Poverty and financial hardship of unpaid carers in the UK

Carers UK and WPI Economics have published a new report which reveals the scale of poverty amongst unpaid carers in the UK as well as presenting the most effective solutions to lift carers out of poverty. The project, which was funded by abrdn Financial Fairness Trust, found that:

• 1.2 million unpaid carers live in poverty, and 400,000 live in deep poverty in the UK.
• The poverty rate for unpaid carers was 50% higher than for those who did not provide care (27% vs 18%).
• Nearly 1 in 10 unpaid carers (9%) live in deep poverty in the UK.

An inability to participate in paid work, caring for long hours, and receiving income-related benefits are the strongest predictors of poverty amongst unpaid carers:

• The poverty rate is more than double for those providing more than 35 hours of care per week (43%), compared to people who are not unpaid carers (18%).
• Carers aged 25-44 have the highest rate of poverty of any other age group, at 38-39%.
• Two-thirds (67%) of unpaid carers who receive Universal Credit live in poverty – around 900,000 carers.

Modelling done as part of this research shows that the following measures would be cost effective in lifting many carers out of poverty:

• An immediate uplift to Universal Credit Carer Element and Carer Addition Pension Credit of £11.10 would lift 30,000 people out of poverty and 40,000 people out of deep poverty at a cost of £580 million per year.
• An increase of £36.30 for carers receiving Universal Credit would lift 110,000 people out of poverty and 140,000 out of deep poverty, at a cost of £1.8 billion per year.
• An increase of £36.30 to Carer Addition to Pension Credit could lift 20,000 older carers out of poverty at a cost of £300 million.
• An increase in the earnings limit for Carer’s Allowance to the equivalent of 21 hours at National Living Wage could lift 50,000 carers out of poverty, at a cost of £90 million per year.[1]

The report also found that Carer’s Allowance – the main carers’ benefit - needs a full review in order to increase the level of support to a sustainable level as well as re-assessing its eligibility criteria and processes to ensure it adequately supports unpaid carers in a variety of situations. While a range of increases to Carer’s Allowance were modelled, and some were very effective at lifting carers out of poverty, the design of the benefit means that these were very costly to implement.

Read the Executive Summary.

Read the full report.

[1] The methodology used in modelling the effects of raising the earnings limit are indicative only as the sample sizes were smaller for this group. The costs for this policy have been estimated by the Department for Work and Pensions in 2022 rather than by WPI economics.