diff --git a/app/src/data/posts/articles/carers-allowance-taper.md b/app/src/data/posts/articles/carers-allowance-taper.md index a405184df..76bdee65f 100644 --- a/app/src/data/posts/articles/carers-allowance-taper.md +++ b/app/src/data/posts/articles/carers-allowance-taper.md @@ -30,7 +30,7 @@ The [Budget 2026 document](https://www.gov.uk/government/publications/budget-202 3. **The limit.** The costings set the limit at 16 times the National Living Wage, the rule above: £228 a week in 2030-31 and £234 in 2031-32 on the OBR's forecast. 4. **Where.** The taper applies in England and Wales. In Scotland, Carer Support Payment has replaced Carer's Allowance, and the taper does not cover Northern Ireland, which runs its own social security system. 5. **When.** The taper starts at some point in 2030-31. The government will confirm the date later: the costings say the measure "will begin within the 2030-31 financial year, with a precise start date confirmed in due course", and the Budget says the government will implement the taper "following the development of a new IT system". -6. **Who.** The government estimates that around 48,000 people benefit in 2030-31, including people who become newly entitled, of whom around 3,000 live in Wales ([Budget 2026 data sources](https://assets.publishing.service.gov.uk/media/6ae1e9a2460c1346f7be77ff/Budget_2026_-_Data_Sources.pdf), page 30). +6. **Who.** The Department for Work and Pensions (DWP) estimates that around 48,000 people benefit in 2030-31, including people who become newly entitled; around 3,000 of the 48,000 live in Wales ([Budget 2026 data sources](https://assets.publishing.service.gov.uk/media/6ae1e9a2460c1346f7be77ff/Budget_2026_-_Data_Sources.pdf), page 30). The Budget and the costings describe no other change. We assume that the caring conditions, the rate, its tax treatment, its effect on other benefits and how the test works out net earnings (weekly, after tax, National Insurance and expenses) stay as they are. The Budget says a new IT system will "automatically adjust payments" for the taper (paragraph 3.20), but not how or over what period the government will measure earnings. @@ -756,13 +756,17 @@ We also ran the measure on PolicyEngine UK's microsimulation model, which uses s We round the rows, so they may not sum to the net cost. -Lower Universal Credit and higher income tax offset part of the cost of the higher allowance. Setting the current-law limit to the government's rule in both runs, as in the worked examples, gives the same figures throughout this section. +Setting the current-law limit to the government's rule in both runs, as in the worked examples, gives the same figures throughout this section. About 82,000 people have a higher Carer's Allowance in 2030-31, and about 83,000 in 2031-32, all in England. About half live in families on Universal Credit, and almost all of them lose a little, because Universal Credit falls by the whole of the extra allowance and income tax is due on it. -We find more carers whose allowance rises than the government estimates will benefit, about 82,000 against its 48,000 in 2030-31, and we model no change in hours worked. Our extra Carer's Allowance, £160 million in 2031-32, comes before any offset: Universal Credit takes back about half of it and income tax about a fifth, leaving a net cost of £24 million in 2030-31 and £48 million in 2031-32. Of the official £38 million and £79 million, £5 million and £10 million is extra block grant for Scotland, which gained powers over Carer's Allowance in 2018. The rest, £33 million and £69 million, is the extra Carer's Allowance less the Universal Credit saving, with no entry for income tax. Before income tax, our figure is £39 million and £79 million, about a sixth more than that spending. Neither the Treasury nor the OBR splits the Carer's Allowance cost from the Universal Credit saving. +For 2030-31, DWP estimates that around 48,000 people gain a higher award, including around 3,000 in Wales, against our 82,000. Both counts compare awards with and without the taper and include people who become newly entitled, but DWP's also depends on assumptions about how carers respond, while ours assumes they work the same hours. -The comparison sets a static estimate against a post-behavioural one. The government's costing, which the OBR certified, includes behavioural responses. Its note says that some carers would increase their earnings or enter work, which lowers Carer's Allowance and Universal Credit spending, and that it accounts for take-up of tapered awards by people newly eligible for them, which adds to the cost. (These are responses of the people affected; the note describes no feedback through the wider economy, which is what a "dynamic" costing usually means.) Our estimate has no labour-supply response. It does include claims by carers whom the current limit keeps out: PolicyEngine's data assumes that 60% of them claim, which may differ from the Treasury's assumption. These differences could explain some of the gap between our figures and the Treasury's, in either direction. +Of our £160 million of extra Carer's Allowance in 2031-32, lower Universal Credit offsets about half and higher income tax about a fifth, leaving a net cost of £48 million. In 2030-31, with half a year of the taper, the net cost comes to £24 million. + +The government's costing, £38 million in 2030-31 and £79 million in 2031-32, measures something different from ours. It includes £5 million and £10 million of extra block grant for Scotland, which gained powers over Carer's Allowance in 2018. The other £33 million and £69 million cover the extra Carer's Allowance less the Universal Credit saving, and the costing has no entry for income tax. Against those £33 million and £69 million, our extra Carer's Allowance less lower Universal Credit comes to £39 million and £79 million, about a sixth more. Neither the Treasury nor the OBR splits the Carer's Allowance cost from the Universal Credit saving. + +The comparison sets a static estimate against a post-behavioural one. The government's costing, which the OBR certified, includes behavioural responses. Its note says that some carers would increase their earnings or enter work, which lowers Carer's Allowance and Universal Credit spending, and that it accounts for take-up of tapered awards by people newly eligible for them, which adds to the cost. (These are responses of the people affected; the note describes no feedback through the wider economy, which is what a "dynamic" costing usually means.) Our estimate has no labour-supply response. It does include claims by carers whom the current limit keeps out: PolicyEngine's data assumes that 60% of them claim, which may differ from the government's assumption. These differences could explain some of the gap between our figures and the official ones, in either direction. The estimate rests on fewer than 50 survey households, so it is imprecise, and we do not show a breakdown by income decile.