Carer's Allowance cliff edge to be replaced by taper, not before 2030
The government plans to replace the cliff-edge rule in Carer's Allowance with a tapered system, Chancellor John Healey announced ahead of Wednesday's Budget. The new system is not expected to be live before 2030, and the existing rule will remain in place for four more years.
Carer's Allowance is a weekly payment for unpaid carers. Under the current rule, a carer who earns more than the £204 weekly earnings limit loses the whole week's payment of £86.45. That is what "cliff edge" refers to: a sharp drop, not a gradual one. Under the proposed taper, only £1 of the allowance would be removed for each £1 earned above the limit.
The taper was one of five "everyday fixes" Healey announced before the Budget. Another, also set out by the Treasury, would make higher tax-free mileage rates permanent, keeping 55p per mile for the first 10,000 business miles and setting 35p above that. The Treasury said this would benefit about 3 million employees and self-employed people who use their own vehicle for work.
The problem for many carers is not only the rule but the repayments it has produced. The Guardian reported that most carers previously hit with overpayments will still have to repay them under the reform. Elizabeth Tait, who cares for her disabled son Oliver, received a £1,623 bill after breaching the threshold without realising. Guy and Oksana Shahar, who care for their autistic son Daniel, were issued a bill of about £10,000 for breaches dating back five years. Oksana Shahar exceeded the limit by £1.92 a week on average, earning £505 over it in total, but was billed £10,130.45 plus a £50 civil penalty.
The sums can escalate quickly. A carer who earned a penny over the weekly limit for a year would exceed it by 52p over the year but be asked to repay £4,495.40, according to the Guardian's analysis of the rule. The Guardian reported that overpayment debts were typically between £2,000 and £5,000, though in some cases reached £20,000. Some unpaid carers were convicted of fraud over cliff-edge breaches, and welfare officials pursued some carers using legislation designed to recover funds from drug dealers and organised crime bosses.
An independent review of Carer's Allowance overpayments, led by disability rights expert Liz Sayce, found that the cliff edge does not cause overpayments but drives the scale and speed at which they grow. The Department for Work and Pensions was aware when carers breached the earnings limits, the Guardian reported, but did not warn them, insisting the onus was on carers to report changes. Carers UK describes the cliff edge as a large disincentive for carers who want to combine work with caring.
Carers have long called for change. In October, the BBC reported that unpaid carers who say they always have to "fight the system" appealed for more financial support in the Budget.
The Budget is expected to be low-key. Treasury insiders warned that difficult tax and spending decisions would be put off until next year's spending review, and the government's room for manoeuvre is constrained by a tight fiscal position shaped by global events, including the conflict in Iran.
