid carers – 70% of whom are women – greater flexibility to work and increase their financial security while allowing them to continue to claim carer’s allowance, the Treasury said.
The move reverses a five-year trend in which the earnings limit has fallen behind the national living wage. In 2019 carers could work 15 hours a week at the national living wage, but this had fallen to just over 13 hours by April, in effect reducing unpaid carers’ earnings potential by 13 days a year.
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Recent research by the charity Carers UK found four out of 10 unpaid carers had given up work because of fears they would breach carer’s allowance rules, while nearly two-thirds said they were prevented from working more by earnings restrictions.
The budget announcement comes a fortnight after the work and pensions secretary, Liz Kendall, announced an independent review into carer’s allowance after the Guardian’s campaign. It will look at ways to improve the management of the benefit to prevent overpayments.
The draconian penalties for breaching carer’s allowance earnings limits are notorious: going just £1 over means the entire benefit must be repaid. A carer who earned £1 more than the current £151 limit across 52 weeks, then, would pay back not £52 but £4,258.80.
Last year about 134,500 claimants were repaying carer’s allowance overpayments – about £250m in total – latest figures show. Campaigners say the failure of the DWP to alert carers to earnings breaches meant many unwittingly ran up huge overpayments.
Davina Ware, 67, a carer who was left devastated after inadvertently running up nearly £4,000 in overpayments, said the review must explain why the DWP waited for years before notifying thousands of carers they had fallen foul of earnings rules. “They need to haul the DWP over the coals for that,” she said.