(2) what assessment has been made of the effect of the removal of the adult dependency increase in carer’s allowance for new claims from 2010, as announced by the Chancellor in his pre-Budget report.
Adult dependency increases were originally introduced to recognise of the fact that many married women did not have employment outside the home. In the case of carer’s allowance, the increase is paid for the carer’s spouse, civil partner or someone who looks after the carer’s children, where that person earns less than the amount of the adult dependency increase, which is currently £28.05 a week.
As at 31 May 2006, the latest date for which information is available, some 410,000 people entitled to carer’s allowance were receiving income support or pension credit, whereas only around 15,900 were receiving an adult dependency increase. Available forecasts suggest that some 3,000 new carer’s allowance awards in 2006-07 and in 2007-08 will include an adult dependency increase. Forecasts are not available currently for 2008-09 and 2009-10.
The Government intend to remove adult dependency increases for new claims for carer’s allowance from 2010. However, adult dependency increases already in payment at 2010 will continue until entitlement ends or until 2020, whichever is earlier. Only a small number of carers who claim carer’s allowance from 2010 onwards are likely to be affected by the removal of adult dependency increases for new claims, because those in lower income households receiving either an income-related benefit or pension credit will be compensated in these benefits for the non-availability of the adult dependency increase.
Carer’s allowance is not a “carers’ wage”, therefore, the connection with the national minimum wage is not appropriate. It is an income-maintenance benefit for people who are not in full-time work and who regularly provide substantial care of at least 35 hours per week for a severely disabled person receiving either attendance allowance or the equivalent rates of the disability living allowance care component. People receiving carer’s allowance can have earnings, net of a range of expenses including the cost of alternative care for either the severely disabled person or a child under 16 years of age while the carer is at work, of up to the national insurance lower earnings limit, currently £84 per week.