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Carers (Flexible Working)

Volume 450: debated on Tuesday 10 October 2006

Motion made, and Question proposed, That this House do now adjourn.—[Liz Blackman.]

In 1998, this Government became the first to take the needs of carers seriously when they established the national carers’ strategy to look across government at the needs of carers and to recognise the enormous contribution that they make to their families and to society as a whole. Since then, much has been achieved, which I want to recognise and applaud before I go any further. The carers’ premium, for instance, has increased from £12 to £25.80 a week and the carers’ grant to local authorities to provide additional breaks for carers, which was £20 million when it was introduced in 1999, went up last year to £285 million. The state second pension will enable carers to build up pension credit of their own over time. All that is good and valuable, as is the support that the Government gave to the Carers (Equal Opportunities) Act 2004 and the decision to introduce into the Work and Families Act 2006 the right to flexible working for carers.

While we recognise the progress made, we all have to be honest and say that we need to go further. We need to do so not only for the sake of carers, but for ourselves, because the changing needs of our economy and the skills shortages that we will face in future mean that we are going to need carers who are able to combine their caring with paid work. Now that the Government have given carers many more rights at work, our task is to ensure that they can exercise them for the benefit of themselves, their families and society as a whole.

All the indications are that many carers wish to combine their caring with paid work. In fact, 80 per cent. of carers are of working age and they already form 12 per cent. of the work force. If they are to exercise their rights successfully, it is important that they are not driven out of the work force because they cannot receive the support that they need or because it becomes financially unviable for them to work. In order to ensure that that does not happen, we need to achieve two things. We need to look carefully into the support available to carers and into how the carers’ allowance currently operates. That is what I shall concentrate on tonight.

Very few carers’ assessments even now ask about their wish to work or their current job. Although the 2004 Act ought to change that, the cultural shift is taking a very long time to come about. In addition, I believe that the carers’ allowance as currently constituted leads to real injustice and amounts to a massive disincentive to work. At £46.95 a week, it is already the lowest income replacement benefit and it is for a minimum of 35 hours of caring. Because of the rule that one must not be gainfully employed, once one earns more than £84, the allowance stops. There is no taper; it is a complete cut-off.

In providing an example of what that leads to, I cite the case of Mrs. Lesley Jarvis. She was one of the carers that I was privileged to meet on the Union of Shop, Distributive and Allied Workers carers’ day last June. I really mean that it was a privilege, which will become apparent when we understand what Mrs. Jarvis does. Her husband had a massive stroke and needs 24-hour care. Her family helps to care for him during the day, but she looks after him during the evenings and at weekends. That allows her to work, but by making the huge effort to keep herself in employment, she earns too much to qualify for carers’ allowance. Mrs. Jarvis works in retail, which is a euphemism for not being paid very much. In terms of the carers’ allowance, too much need not be very much at all.

Another case cited by USDAW is of a gentleman who gave up work to care for his mother. He now works from 7 am to 1 pm and cares for his mother until 7 pm each evening and at weekends. He earns £150. In effect, with both his caring and paid work, he works 12 hours a day, seven days a week, for £150. That is intolerable in a strong economy in the 21st century. It is even more scandalous when we realise how much carers save the economy. They do not do it for that reason—they do it for love—but it is undoubtedly true that their unpaid caring saves us an extraordinary amount of money.

It costs a minimum of £377 a week to keep someone in a local council home. It costs £1,000 a week to keep someone in an acute hospital ward. It is estimated that carers, as well as improving the quality of life of the people for whom they care, save the economy £57 billion a year. That is the entire cost of the NHS and £10,000 per carer.

In return, we not only give them very little, but subject them to massive bureaucracy when they want to work. Maggie Hughes is another carer whom I met that day. She told me that if carers are close to the £84 earnings limit, they are kept on a non-established list. That means that they have to keep producing wage slips and letters from their employer and filling in forms. That is very time consuming. She also found that going back and forth to the Benefits Agency used up a lot of time and energy that, together with work and caring, she simply did not have. We can do better than that for people who are making such an effort to help themselves.

We have to do better, not only for the carers, but for ourselves. Our working population is declining, relative to the rest of the population. The Government rightly want to encourage work for those who can, for their own benefit and that of the economy. But our social care system relies on an army of unpaid carers. The Pensions Commission tells us that whatever choice we make on pensions we will all have to work longer, but it is estimated that by 2037 we will need an extra 3.4 million carers just to cope with the rising number of elderly and frail people. We are living longer and as a result we spend more years in ill health. Even over the next 20 years our economy will need an extra 2 million workers. Only a quarter of those will come from school leavers.

As the Education and Skills Committee, of which I am a member, points out, that means that adult skills will be vital in the future. We cannot afford to lose the skills and experience of people who have caring responsibilities. We have to find a way of squaring the circle, because that is vital to our future economic prospects. It has other benefits. Keeping carers in work allows them to keep their skills up to date, so that when they are ready to go back to work full-time, they are more able to do so. It helps to tackle the feelings of isolation from which many carers suffer and it has health benefits. Most importantly, it helps to keep people out of poverty, both when they are caring and later as they get older.

Yet we make it more difficult for people not only to stay in work, but to get back to work. There is no mechanism for allowing carers to try out a job and perhaps go back on benefits if it does not work out without going through the huge bureaucratic process all over again. When people want to try to study to improve their qualifications, they encounter the same problem with carer’s allowance: if they study more than 21 hours a week, they lose all their carer’s allowance. Yet many vocational qualifications require more than 21 hours a week of study. What sort of message does that give people who are doing their best to improve their situation? It is more worrying when we realise that the peak age for caring is between 45 and 64—exactly the age when people have acquired skills and experience and progressed in their jobs so that we can least afford to lose them.

If we examined what we would save in carers’ ill health, the contributions that people in work would make—it is estimated that one in three carers who are currently not in paid employment would like to be, if they had the opportunity—and what we would save in future in pensions and benefits, we might realise that it would pay us to ensure that more carers could stay in work.

Although I am making the economic case, it is fundamentally a matter of justice. Sometimes we simply have to do the right thing because it is the right thing to do. It is intolerable that people who carry such a heavy burden and save the economy so much money are forced into poverty as a result. That often happens. A survey by Carers UK showed that one in five carers have had to cut back on food; one in three find difficulty paying utility bills and, astonishingly, four out of 10 find that trying to pay for the support and services that they need causes them financial hardship.

Let me quote Maggie Hughes again—I hope that she will not mind. She also works in retail and cares for her disabled son. She said:

“When my other children could not look after Stephen on Saturdays, I had to pay someone to look after him. This didn’t work out as it was costing me more money to pay someone to look after Stephen than I was earning.”

That is the Catch-22 into which we put many people. They cannot earn too much because they lose carer’s allowance and that means that they cannot afford the services that they may need.

More than that, we ensure that carers live in poverty in future. One in three have no savings. There is nothing to pay for the breakdown of something in the house and no resources for their old age. Although the state second pension will help many carers, it is not a substitute for being able to work and build up a better pension in one’s own right. Yet because of the “gainfully employed” rule, those who work find that they are excluded from many other benefits such as statutory sick pay, statutory maternity and adoption pay and pension contributions. We are storing up a problem for the future. We must tackle it.

It will not be easy to rebalance the system—everyone accepts that. All the carers to whom I have spoken accept that there must be safeguards against fraud. However, difficulty is not an excuse for not starting on something. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Stirling (Mrs. McGuire), has a good track record and is concerned about the issue. We need to ensure that carers get the support and equipment that they need quickly to help them to work, not only because it is their right but because it is that of the people for whom they care. We should examine the way in which carer’s allowance works, with a view to ensuring that, in future, it is an allowance with a taper, which rewards work rather than acting as a massive disincentive to work.

We should also look at making an exemption in respect of the number of hours of study undertaken by people pursuing a recognised vocational qualification. In addition, we should consider establishing a scheme, similar to the one that operates for disabled people, that would allow carers to try going back to work but then to return to claiming benefit if that does not work out.

At the Labour party conference, my right hon. Friend the Chancellor said that he wanted the honours system to reward people such as carers and home helps. I agree 100 per cent., but he would agree with me than an MBE is not much use to people who cannot pay their bills or who face poverty in old age. It is time for us to look at the problem very seriously and to give carers the recognition that they deserve. That is in their interests, but it is in our interests too.

I shall end my speech there, as I know that my hon. Friend the Member for Dumfries and Galloway (Mr. Brown) wants to make a short contribution.

I begin by congratulating my hon. Friend the Member for Warrington, North (Helen Jones) on securing this debate, and I shall merely supplement some of the points that she made.

I know that my hon. Friend the Minister is aware of the admirable organisation Apex Scotland, which does tremendous work with offenders. Its real aim is to prevent reoffending by people who, all too often, have other problems related to alcohol or drugs. Last Friday, I had the opportunity to meet a group of Apex Scotland’s employees and volunteers, as well as some of its clients. Later that afternoon, ironically enough, a constituent visiting my surgery told me that he had an excellent rapport with Apex Scotland and with the Department for Work and Pensions, and that he had been able to help a young man to take advantage of the new deal and perform 16 hours of work a week.

The arrangement worked tremendously well for the young man in question. It had really built up his self-esteem, to the point where he was able to leave my constituent’s employment and move on to work elsewhere. However, that success created a problem, and my constituent went back to Apex Scotland to look for someone else to whom he could offer the same chance. The work he had to offer was only farm labouring, and the young man recommended to him was surviving on income support. He was also caring for his father, who was terminally ill with cancer, which meant that his income, including carer’s allowance of £46.95, amounted to £83.80.

The 16 hours of new deal work that this young man would do for my constituent would have brought him an income of £86 a week, at the new minimum wage, but it would also cause him to lose his carer’s allowance. The House must bear it in mind that the 16 hours a week was about as much as the young man could cope with. He was trying to get back into a work environment, but he was not sure that he could afford the penalty that losing the safety net of the carer’s allowance would amount to.

As my hon. Friend the Member for Warrington, North said earlier, something needs to be done about people who find themselves in that situation. Perhaps we could introduce a sliding scale for the carer’s allowance, but I merely want to supplement the arguments that my hon. Friend made earlier. I hope that our good friend the Minister will look favourably at the matter. She has been receptive to similar proposals that have come her way in the past, and I look forward to her response this evening.

I congratulate my hon. Friend the Member for Warrington, North (Helen Jones) on securing the debate and on raising some important and sensitive issues. My hon. Friend the Member for Dumfries and Galloway (Mr. Brown) also raised issues by illustrating a situation that he had come across recently.

The issues are difficult, as my hon. Friend the Member for Warrington, North highlighted in her contribution; none of them is straightforward—for example, trying to rebalance the carers’ allowance and other allowances—but I hope that over the next 10 minutes I shall be able to give my hon. Friends some comfort and to set out some of the ways in which we are trying to do things better.

As most people in the House understand, caring is not something that other people do; it is often something that we shall do at some point in our life, which gives us empathy with some of the issues that have been raised tonight. As my hon. Friend pointed out, there is an ageing population and an increased demand for care at home. People do not necessarily want to move away from home so the role of informal carers is set to become even more significant in the future.

We all recognise that for some carers—perhaps those with a disabled daughter or son—caring can be a lifelong commitment; it is not something that they can opt out of when it suits them. My hon. Friend said that the caring peaks are for people between the ages of 45 and 64, when their parents are growing older, and that is certainly reflected in the number of people receiving carer’s allowance.

I realise that my hon. Friend wants to focus on issues that mainly affect carers of working age. However, she will recognise that many carers over pension age are still very much engaged in caring responsibilities. That is why provision for carers has developed over a broad front and not in the focused area that the debate has highlighted. I hope that my hon. Friend will recognise in particular that the Government’s removal of the age limit for claiming carer’s allowance has given an additional 188,000 pensioner carers access to an additional amount through pension credit, which means that they are up to £26.35 a week better off than other pension credit recipients.

Carers’ allowance is a non-contributory and non-income-related benefit for those providing informal care. It helps carers who are not entitled to other help from social security or who do not have significant part-time earnings, or no earnings. It is in fact an income replacement benefit. The earnings limit is one of the benefit’s essential features. From 2001, we raised the limit from £50 to £72 a week—an increase of more than 40 per cent. We also aligned the amount with the lower earnings level of national insurance contributions so that it increases every year, which was not the case before 2001.

The limit is currently £84 a week, as my hon. Friend indicated. However, people can receive carer’s allowance with earnings well in excess of that amount. In line with the general rules in social security, when someone claims the allowance their gross earnings are converted to a net earnings figure by deducting income tax, national insurance contributions and half of any payments to a personal or occupational pension scheme. There are also allowances for the business expenses of self-employed people.

Perhaps I can illustrate the process by quickly describing a couple of real case studies, as the impression has been created that £84 is the limit that a person can earn. A woman who looks after her partner is receiving carers’ allowance. She decides to work part-time and her weekly earnings, net of income tax and national insurance contributions are £150. She has to pay a carer to look after her husband, Peter, while she is at work, which costs £85 a week. Half her net earnings, or £75 a week, can be allowed towards that expense, reducing her net earnings figure for carer’s allowance purposes to £75 a week.

I appreciate that such calculations may seem difficult during a short Adjournment debate at the end of an evening. However, we make allowances for certain expenses, and they allow individuals to earn significantly more than £84 a week, as my case study has indicated. I recognise that we need to get that message across far more clearly to people who are either thinking of finding employment or who are currently in employment. I could give the House a similar example of someone who is self-employed if I had the time.

I recognise that my hon. Friend the Member for Warrington, North thinks that we should not just introduce a taper but perhaps remove the earnings limit altogether. I understand that the ambition to do more for carers is something that echoes around many parts of the House, and we are always considering what more we might do to help them. The problem is that, if we lift the earnings limit, we would remove the rationale for carer’s allowance itself, which is to provide a measure of help for carers who are disadvantaged by limited employment opportunities. Those who provide 35 hours of care a week will tend not to have high personal earnings. It is the minority who are in a relatively more favourable position with regard to earnings who would gain if the earnings limit were removed.

My hon. Friend also suggested—this links with the comments of my hon. Friend the Member for Dumfries and Galloway (Mr. Brown)—the introduction of a tapered earnings limit for carers’ allowance. Of course, with a taper, carers who earned more than the carers’ allowance earning limit would find that their carers’ allowance was reduced by a percentage of their earnings, not by the total.

I must be quite frank that the problem with tapers is that they can often add additional complexity to the system and incur quite significant additional administrative costs. However, I hear what my hon. Friend has said about one of her constituents who had to go to Benefits Agency almost every other week or month, or whatever, to get some sort of qualification for her carer’s allowance. In fact, her constituent should have to undertake that sort of additional exercise only when her income regularly fluctuates.

I am sure that my hon. Friend knows, if she thinks about this, that many women who work in retail jobs have variable hours and experience a regular variation in income and that many carers are forced to accept what hours they can get.

I do not have enough time to do so this evening, but these are some of the issues that I want to address inside the Department and with carers’ organisations. I shall, however, briefly mention the response that the Department and I, as the Minister with specific responsibility for this issue, are making. I have asked my officials to look carefully at some of the points that my hon. Friend and others have raised and, to this end, I have established a small stakeholder working group to focus on benefit and employment-related issues, some of which have been highlighted tonight. It will also cover how we deliver those policies through the Disability and Carers Service, Jobcentre Plus and the Pension Service. I am delighted to advise my hon. Friend that about a dozen organisations have agreed to participate with me in the working group, and they include Carers UK, the Princess Royal Trust for Carers, Carers Scotland and Carers Wales. We will look at some of the issues that she has raised.

I am sorry that we have not had a longer opportunity to refer to some of the other issues by which we are looking at enhancing our support for carers through pension entitlements and so on, but I reassure my hon. Friend that I have listened carefully to the significant and serious points that she raised. I give her my commitment that I will look at them in the cold light of day after this debate.

Question put and agreed to.

Adjourned accordingly at one minute to Eleven o’clock.