Louise Haigh – 2016 Parliamentary Question to the Department for Work and Pensions

The below Parliamentary question was asked by Louise Haigh on 2016-04-20.

To ask the Secretary of State for Work and Pensions, if he will make an assessment of the potential merits of increasing the eligibility threshold for carer’s allowance to enable carers working 16 hours per week on the new National Living Wage to keep their entitlement to that allowance.

Justin Tomlinson

The primary purpose of Carer’s Allowance is to provide a measure of financial support and recognition for people who give up the opportunity of full-time employment in order to provide regular and substantial care for a severely disabled person. It is not, and was never intended to be, a carer’s wage or a payment for the services of caring, nor is it intended to replace lost or forgone earnings in their entirety.

The earnings limit for Carer’s Allowance is a net figure which is the figure left once income tax, National Insurance contributions and half of any contributions to an occupational or personal pension are deducted from earnings. There are also a number of other deductions which can be made that mean that people can earn significantly more than £110 per week and still be eligible for Carer’s Allowance.

The Carer’s Allowance earnings limit is not linked to the number of hours worked. Instead, it is set at a level that aims to encourage those who give up full time work in order to undertake caring responsibilities to maintain a link with the labour market through part time work.

Whilst the Government does not link the earnings limit to any other particular factor (including the National Living Wage), we do keep it under regular review and increase it when it is warranted and affordable, and this will continue to be our approach. Most recently in April 2015 the earnings limit was increased by 8% to £110, far outstripping the general increase in earnings.

For those carers working around 16 hours a week on a low income and receiving Working Tax Credit, Carer’s Allowance is taken fully into account as income. That means that any loss in Carer’s Allowance is likely to be offset by an increase in Working Tax Credit, and this is one of the changes of circumstances that results in an immediate change to Tax Credits. Going forward the earnings taper in Universal Credit will help ensure that people are always better off in work.