John Healey to Replace Carer's Allowance Cliff-Edge With Gradual Taper

Chancellor John Healey will announce the end of the carer's allowance cliff-edge in Wednesday's budget, replacing a binary penalty with a digital taper system. Under the current rules, an unpaid carer earning even one penny over the weekly limit of 204 pounds forfeits the entire 86.45 pounds in allowance for that week. Healey's proposal shifts this to a gradual reduction where only 1 pound of benefit is removed for every additional 1 pound earned above the threshold.

The change addresses a system that left approximately 180,000 carers with overpayment debts totaling 300 million pounds between 2019 and 2025. An independent review commissioned by the government and led by disability rights expert Liz Sayce found that the Department for Work and Pensions was aware of the distress caused by the rule but did not warn carers of breaches. Many carers accrued debts ranging from 2,000 to 5,000 pounds, with some reaching 20,000 pounds, after exceeding the limit by mere pence over years of work.

The cliff-edge created a financial disincentive for carers to work, as earning more often resulted in a net loss of income. The review cited cases where carers were penalized because the national minimum wage rose faster than the earnings limit. In one instance, a carer who earned 15 pounds over the limit was billed a 2,000 pound penalty. Welfare officials used legislation designed for drug dealers and organized crime to recover these funds, leading to fraud convictions in some cases.

Healey is introducing this measure as one of five everyday fixes ahead of a budget constrained by global events, including the conflict in Iran. Treasury insiders describe the upcoming budget as low-key, with major tax and spending decisions deferred to next year's spending review. Alongside the carer's allowance change, Healey will make higher tax-free mileage rates permanent, setting the rate at 55p per mile for the first 10,000 business miles and 35p per mile for additional miles. The Treasury estimates this will benefit about 3 million people who use their own vehicles for work.

The budget also includes parental support worth up to 194 pounds a week for an additional 150,000 new parents, including self-employed fathers and partners. Ministers plan to remove import tariffs on more than 100 products, such as baked beans and chocolate, while supporting farmers facing higher fertiliser costs. The government will also install hundreds of new Post Office drop boxes, bringing the total to 1,000 nationwide.

Work and Pensions Secretary Pat McFadden stated the government intends to end the system that leaves carers financially worse off for working extra hours. Carers UK director of policy Emily Holzhausen said the taper should give families more choice about working and caring. The new digital system will not be introduced before the end of the decade due to technical demands, a timeline that left some campaigners disappointed.

Healey told the Guardian that the current system meant an extra shift or small pay rise could leave someone worse off. He said the taper will give carers the freedom to work a little more without suddenly losing all their support. The minimum wage is expected to rise by about 4 percent to 13.20 pounds an hour, with youth rates increasing by a similar amount rather than reaching the full rate.