Resolution Foundation warns unpaid carers face ‘crippling’ losses as benefit system lags behind modern needs
The UK government is facing mounting pressure to reform one of the country’s most outdated welfare provisions—Carer’s Allowance—after a hard-hitting report revealed that millions of unpaid carers are being pushed into financial hardship while propping up a broken system.
In a scathing report released Thursday, the Resolution Foundation urged ministers to overhaul the carer’s allowance framework and significantly raise the weekly payment. The thinktank said low-income unpaid carers suffer a “very heavy price” for caring for disabled or vulnerable loved ones, sacrificing not only their time and energy but also their financial stability.
The Stark Reality: A 10% Pay Penalty—and £7,000 Yearly Loss—for Caring
Living standards plunge as benefit fails to match rising care needs and inflation
According to the report, carers on low incomes endure a typical financial penalty of 10%—equating to as much as £7,000 annually—when compared to households without caring responsibilities. With over a million working-age families in the UK featuring both an unpaid carer and a disabled person, this impact is not marginal; it’s systemic.
Despite their vital contributions—valued at an astonishing £184 billion per year—unpaid carers receive just £83.30 a week, the lowest-value benefit in the UK. For context, that’s 19% of full-time minimum wage earnings—down from 32% in 1999.
Bringing the value of carer’s allowance back in line with its 1999 purchasing power would require increasing the benefit by £53.45, bringing the total to £136.75 a week—a £2.9 billion investment that the Foundation argues is long overdue.
Resolution’s Prescription: Lift, Align, and Remove the Cliff Edge
Raise rates, match Jobseeker’s Allowance, and eliminate earning penalties
The thinktank proposed several practical and immediate reforms:
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Lift carer’s allowance from £83.30 to at least £92.05, aligning it with Jobseeker’s Allowance.
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Remove the earnings cliff edge, currently set at £196 a week. This rule means carers earning just £1 over the threshold lose 100% of their benefits, creating a perverse disincentive for part-time work.
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Consider Scottish parity: In Scotland, carers receive £94.60 a week, thanks to regional top-ups. Bringing England and Wales in line would offer an intermediate step toward equity.
Resolution economist Hannah Slaughter stressed that the UK’s care crisis isn’t temporary. “The trend of rising levels of disability across Britain, and the need for unpaid care, isn’t going to end. It’s time policy caught up with this reality.”
The Overpayment Scandal: Carers Blindsided by DWP Errors
Tens of thousands forced to repay debts they didn’t know they were accruing
This call for reform comes on the heels of a Guardian investigation exposing widespread mishandling of Carer’s Allowance payments by the Department for Work and Pensions (DWP). Hundreds of thousands of carers inadvertently exceeded the earnings cap and unknowingly accumulated large overpayments—often without warning. Many are now being forced to repay debts stretching into the thousands.
One carer told The Guardian: “The DWP threatened to send in bailiffs. I was just trying to support my son. I had no idea I had gone £3 over the limit one week.”
The government’s rigid “cliff-edge” threshold and outdated systems are at the heart of this injustice. Critics say the DWP’s punitive approach betrays the very people it should be protecting.
Liz Sayce’s Independent Review: A Crucial Turning Point
Guardian exposé leads to government-commissioned investigation of broken system
In response to growing public outcry and media attention, the government commissioned an independent review of the carer’s allowance system, led by disability policy expert Liz Sayce. Her findings are expected to inform upcoming welfare reforms.
Her review follows a wave of scrutiny triggered by the Guardian’s reporting on the DWP’s treatment of unpaid carers. Advocates now see this moment as a watershed opportunity to redesign carer support in a way that is both sustainable and humane.
Carers UK: “The Time for Token Gestures Is Over”
Advocacy groups back Resolution’s findings and push for comprehensive change
Emily Holzhausen, director of policy at Carers UK, welcomed the report, saying: “The evidence from the Resolution Foundation adds even more impetus for change—especially after the scandal of overpayments and looming cuts to welfare.”
Holzhausen warned that mere tinkering at the edges won’t suffice. What’s needed is a system-wide overhaul that reflects the real economic and emotional cost of caregiving in the UK.
Government Response: “We Understand the Huge Difference Carers Make”
DWP touts earnings threshold increase but remains vague on broader reforms
In a statement, a government spokesperson defended recent changes, pointing to a £45 increase in the earnings threshold—to £196 per week—which will benefit an estimated 60,000 carers by 2029-30.
“This is the biggest-ever cash increase in the earnings threshold for carer’s allowance,” they noted. The government also reiterated its commitment to an independent review of social care, which will include a focus on unpaid carers.
However, critics say these moves are too little, too late—and fail to address the systemic undervaluing of unpaid care work.
CEOs and Policymakers Take Note: The Economic Argument Is Clear
Raising Carer’s Allowance is not just morally right—it’s fiscally smart
From a CEO’s perspective, the takeaway is stark: neglecting unpaid carers costs the UK more in economic drag, healthcare strain, and workforce loss than investing in proper support ever would.
Boosting the carer’s allowance:
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Strengthens household resilience
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Keeps more carers in part-time work
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Reduces reliance on emergency social care
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Mitigates long-term health declines in both carers and recipients
If £184 billion in unpaid care underpins the social fabric, then failing to invest in its sustainability risks catastrophic downstream costs.
Carers Deserve Better—And So Does the UK Economy
As Britain grapples with rising disability rates, an aging population, and a healthcare system under strain, policymakers are running out of excuses. A fair, modern, and sustainable carer’s allowance is not just a matter of compassion—it’s economic common sense.
The Resolution Foundation has laid out a blueprint. Now it’s up to ministers to act.