Rise In Minimum Wage In The UK Puts More Caregivers At Risk

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The minimum wage has just risen in the UK1. There are millions who will benefit from this rise, and it could come as a blow to those who provide care for people who are disabled or elderly.

The issue at hand is the government’s carer’s allowance, which issues £81.90 per week to carers who provide at least 35 hours of care (that’s £2.20 per hour). The carers are also allowed to earn up to £151 per week from other work. When carers earn more than £151 from other work, the carer’s allowance is cancelled.

As a carer, if you have been earning £151 at work in a job that paid minimum wage, the rise in minimum wage could mean that you will be cut of from the carer’s allowance2.

If you receive the £81.90 and you’re not eligible, the pension system will move in to action to recover the overpayment. Unfortunately, it has been taking a while for the pension system to get its act together.

For a caregiver who earns the carer’s allowance of £81.90 and the maximum £151 from outside sources, even £81.90 is a lot to pay back. And because the system isn’t catching the overpayments early, some carers are being required to pay back thousands of pounds.

The government’s view is that the overpayment is the fault of the carer, who failed to notify the authorities to cancel the carer’s allowance. The government is taking court action to recover the overpayments in come cases.

An overpayment of £81.89 may not sound like a lot, but we need to bear in mind that the absolute maximum that a carer is allowed to earn in a year and receive the carer’s allowance in round numbers is £12,1003. That is far below the amount they would earn working full time at the UK’s minimum wage: £20,820.

Does recovering payments for people earning so little seems wrong headed? The overpayments are being extracted from people who are providing care and support to people who cannot manage on their own.

The elderly and/or people with disabilities who receive the care often have incomes that are well below the minimum wage. The people who receive care rely on their carer. Without this lifeline, many people who receive care would have to move to institutional care or become homeless.

Surely some kind of amnesty could be worked out? But so far, apparently not.

Read more in The Guardian: Carers threatened with prosecution over minor breaches of UK benefit rules

The situation in the UK is unique in some ways, but the overall effect of policies and payments for support to people with disabilities extends to other countries. In Canada for example, people may claim a disability deduction on their taxes. This requires compiling receipts and submitting them with the annual tax return. The people who need the services have to pay for their support costs up front.

Additionally, not everyone is eligible to receive the deduction. People with higher incomes are excluded.

People who receive a public provincial disability pension (ODSP) in Ontario would very likely be eligible for the deduction, their income being below the amount they need to purchase basic necessities. The monthly disability payment for a single individual is currently $1,308 per month4.

Ontario’s government has also announced its intention to index the disability pension to inflation. In 2022, the average rent for the most affordable housing (a bachelor unit) in Ontario was reported to be $1,2715. It is hard to imagine how people with such a low income will be able to pay for supports up front in order to claim the disability deduction when they file their taxes.

Footnotes

  1. You can read more about this in Positive News: What went right this week: the good news you should know about
  2. Note that this isn’t the only possible outcome. For example, you could reduce your work hours.
  3. £4,260 for the carer’s allowance and £7,850 for other work.
  4. This comes from the Government of Ontario’s web site: Income support from ODSP
  5. This comes from CMHC’s annual rental market survey report: Rental Market Survey Data Tables