Dr Linda Pickard: Public expenditure costs of carers leaving employment

June 7, 2013

Last week the Women’s Business Council reported that a rise in working women could boost UK economic growth.  Many women leave work because they provide unpaid care for family or friends who have disabilities or problems associated with old age.  Last year, we estimated that nearly 200,000 women have left the labour market in England to provide unpaid care, as well as 120,000 men, at a total cost to the public purse alone of £1.3 billion a year.

These figures are key findings from a study of unpaid care and employment by Linda Pickard, Martin Knapp, Derek King, Margaret Perkins and Nicola Brimblecombe at the Personal Social Services Research Unit (PSSRU) at the London School of Economics and Political Science (LSE).  Funded by the NIHR School for Social Care Research (SSCR), the findings from the study are now available on the PSSRU and SSCR websites.

The starting point of our 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 forgone 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 forgone incomes.  The figure would be higher if receipt of other benefits and lost national insurance contributions on forgone 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).

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.

The next opportunity to hear us present our research on unpaid care and employment is at the British Society of Gerontology Conference at the Oxford University on 11-13 September 2013.

Dr Linda Pickard