What we can learn from the Carer’s Allowance scandal

Good afternoon from New Economy Brief.

What we can learn from the Carer’s Allowance scandal

Over the last year Carer’s Allowance – the main benefit for carers in the UK – has been under scrutiny as thousands of recipients have been put into debt as a result of its flawed design. 

On the International Day of Care and Support, this week’s NEB explores what the scandal tells us about how our economy and society undervalue care.  

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A scandal years in the making.

In the UK there are almost 6 million unpaid carers supporting someone, either in their family or beyond, who is ill or disabled, or needs help as they get older. Carer’s Allowance (and Carer Support Payment in Scotland) is the main benefit designed to support unpaid carers in the UK. It was introduced in 1976, and while it is non-means tested, recipients must meet strict requirements. These cover the number of hours of care provided, the benefits claimed by the person cared for, and how many hours of paid labour the recipient is authorised to do alongside their caring duties. Taken together, these requirements limit takeup of the benefit – only around 1.4 million unpaid carers in the UK currently claim it.

The human cost of an inflexible system. Unlike benefits like Universal Credit, there is no taper built into Carer’s Allowance. Once a recipient earns a penny more than the authorised amount – £196 a week – from paid work they’re doing alongside caring, they lose all their entitlement. This, combined with a reliance on self-reporting, has left an estimated 140,000 recipients being incorrectly overpaid – sometimes over many years.

These overpayments then count as a debt to the Department for Work and Pensions (DWP). This isn’t a new problem: a 2019 National Audit Office investigation found that the DWP was seeking repayment from just under 80,000 carers – nearly half with ‘debts’ over £1,000.

Five years later, a 2024 Guardian investigation brought these overpayments into the public consciousness. It reported that most unpaid carers in debt owed between £2,000 and £5,000, but found some owing up to £20,000. It also covered more than 600 carers prosecuted for fraud since 2019. Carers UK estimates that overpayments to unpaid carers have reached at least £357 million.

A limited response. In response the DWP this year conducted an Independent Review of Carer’s Allowance overpayments, aiming to identify how the situation has arisen and what solutions will reduce future risk. Its findings have been internally reported, and the government has promised to respond by the end of this year. Hoping for a remedy for those already affected, over 100 organisations (including Disability Rights UK, Oxfam GB, and the We Care Campaign) have signed an open letter calling for debts to be halted and ultimately cancelled.

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Unpaid carers are already financially insecure.

As a recent essay from the Women’s Budget Group articulated, the scandal shines a light on the hardship carers face. JRF’s annual UK poverty report this year found 28% of unpaid carers are in poverty (compared to 20% of the wider population). And, with Carer’s Allowance paying just £83 a week and limiting income from paid work to £196 a week, the poverty rate amongst its recipients rises to 34%.

JRF estimates that unpaid carers face a pay penalty - earning £414 a month less on average than those without caring responsibilities; their analysis concludes: “Carer’s Allowance is ineffective both at incentivising paid work and at replacing earnings.”

This isn’t a niche experience. Resolution Foundation research finds more than 40% of low-to-middle income families include a carer or disabled person. Their analysis cites limited access to paid work and inadequate social security as reasons for unpaid carers experiencing ‘considerably lower incomes and living standards than others’. Three quarters of low-to-middle income carers can’t work at all or as much as they would like, and for more than half providing care is the equivalent of a full-time job (35 hours a week).

Wider reforms threaten unpaid carers further. Earlier this year the government’s Welfare Reform Bill – including plans to cut social security spending by tightening eligibility for Personal Independence Payments (PIP) – faced widespread criticism. A backbench rebellion forced a U-turn, including pausing the PIP cuts. Among the concessions was a review into PIP assessments, led by DWP minister Stephen Timms and concluding in autumn 2026. Any resulting policy changes could have worrying implications for unpaid carers: access to Carer’s Allowance depends on the person they care for receiving one of several benefits including PIP. Carers UK estimates the original plans would have cost 150,000 unpaid carers their entitlement.

Approaches to social security put paid work first. Even with these plans on hold, the government wants to reduce economic inactivity – a category which includes unpaid carers and disabled people not in paid work. Its Get Britain Working White Paper explicitly sets out this ambition, but as Care Full explains, paid work is too often impossible for unpaid carers and reforms in this direction undermine the value of care in our society.

There is consensus that Carer’s Allowance needs reform. Carers Trust, IPPR and JRF have each called for an overhaul of Carer’s Allowance, whether that’s cancelling current debts, increasing the value of Carer’s Allowance or wider reform, beyond the independent review’s focus on the buildup of debt. There is also pressure to meaningfully involve those with lived experience of care in discussions about PIP. Organisations including NEF, Trussell and Turn2us have signed a joint letter including calls for unpaid carers to be given a voice in the review’s co-production commitments, given their ‘direct stake’ in the outcome.

Policies that could transform care. Beyond Carer’s Allowance and directly related policies, there are other ways to transform the financial security of unpaid carers. IPPR Scotland and Carers Scotland have proposed a Minimum Income Guarantee pilot for unpaid carers that would raise their incomes enough to provide a good standard of living. Elsewhere the Oxfam Time to Care Campaign backs the JRF- and Trussell-led Essentials Guarantee – the idea our social security system should enable us to meet our essential needs – as an unpaid care policy given many unpaid carers rely on the system for their income.

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Care is a cross-economy issue.

In their programme A Green and Caring Economy, the Women’s Budget Group link care to our wider economy, calling for care to be at the centre of the  design for a fairer system. This would ‘put wellbeing above profit, moving away from energy-intensive and polluting industries and towards activities that care for people and planet, and ending GDP growth as our main economic objective’. Supporting this, research out today from Care Full articulates our current economy’s design features – from wealth extraction to individualism – that must be overcome to centre care in all forms.

In the context of a wider social care crisis, Emma Dowling argues that “the care of the population…is a cost to capital that, systemically speaking, must be kept as low as possible” and challenging this requires rethinking our economic model. Oxfam UK echoes this, calling for “a proactive shift in our economic approach to a model that invests in a feminist caring economy”.  They name steps to get there including wealth tax proposals from Tax Justice UK and Patriotic Millionaires to “redistribute the wealth created and sustained by the labour of unpaid and underpaid carers”. 

Questions about care, unpaid labour and social security become entry points to thinking more broadly and deeply about who our economy is designed for. As Emily Kenway argues, if “we continue to consider care policy separate from wider labour market policies, we will continue to prioritise waged labour above our need to care for our loved ones”. As demographic shifts leave more and more people needing care, the consequences of this separation will become increasingly acute.