Press Release: Unpaid carers action plan does not go far enough, says LITRG
The Low Incomes Tax Reform Group (LITRG) is disappointed with a government action plan that sets out a programme of work to support unpaid carers. LITRG said the new plan ignores the difficulties caused by the interactions between Carer’s Allowance, the minimum wage and tax credits. In particular, the group is dismayed that there is no mention of uprating the Carer’s Allowance earnings threshold given the increase to the National Living Wage.
The Government action plan sets out the cross-government programme of work to support carers in England over the next two years. It draws on responses to a 2016 call for evidence, which LITRG responded to, along with a total of 6,801 organisations and individuals. LITRG’s response to the call for evidence focussed mainly on employment and financial well-being, stressing that more could and should be done to support the financial position of unpaid carers, with a particular aspect in mind – the impact of tax, National Insurance and benefits administration and policy on them.
LITRG said that while there are sensible recommendations in the action plan, the actions the Government has come up with around financial well-being are worryingly vague, for example ‘The Department for Work and Pensions will ensure that benefits for carers (including Carer’s Allowance and universal credit) meet the needs of carers and support employment for those carers who are able to work.'
LITRG Chair Anne Fairpo said:
“The lack of a full and detailed response to the issues raised in the call for evidence is disappointing. In particular, there is no mention of uprating the Carer’s Allowance earnings threshold for the National Living Wage each year, despite this being a recommendation made by the Work and Pensions Committee in their recent report on employment support for carers.”
Currently there is an earnings limit built in to Carer’s Allowance of £120 per week; those who earn above this amount are not entitled to Carer’s Allowance. In April 2018, the National Living Wage for those aged 25 or over increased to £7.83 per hour which means someone working 16 hours a week will have earnings of £125.28.
LITRG said that while a higher National Living Wage rate is good news for many, those claiming Carer’s Allowance and working 16 hours are at risk of losing all of their Carer's Allowance. While a person in this position could cut their hours so that they still qualify, cutting their hours to below 16 could mean they no longer qualify for another vital strand of financial support – working tax credit (WTC).
LITRG also raised this issue with the Work and Pensions Committee who have recently been inquiring into better employment support for unpaid carers. The Committee picked up several of LITRG’s recommendations and further highlighted that the 16 hour rule could also apply in other areas of the system saying: ‘This means that working additional hours can leave carers worse off – a clear contradiction to government’s stated aims of “making work pay”. A pay rise can also leave parents facing the choice between losing Carer’s Allowance or losing free childcare for their three or four-year-old, which requires them to work 16 hours a week.’
Anne Fairpo said:
“Many carers rely on the financial support of Carer’s Allowance and something must be done to rectify the difficult and often financially detrimental interactions between Carer’s Allowance, the National Living Wage and the various 16 hour rules. We will continue to make this case at every available opportunity. We urge unpaid carers to view the guidance on our website in which we look at the different deductions that may be made from earnings which might help some people retain Carer's Allowance payments without having to cut their hours.”
The rules on free childcare can be found on GOV.UK. Someone on the NLW will be required to work 16 hours to qualify, however, the rules only require you to earn the equivalent of 16 hours work. So, if your hourly rate is high enough, you could still qualify by working fewer hours.
During the 2015 to 2016 financial year, eight per cent of the UK's private household population were ‘informal carers’ for someone, according to survey data from the Department for Work and Pensions. ONS Unpaid carers provide social care worth £57 billion, ONS, July 2017