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Last Updated: Saturday, 24 February 2007, 05:53 GMT
Carers 'losing out' as wages rise
By Paul Lewis
BBC Radio 4's Money Box

A carer holding an elderly person's hand
Wages have to be less than 84 a week to qualify for the benefit
Thousands of carers have ended up worse off after a rise in the minimum wage last October, support groups say.

The extra money has taken them above the threshold for claiming Carer's Allowance, which is worth 46 a week.

But if the people affected cut their weekly hours to under 16 to take them back under the threshold, they would then lose out on tax credits.

Support groups want the government to end what they say is a "catch-22 situation" but so far it has refused.

Sarah lives in Liverpool and cares for her elderly mother as well as looking after her own 14-year-old son and working in the local chemist.

She told BBC Radio 4's Money Box about the nasty shock when her wages went up.

"I work 16 hours a week and earn the minimum wage. But when that went up to 5.35 an hour I was no longer entitled to claim the Carer's Allowance. I was 1.60 over the threshold," she said.

To get Carer's Allowance your wages have to be less than 84 a week.

And the small rise in her weekly pay took her above that threshold meaning she lost the whole of her Carer's Allowance - worth 46.95 a week.

'Catch 22'

If Sarah cut her hours to just 15 a week she would get back her Carer's Allowance.

But another anomaly means that would leave her even worse off.

"It's a catch-22 situation," she said.

"You can't work any longer because you're caring for somebody. And you can't work any less because if you're claiming tax credit you've got to work 16 hours a week."

I can't begin to tell you what a difference it makes and how miserable it's made us
Sarah, carer

Sarah's tax credit amounts to more than 100 a week.

Emily Holzhausen, head of policy at Carer's UK, confirmed that if Sarah cut her hours she would lose it.

"If you work 15 hours you don't get tax credits at all. So she has no option but to lose this Carer's Allowance," she said.

And Sarah said that has not been easy: "Just over 45 a week may not seem a lot to some people but I can't begin to tell you what a difference it makes and how miserable it's made us now it's been taken away."

Simple solution?

The problem affects many of the estimated 40,000 people who get Carer's Allowance from the Department for Work and Pensions and also work.

Ms Holzhausen said it shows a lack of joined up government: "One department has been working without talking to another department about what the knock-on effect would be.

"It's great that the minimum wage has gone up in October. But it's out-of-synch with benefit changes.

Change the time when you raise the earnings threshold
Emily Holzhausen, Carers UK

"The threshold will rise to 87 in April and Sarah will be able to claim Carer's Allowance again.

"Then in October if the minimum wage rises again she will lose it. And so on."

Ms Holzhausen hopes the recent launch of a 33m package of help for carers by Chancellor Gordon Brown and Minister for Care Services Ivan Lewis will trigger a further look at this expensive anomaly.

"The solution is simple," she said: "Change the time when you raise the earnings threshold for Carer's Allowance from April and synchronise it with the National Minimum Wage in October.

"If you did that we would solve it in one."

BBC Radio 4's Money Box was broadcast on Saturday, 24 February 2007 at 1204 GMT.

The programme was repeated on Sunday, 25 February 2007 at 2102 GMT.

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