Abolition of the ‘cliff edge’ is an important step forward
The government has announced the introduction of an earnings taper to Carer’s Allowance in its Autumn Budget. This marks an important step forward because it will replace the ‘cliff edge’ which has long been one of the most punitive features of the benefits system. Currently, carers lose their entitlement to Carer’s Allowance entirely after breaching the weekly earnings threshold by one penny – this has contributed to thousands of carers unknowingly accumulating substantial overpayments debt, and even civil penalties, causing significant financial and emotional harm.
The Chancellor stated that the taper will mean that claimants lose £1 of their Carer’s Allowance for every £1 they earn through employment – a gradual rather than complete loss of the payment. However, although it will remove the harsh ‘cliff edge’, this 100% taper does not address a more fundamental issue with the social contract between carers and the state. At its current level of £86.45 per week, with the earnings restrictions, Carer’s Allowance does not support carers to have a decent standard of living, nor does it recognise the additional costs of caring, the steep income penalty experienced by carers over their life course, or the fact that our health and social care systems would simply collapse without their unpaid labour.
Introducing a taper is, of course, welcome insofar as it addresses the preventable harm caused by administrative failures, as concluded by the Sayce Review. However, this should not be mistaken for the comprehensive reform which is urgently needed as a matter of social justice and economic urgency.
Slow timeline fails to treat carers’ financial insecurity as urgent
The most immediate concern is the timeline for implementation. The taper will not be fully rolled out before the end of the decade; for carers facing financial insecurity and poverty today, 2030 is an unacceptably long time to wait. The government has known for years about the unfairness and profound distress that resulted from the cliff edge. Delaying implementation for 3-4 years prolongs a recognised source of administrative harm and injustice. So far, there are no further commitments from the government about how it will protect the carers who are at risk of incurring overpayments debt in this interim period.
This announcement follows an update from DWP a fortnight ago on the progress of the Carer’s Allowance overpayments reassessment exercise, which revealed that less than 2% of the cases included in scope had been reviewed. This disappointingly slow pace, combined with the timetable for the taper, brings into question the level of priority and dedicated capacity accorded by DWP to delivering reform which improves carers’ financial security and ultimately rebuilds their trust in the system. The House of Commons Work and Pensions Select Committee found a ‘culture of complacency’ which undermines confidence in the Department’s commitment to fixing systemic flaws.
The bigger question: what is Carer’s Allowance for?
The deeper issue is that we have never seriously reconsidered what the purpose of Carer’s Allowance should be in the modern world. The benefit was introduced fifty years ago, in a very different social and economic context. Originally intended primarily as partial income replacement for unmarried women who were presumed to be available to care for family members. Indeed, the last major legislative changes were in 1986, to allow married and cohabiting women to claim, and in 2002, to allow people over the age of 65 to claim (although the ‘overlapping benefits rule’ applies to the State Pension). These assumptions about gender roles, caring relationships and the nature of employment no longer hold true. Abolishing the ‘cliff edge’ is a good start but it is not enough to address the unjust and unsustainable demands placed on high-intensity carers – policy-makers must ask a bigger question: what is this benefit intended to achieve in 2026? Is it about compensation for foregone or reduced earnings, recognition of the value of unpaid care to society, support with the additional costs of caring, or to enable carers to participate in opportunities beyond caring – or likely, some combination of all of these aims?
We should also ask whether one benefit can be designed in such a way that it meets the needs of two groups of claimant: i) carers who are juggling part-time employment with their caring role and need state support to enable them to do so; and ii) carers whose caring responsibilities are so intense or unpredictable that it is not possible for them to remain in the labour market. These are questions that require proper consultation; once we articulate the purpose of carers’ benefits, the design will follow. There is a risk that focusing simply on the implementation of a taper becomes a major, slow-moving distraction from getting started with a broader reform process which addresses these larger questions.
Our Case for Change
The cliff edge is a significant design flaw, but it is far from the only one, as we argue in our Case for Change:
- Carer’s Allowance is materially inadequate – at just £86.45 per week, it provides an extremely low level of income replacement. This does not adequately reflect the additional costs of caring, the loss of earnings from employment or their substantial contribution to society; many feel that it is ‘insulting’. Over time, its value has declined relative to the National Minimum Wage. The majority (82-85%) of Carer’s Allowance claimants are not in paid employment, and 52% report caring for 65 hours or more per week. It was not designed to provide a meaningful level of financial security to carers in the 1970s.
- Despite its inadequacy, Carer’s Allowance places tight restrictions on paid employment – currently, the earnings threshold limits carers to just 16 hours’ work paid at the National Minimum Wage. While a taper would reduce the current disincentive to work, the underlying question remains about whether the earnings threshold should be significantly higher or whether it should exist at all. Given the value of paid employment not just for incomes and pensions but also people’s sense of identity and social connections, policy should seek to enable carers to stay in the labour market if they want to, rather than limiting them to a narrow range of low-paid and often precarious employment. This is also crucially important to the government’s agenda to retain older workers in the labour force.
- Carer’s Allowance also restricts carers to part-time study – we know that younger carers experience a particularly steep income penalty over their life course. Policy should enable, not restrict, their lifetime opportunities.
- Carer’s Allowance is based on out-dated, inflexible assumptions about caring relationships – claimants must be caring for one person for a minimum of 35 hours per week. However, many carers support multiple people or share caring responsibilities for the same person. Reform should ask how carers’ benefits can offer different levels of support to reflect these different circumstances appropriately.
- Interactions with other benefits are complex and create unfair outcomes – it’s time to re-visit the underlying principles which govern these interactions.
- State Pension – it is not possible to receive the full amounts of both State Pension and Carer’s Allowance due to the overlapping benefits rule’. However, this is widely felt to be unjust by carers whose caring responsibilities do not change overnight when they become eligible for the State Pension.
- Severe Disability Premium or Addition – if a carer claims Carer’s Allowance for supporting a disabled person who lives alone and receives a Severe Disability Premium / Addition with their means-tested benefits, then that person will lose that extra payment (and potentially other forms of support such as council tax reductions). Again, this is widely felt to be confusing and unfair since it forces people to choose who should receive a benefit payment. Effectively it penalises carers for stepping up to support someone they don’t live with – whereas both benefits can be paid if the carer and the person they support co-habit.
- Universal Credit (UC) – Carer’s Allowance is treated as income, and therefore deducted pound-for-pound from the claimant’s UC payment. Approximately 66% of Carer’s Allowance claimants also receive UC. This rule means that even if the government decided to increase the weekly rate of Carer’s Allowance, this uplift would not make a difference to the majority of claimants as it would simply be deducted from UC. This interaction needs to be considered as part of the wider discussion about how welfare benefits recognise the value of caring and support an acceptable standard of living for carers.
Time for a debate about the fundamental aims of this benefit
The conversation about the taper risks diverting attention from what is lacking: a clear statement of purpose for carers’ benefits in the modern world. Following devolution of social security, the Scottish Government undertook a reform process which included in-depth consultation with carers and other stakeholders to establish what this benefit should achieve. This resulted in three stated aims for Carer Support Payment (CSP):
- CSP ‘provides income for unpaid carers in recognition of their vital role and its impact on their lives’. This ‘takes into account that different carers have different needs, and that different caring situations have different impacts’.
- CSP ‘provides stability and supports carers to access opportunities outside of caring, where possible, and they wish to do so’.
- CSP ensures that ‘carers have a positive experience of the social security system’ and ‘maximises carers’ take-up of all support available to them’.
Don’t let the taper overshadow the urgent need for fundamental reform
Abolition of the cliff edge is long overdue. Carers are all too often overlooked, and it is welcome that the Chancellor has included them in this Budget as an example of the ‘everyday fixes’ urgently needed to improve people’s living standards. However, if the taper were to become this Government’s main ambition for carers, that would be a missed opportunity. Carers deserve a fundamental review of what financial support for unpaid care should look like in the 21st century. A taper addresses the most visible flaw, while leaving the underlying principles untouched. The disappointingly slow timetable for both the reassessment exercise and implementation of a taper will bring little change for carers facing acute financial insecurity now.
About the author
Becky Driscoll is a Research Fellow at CHASM based at the University of Birmingham, and a former member of the Centre for Care team. CHASM is a multidisciplinary research centre for financial security, wellbeing and inclusion. We produce research that matters and use it to advocate for a fairer, more financially inclusive society.
