Apr 25 2012

Dr Linda Pickard: Public expenditure costs of carers leaving employment

Providing unpaid care to older people and people with disabilities is costly. Many unpaid carers leave employment and experience costs to themselves in terms of foregone earnings. However, initial findings from a new study at the London School of Economics and Political Science (LSE) now show that carers leaving employment also involves high costs to the public purse. The study shows that the public expenditure costs of carers leaving employment in England amount to around £1.3 billion a year.

This figure is a key finding from a study of unpaid care and employment by Linda Pickard, Martin Knapp, Derek King and Margaret Perkins at the Personal Social Services Research Unit (PSSRU) at the LSE. Funded by the NIHR School for Social Care Research (SSCR), the findings from the study have been undergoing peer-review and will be available shortly on the PSSRU and SSCR websites.

The starting point of the calculations is the number of people who leave employment due to caring. Based on analysis of the 2009/10 Survey of Carers in Households and 2010 Office for National Statistics (ONS) population estimates, the study estimates that approximately 315,000 carers aged 16 to 64 in England have left employment to provide unpaid care and remain out of employment. Of these, 120,000 are men and 195,000 are women. 

Over a third of carers who have left employment to care are in households where Carers’ Allowance is claimed. This suggests that there are around 115,000 carers who have left work to care and are claiming Carers’ Allowance, at a cost of around £0.3 billion a year. 

Moreover, using methods reported elsewhere (Knapp et al 2007), we estimate that lost tax revenues, based on foregone income and an average percentage of income that goes on tax of 17.8%, are approximately £1.0 billion a year. This estimate is based on median weekly full-time earnings of £538 for men and £439 for women and part-time earnings of £142 for men and £157 for women (ONS 2010). It also assumes, based on the 2009/10 Carers Survey, that the full-time employment rate is the same for carers leaving employment as for carers currently in employment (82% of men, 39% of women).

In total, the public expenditure costs of carers leaving employment are estimated at £1.3 billion a year. This is a conservative figure since it is based only on the costs of Carers’ Allowance and lost tax revenues on foregone incomes. The figure would be higher if receipt of other benefits and lost national insurance contributions on foregone incomes were also taken into account.

Social care support for unpaid carers in employment is currently low. Only 4% of carers working full-time, and 6% working part-time, are currently offered an assessment or review of their needs for social care support (2009/10 Survey of Carers in Households).

If there was greater public investment in social care, such as ‘replacement care’ to support carers in employment, and fewer carers left the labour market, then public spending on benefits would be lower and revenues from taxation would be higher. £1.3 billion represents a substantial sum of money in terms of social care expenditure. It constitutes 9 per cent of current public spending on adult social care in England (currently £14.5 billion, according to the Commission on Funding of Care and Support).   

Dr Linda Pickard
l.m.pickard@lse.ac.uk

Dr Pickard will be giving a talk on the initial findings of the unpaid care and employment study at the SSCR Annual Meeting on 14 May 2012 at the LSE.

This is an independent study funded by the NIHR School for Social Care Research. The views expressed are those of Dr Pickard and the research team and not necessarily those of the NIHR School for Social Care Research or the Department of Health, NIHR or NHS.

Further coverage

  • Invest in social care to revive economy, government told, Community Care, 2 May 2012
  • Charity urges government to back new strategy on care jobs, BBC News, 2  May 2012
  • A new way to find jobs for two in five wishing to work beyond 65, Telegraph Blog by Ian Cowie, 2 May 2012
  • Shrinking social care puts families and employers under strain, LocalGov.co.uk, 2 May 2012
  • Care crisis destroys family finances, Saga Zone, 3 May 2012
  • Care crisis destroys family finances, AOL, 2 May 2012
  • Charity urges government to back new strategy on care jobs, Manchester Wired, 2 May 2012
  • Fresh strategy urged on care jobs, Human Health and Science, 2 May 2012
  • New strategy urged for carers, Savista Magazine, May 2012
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