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New Carer’s Allowance benefit rates and rise in earnings limit, but worries about the future

30 November 2021

The Government has announced the amount benefit rates will increase from 11 April 2022. 

This includes the new earnings limit for Carer’s Allowance which has also been increased by CPI which we estimate would be from £128 to £132 per week. This is important but doesn’t wholly compensate for the rise in the National Living Wage. With the National Living Wage rate currently at £8.91 per hour, a carer can work for 14.36 hours per week and still retain Carer’s Allowance.   Although this £4 rise in the earnings limit is important, with the new National Living Wage rate at £9.50 per hour, carers working hours would have to fall below 14 hours – to 13.89 hours per week – in order to still retain Carer’s Allowance.

The penalty for carers is significant.  Going even £1 over the earnings limit means the carer loses 100% of Carer’s Allowance – which is the harshest withdrawal rate in the benefit system.  Earlier this year, when the National Living Wage rates were announced, Carers UK had warned that without any change at all in the earnings limit, this would have reduced carers’ working hours even further to only 13.47 hours per week.

Helen Walker, Chief Executive of Carers UK, said: “Whilst we are pleased that the earnings limit has risen, it has only done so in line with CPI and not wage inflation which we know is far higher. This will mean many carers making tough decisions to either reduce work or leave work altogether. 

“Despite the rise, carers are still losing out on working hours year on year as increases have not kept pace with the National Living Wage or average wage rises.  This is completely counter to the Government’s objective to make work pay.  What we need urgently is a system that legislates for a year-on-year rise, in line with at least 16 times the National Living Wage. 

“This would allow carers to remain in work which is so important for carer’s income and finances in the short and longer term – and many also want to work.

“The rate of Carer’s Allowance is set to rise has been announced as 3.1% in line with CPI from £67.60 (2021/22 rates) to an estimated £69.70 per week (2022/23) – a rise of £2 per week.

Helen Walker, Chief Executive of Carers UK said: “Carer’s Allowance still remains the lowest benefit of its kind for which carers need to provide at least 35 hours of care per week although we know that many provide round the clock care.  They see it as insulting that the benefit rates are so low and especially since the care they provide is equivalent to £193 billion for a year during the pandemic.  Health and social care would have collapsed without unpaid carers’ support.  What’s even more worrying is that despite this rise, carers have been telling us that their costs have increased during the pandemic.

“Our State of Caring 2021 survey found that one in five carers said they may not cope financially over the next 12 months, one in four (23%) may not have enough to cover monthly expenses. 36% of carers say their finances have got worse during the pandemic and we know that as health and care services are stretched, carers have greater costs.

“We urgently need to see a rise in carers’ benefits that better recognises the support that carers provide.  We cannot continue to value unpaid carers so little within society by keeping Carer’s Allowance as the lowest benefit of its kind.  Scotland has introduced a Carer’s Allowance Supplement which would normally be worth £231.40 every six months, but they have doubled this to £462.80 due to extra costs faced by carers in the pandemic.  Sadly, this leaves carers in England, Wales, and Northern Ireland even further behind. We’re asking the Government to do the right thing and recognise carers.”

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