Unpaid care places additional strain on many households’ finances. At a time when budgets are already under intense pressure, the rising cost of living is likely to cause bigger problems for those providing or receiving support because of frailty, disability or ill health.
The cost of living crisis is not affecting all households equally. For those that provide or receive unpaid care, the impact of inflation will depend largely on the nature of their members’ caring role or support needs. It will be determined by their energy consumption, whether they receive benefits, and if and how much they work.
NHS England defines unpaid carers as those who look after someone who cannot cope without their support due to illness, frailty, disability, a mental health problem or an addiction.
Unpaid caring roles often go beyond personal care – such as help with washing, dressing and eating – and include other essential forms of support. This might involve helping to manage finances, shopping for essentials, mobility assistance, ordering medication and emotional support (Carers Trust, 2021).
Nearly 60% of unpaid carers live in a household where someone is disabled; a similar proportion of unpaid carers are women.
But in absolute terms, demand for care is rising, as the UK’s population is getting older and the prevalence of working age disability has increased. In 2019/20, 1.9 million requests for social care support were made in England, over 5% more than in 2015/16.
Care costs have risen, demand has increased, and local authority funding for social care in real terms was only 0.4% higher in 2019/20 than it was in 2010/11. These trends are likely to continue, so we might expect the number of unpaid caregivers and recipients to increase.
The support needs of those who receive unpaid care, and the commitment made by those that provide it, can often strain family finances. Recent analysis finds that people in these households are less likely to be in employment and more likely to fall below the poverty line compared with the rest of the population.
This means that, on average, households where an individual provides or receives unpaid care came into the cost of living crisis with less financial resilience to the pressure being placed on household budgets.
But even within this group, the impact of high inflation will not be uniform. Those receiving care come from a range of socio-economic backgrounds and have different requirements in terms of their care.
What is missed by headline inflation figures?
While prices are rising across the economy, it is primarily energy and transport costs that are pushing up inflation. These costs are rising faster than any other type of goods or services. The consumer prices index including owner-occupiers' housing costs (CPIH) rose by 8.8% in the year to July 2022, and 40% of this rate was driven by transport, electricity, gas and other fuels.
This means that households that spend a greater share of their income on energy and transport will be at the sharp end of the cost of living crisis. Evidence tells us that this will include many households where someone provides or receives unpaid care.
We know that disability often has a direct impact on energy usage, with many care recipients needing to consume more energy at home because of their impairment or condition. This comes on top of other cost burdens that can fall on individuals with support needs, such as specialist equipment or adaptations to the home.
Unpaid carers themselves also face an additional burden on household finances. For example, they may incur higher transport costs due to providing care.
This means that, in general, the composition of these households’ spending will leave them facing a higher rate of inflation than the headline figure suggests. But the extent to which this is the case will depend on individual circumstances.
What about work?
Some people might respond to the rising cost of living by taking on extra hours to increase their earnings. There is ample opportunity for this. The number of job vacancies in the UK economy is over 60% higher than it was in the months preceding the Covid-19 pandemic.
But households where unpaid care is a factor are limited in their ability to work. This applies to both carers and care recipients. A key barrier is the time spent providing or receiving care. Evidence indicates that the higher the care commitment, the greater the impact on earnings.
For example, a study by the New Policy Institute finds that the poverty rate for unpaid carers rises significantly where more than 20 hours of care are provided per week (35% for 20-49 hours per week; 38% for over 50 hours per week; compared with 14% for 0-4 hours per week).
There are many other barriers to employment for care recipients. These depend on their health condition, but they can include inaccessible workplaces, a lack of support or reasonable adjustments from employers, and bias in the hiring process.
These barriers are evident in labour market outcomes. The latest data show a disability employment gap in the UK of 28%. For carers, the employment gap is 10%. In the UK; more carers exit the workforce than elsewhere in Europe; and those who do are unlikely to return.
An important factor is not just access to the labour market in general, but also limits on the type of jobs available. Support needs can often be unpredictable, meaning that unpaid carers and care recipients require flexible working arrangements, which are not available in every workplace.
The impact of unpaid care on labour market access is less pronounced for those above working age. Pensioners’ incomes are more secure, as private and state pensions tend to be the main source of income for these households. This explains why unpaid care does not lead to higher poverty rates in pensioner households. The effect of the cost of living crisis is therefore likely to be similar to the pensioner population in general.
What role can policy play?
Limited access to the labour market can leave unpaid carers and care recipients more reliant on income from social security (national insurance in the UK), especially where the hours of care provided are high.
An important factor here is whether the unpaid carer and the care recipient live together. This is for two reasons. First, support needs in these households tend to be higher, which restricts the ability to work. One study finds that when unpaid care exceeds 20 hours per week, three-quarters of carers live with the care recipient. Second, these households lose two incomes: those of the unpaid carer and the care recipient.
Any decisions taken on social security in response to the cost of living crisis will therefore be significant to these households.
What benefits are available for unpaid carers and care recipients?
Unpaid carers on low incomes might be eligible for means-tested benefits, such as universal credit. The carer’s allowance is also available to some, although this offers relatively little protection (only £67.50 per week). Income from the state pension is deducted from carer’s allowance. In Scotland, an additional supplement of £491.40 per year is available.
Unpaid carers who provide fewer than 35 hours of care per week or earn more than £132 per week after tax and national insurance cannot claim carer’s allowance.
Those who receive unpaid care might be eligible for the personal independence payment (PIP), or one of the older benefits that this has replaced. Eligibility depends on how support needs affect a person’s daily living and mobility. Payments range from £61.85 to £156.90 per week and are intended to account for the additional living costs associated with disability.
For low-income households, universal credit has a ‘limited capability for work related activity’ element, which provides up to £354.28 per month. There is also a ‘carer’s element’ of up to £168.81 per month.
What has happened to these benefits during the cost of living crisis?
Benefits are usually increased in line with the consumer price index (CPI) inflation level from the previous September. This means that in April 2022, benefits were uprated by 3.1%. Inflation has since reached 10.1%.
This means that the impact of the cost of living crisis is a significant real-terms cut to the value of financial support provided to many households where unpaid care is a factor. This is especially acute for those with higher support needs and where the carer and care recipient live together.
In response, the government announced a series of flat-rate payments to benefit recipients in May 2022. They have offered £650 for means-tested benefits, £150 for non-means tested disability benefits and £300 for pensioners who claim the winter fuel allowance.
These measures will offset 93% of the energy price rise for the poorest households, which might overlap with some unpaid carers and care recipients.
But no specific consideration has been made for unpaid carers’ vulnerability to rising energy and transport costs. Indeed, the carer’s allowance is not a qualifying benefit for any additional support in response to the cost of living crisis.
What about mental health and wellbeing?
Unpaid care often results in a deterioration of health outcomes for carers. One study finds that unpaid carers who provide high levels of care are more than twice as likely to suffer from poor health than non-carers.
Other research finds a strong relationship between mental ill health and the intensity of a carer’s commitment.
Public health protections during the pandemic saw the withdrawal of many care packages and the closure of support services, such as day centres for people with learning disabilities. This resulted in unpaid carers’ roles intensifying, leading to exhaustion and burnout among many. The added burden of stress that is associated with deteriorating household finances is of particular concern for this group during the cost of living crisis.
What further evidence do we need?
The cost of living crisis has been prominent in the news this year, partly because economic statistics around inflation and pay are published regularly. These statistics are disaggregated. This means we can see, for example, the inflation rate for particular types of goods or how wages are changing for men and women.
Economic surveys that ask specifically if a member of a household provides unpaid care are published less regularly. In particular, the annual Family Resources Survey tells us a lot about household finances and includes questions on unpaid care.
When more up-to-date versions of these surveys are published, we will know more detail about how the cost of living crisis has affected those who provide or receive unpaid care.
While evidence is still emerging, we can draw on information about household finances before the cost of living crisis to assess its likely effects. Households where someone provides or receives unpaid care are, in general, likely to consume more energy at home. As energy prices are rising significantly, this implies that these households will be disproportionately affected.
Working age households are likely to be more reliant on social security income and limited in how they can respond to real-terms falls in earnings by working more hours because of their care commitments. This means that the extent to which government support offsets a household’s rising energy bills is of particular importance for unpaid carers and care recipients.
While individual circumstances will vary, few in this group will be better off than they were this time last year.
Where can I find out more?
- Unpaid carers changing the systems that trap them in poverty: Article from the Joseph Rowntree Foundation.
- ‘Seismic’ impact of the cost of living crisis on disabled people: Report from the Welsh Parliament.
- From disability to destitution: Report by Tom Clark and Peter Matejic for the Joseph Rowntree Foundation.
- The high cost of unpaid care by young people: health and economic impacts of providing unpaid care: BMC public health report.
Who are experts on this question?
- Nicola Brimblecombe
- Linda Pickard
- Emma Congreve
- Martin Knapp
- Tom Clark