It’s time for a new social settlement for carers

People who take time off work to care for their loved ones lose thousands of pounds in missed earnings. We need to address this

July 24, 2023
Clement Attlee’s government introduced the National Assistance Act. Image:  Keystone Press / Alamy Stock Photo
Clement Attlee’s government introduced the National Assistance Act. Image: Keystone Press / Alamy Stock Photo

It is now 75 years since the Attlee government passed the National Assistance Act, which enshrined the state’s responsibility to ensure that any citizen who needs social care, whether due to old age or ill health, will be able to receive it.

As anyone trying to access adult social care services will know, this ambition has not been realised. Not only are both availability and quality often lacking, but the costs can devastate households. Part of the story is that the demand for support has changed, as we live longer and spend more time in ill health. The system has changed as well, with a frenzy of privatisation beginning in the 1980s and subsequent underfunding transferring costs—and risks—onto individuals.

But the act of undertaking unpaid care yourself—something largely invisible in the 1948 Act—can also come at a significant cost. Facing a tension between paid work and unpaid care, many carers are forced to leave work or cut their hours. For the first time, we have quantified the value of this “caring penalty” for people looking after loved ones who are ill or disabled. We found that on average, carers who were previously in work earn nearly £8,000 less per year six years after they start caring, compared to if they had not undertaken care work. This penalty is the result of a double blow: carers not only lose pay in the short term, but also sacrifice potential pay growth, resulting in long-term scarring effects.

The benefits system does little to address the issue. Carer’s Allowance provides just £76.75 per week and penalises work with its strict earnings limit. Indeed, our analysis finds that a large majority of recipients are out of work; and two years after they start receiving the benefit, the proportion who are in work is broadly unchanged.

As part of her call to rekindle the interventionist spirit of government, shadow chancellor Rachel Reeves has harkened back to Attlee’s ambitions and signalled plans to expand the provision of formal care. So far, this includes an intention for a Nordic-style childcare system which mirrors schools, and a National Care Service to match the ambition of the NHS. With millions of people currently forced to choose between the eyewatering costs of care services and a severe pay penalty for caring themselves, there’s no doubt that these would save many people from financial hardship.

But we cannot neglect the other side of the equation. “Securing the finances of working people”, as Reeves has pledged to do, requires any government to take seriously the intensely human wish to care for our loved ones—and ensure that this noble act does not have to come at the price of their own livelihoods. We already do this for working parents through statutory maternity pay—and to a much lesser extent, statutory paternity pay—but no equivalent policy exists for other carers. Real security would allow a freer choice. People need more and better care services, but they also need time and support to undertake care themselves.

The recent Carer’s Leave Act signals a recognition that carers deserve better, but its provisions are mainly symbolic, delivering just one week of unpaid leave. It offers little relief to households who cannot afford to forgo pay, so the bind remains largely unchanged—pay huge sums out of pocket for formal care or take a longer-term financial hit by leaving work and caring yourself. 

As we look overseas for ideas to improve our care system, we can take inspiration from progressive systems like Norway and Canada which have well-developed systems of long-term, paid care leave that deliver both security and choice.

We’re calling for the UK to follow suit by introducing a new Statutory Care Pay entitlement. Mirroring maternity leave, the policy would provide nine months of leave to care for a loved one, useable in up to three separate segments. Employees would be paid a percentage of earnings for six weeks followed by a steady, lower amount, all of which the employer would claim back from the government. Recipients would need to be providing care for at least 35 hours of week, as confirmed by a frontline health professional.

By confronting the cruel dilemma between paid work and unpaid care, the policy would provide working people with financial security and meaningful choice. It would also keep more people attached to the labour market at time when economic inactivity is a major concern. And it would complement the formal care system, mobilising caring capacity at a time when services are under severe strain. Tackling these issues will only become more critical as the population ages.

This is not to say that the policy would be a panacea. It would be most helpful for people supporting loved ones undergoing cancer treatment, sudden onset conditions like severe Motor Neurone Disease, or end of life care. Any new settlement on care will require a wider set of reforms to address the root causes of insecurity and lack of choice, starting with an expansion of paternity pay and flexible working practices. But this policy would be a big step in the right direction. 

When Labour created the welfare state some 75 years ago, it promised to support citizens from the cradle to the grave, in sickness and in health. If we are to renew that promise, we must put those who are already providing such support at the centre. 

Correction: due to a minor coding error in the research, this piece previously said that carers who were formerly in work earn nearly £9,000 per year less six years after they start caring, compared to if they had not undertaken care work. The true figure is nearly £8,000 on average. The article has been updated to reflect this.