A leading thinktank has called on ministers to reform the carer’s allowance and increase its basic rate to alleviate financial strain on unpaid carers and disabled individuals. The Resolution Foundation reports that unpaid carers, particularly those on low incomes, face significant financial penalties, losing up to £7,000 annually compared to non-carers.
A Critical Call for Change
The Resolution Foundation’s report highlights the financial hardships faced by unpaid carers across the UK. Released on 16 July 2025, the study emphasises that these carers often sacrifice their financial stability to provide essential care for loved ones. The foundation’s analysis reveals that the typical financial penalty for unpaid carers amounts to around 10% of their income. The report urges the government to reconsider the current structure of the carer’s allowance, which is deemed insufficient to support the needs of those who dedicate their time to caregiving.
The call for reform is backed by compelling evidence showing that many carers struggle to make ends meet, compelling them to rely on savings or find supplementary income to cover basic living costs. This situation is particularly pressing for carers who balance caregiving with low-income jobs, further exacerbating their economic vulnerability.
Understanding the Timing and Context
The demand for an overhaul of the carer’s allowance comes at a time when the cost of living in the UK continues to rise. The Resolution Foundation’s study was conducted in various regions across the country, highlighting the widespread nature of the issue. The report underscores the urgent need for policy changes to address the financial challenges faced by carers, especially as inflation and living costs remain high.
The study’s timing is crucial, aligning with ongoing debates about social welfare and support systems in the UK. As the government considers various economic policies, the Resolution Foundation’s findings aim to prioritise the needs of unpaid carers, who are often overlooked in broader economic discussions.
The Reality of Financial Hardship for Carers
Unpaid carers often face a dual burden: providing essential care and managing their financial responsibilities. The Resolution Foundation’s research highlights that many carers are forced to reduce their working hours or leave their jobs entirely to meet caregiving demands. This decision often leads to a significant loss of income, making it challenging to maintain financial stability.
The foundation’s findings indicate that the current carer’s allowance does not adequately compensate for the financial sacrifices made by carers. The allowance, which is £76.75 a week as of 2025, falls short of covering basic living expenses, especially for those who provide round-the-clock care. The report calls for an increase in the allowance to reflect the true cost of caregiving and support carers in maintaining a reasonable standard of living.
Expert Insights on Potential Reforms
Experts in social policy and welfare have echoed the Resolution Foundation’s call for reform. Dr. Sarah Williams, a social policy analyst, emphasises the importance of recognising the economic value of unpaid care. “Unpaid carers provide an invaluable service, saving the state billions in care costs. It is only fair that they receive adequate financial support,” she states.
Williams suggests that reforming the carer’s allowance should involve not only increasing the basic rate but also addressing eligibility criteria to ensure more carers can benefit. She advocates for a comprehensive review of the support systems available to carers, taking into account the diverse needs and circumstances of those providing care.
Government Response and Potential Impacts
In response to the Resolution Foundation’s report, a spokesperson for the Department for Work and Pensions acknowledged the vital role of unpaid carers and expressed a commitment to reviewing the carer’s allowance. While concrete plans have not yet been announced, the government has indicated a willingness to consider reforms that align with the findings of the report.
The potential impact of reforming the carer’s allowance extends beyond individual carers. By providing adequate financial support, the government could alleviate the economic strain on carers, enabling them to focus on providing quality care without compromising their financial well-being. Improved support for carers may also reduce the pressure on public health services, as carers play a crucial role in maintaining the health and well-being of those they care for.
As discussions about social welfare continue, the Resolution Foundation’s report serves as a crucial reminder of the importance of supporting unpaid carers. By addressing the financial challenges they face, the government can ensure that carers are not only recognised for their contributions but also empowered to continue their essential work without financial worry.