Today the Chancellor, Rt Hon Rachel Reeves MP, delivered Labour’s first budget for 14 years. 

Carer’s Allowance earnings limit rise  

This is an unprecedented rise in the earnings limit on Carer's Allowance, the main carers' benefit, to the equivalent of 16 hours at the National Living Wage. The National Living Wage will go up from £11.44 to £12.21 an hour from April 2025, resulting in one of the biggest increases in the earnings limit since the benefit was first created in 1976. Working carers will now be able to earn £196 per week and claim Carer’s Allowance – an increase of around £45 per week in comparison to the previous earnings threshold of £151. 60,000 more carers will be able to access Carer’s Allowance as a result. 

This change is unprecedented, helping thousands of carers to keep a toe in the labour market. It means that carers would be able to earn up to £2,340 per year more, providing much needed cash in the pockets of those who rely on it most. For the first time in decades, carers won’t lose out as the National Living Wage rises. Pegging the earnings threshold to the National Living Wage will end the guessing game for carers – putting an end to the anxiety of reducing working hours to compensate for minimum wage increases.  

Carers in poverty  

Support via Carer’s Allowance is vital for those who are unable to combine work and care, but it remains the lowest benefit of its kind at just £81.90 per week. Many are struggling with high living costs as a result of high levels of inflation. There are 1.2 million carers living in poverty across the UK who need urgent help. The Government should take urgent steps, including a full review of Carer’s Allowance and other social security benefits available to carers, to tackle the root causes of poverty.  

DHSC funding on social care 

We welcome the fact that the Government is supporting local authorities with at least £600 million of new grant funding for social care. However, we need a long-term solution for funding this. Over the past few years, social care has been propped up by last minute funding delivered to the sector, some coming too late to be implemented well. An announcement of how the Government intends to improve NHS and social care – as part of its 10-year plan for reform - can't come soon enough. 

Household Support Fund 

Carers UK is relieved to hear that this will be extended for 2025-26 as a lifeline for lower income families needing additional support. Unpaid carers are mentioned in the Household Support Fund guidance as one of the groups able to access  assistance through the Fund. We hope that the new iteration of this and guidance will continue to focus on unpaid carers. This is particularly important since the Government is directing those most in need of funding support and who don't get Pension Credit, to the Household Support Fund.  

Winter Fuel Payment  

The Pension Credit Standard Minimum Guarantee will increase by 4.1% from April 2025. This will mean that more of the poorest pensioners will become eligible to receive Pension Credit and therefore the Winter Fuel Payment.  

Unfortunately, there were no mitigations for unpaid carers due to lose Winter Fuel Payments this Winter. This will hit carers who are pensioners hard this winter, with no support to shoulder the extra costs of heating. The Government’s impact assessment released on 13th September did not consider the additional costs of carers in heating their homes. It also does not have statistics on the number of older carers who will be impacted by the removal of the Winter Fuel Payment.  

Helen Walker, Chief Executive at Carers UK, said:  

“It’s fantastic to hear that the Government will increase the earnings threshold for Carer’s Allowance allowing 60,000 more carers juggling work and care to access this benefit. It’s the largest increase in the earnings limit for Carer’s Allowance since it was introduced in 1976.  

“Carers working and claiming Carer’s Allowance can now take on additional hours to earn up to £196 per week from April 2025, or over £10,000 a year. This is a vital poverty prevention measure helping many carers, particularly women, stay in the labour market. It will make a noticeable difference for many, and for the first time in decades, carers will not lose out as the National Living Wage rises.  It will help to put much needed cash into the pockets of working carers who do so much to look after their disabled, ill and older relatives. 

“Many carers are still struggling with their finances whilst providing so much for society. In addition to today’s announcement, we need to see a full review of Carer’s Allowance as the lowest benefit of its kind at only £81.90 per week for providing a minimum of 35 hours of care. 45% of carers receiving Carer’s Allowance are struggling to make ends meet and urgent steps must be taken to further tackle poverty for carers and their families.”