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Martin Lewis: 'Chancellor – will you end the awful cliff-edge on Carer's Allowance that means you earn 1p over £151 and you lose £80 a week?'

MoneySavingExpert.com founder Martin Lewis has grilled the Chancellor Jeremy Hunt on whether he'll fix the Carer's Allowance "cliff-edge" that causes people to lose their entitlement when they earn just a penny over the threshold. The interview took place just before the general election was called last week.

Watch: Clip from ITV's Good Morning Britain – Wednesday 22 May 2024

Embedded YouTube Video

From ITV's Good Morning Britain on Wednesday 22 May 2024, courtesy of ITV. All rights reserved. Watch the full episode on ITVX.

For more information on what support is available for carers, see our Carers Credit and Carer's Allowance guide. If you're claiming Carer's Allowance and you think you may be earning over £151 a week, contact the Department for Work and Pensions as soon as possible.

Transcript of what Martin said on the show…

Here's a direct transcript of what Martin said, though we've split it into sections for ease. 

Martin calls the Carer's Allowance cliff-edge 'nonsense' and asks if the Chancellor will address it

Martin Lewis: "Chancellor, I want to shift to an issue that's affecting a lot of people, some of the backbone of this country, our carers. There's a benefit called Carer's Allowance. You get a too-small £80-odd a week if you get Carer's Allowance – but if you earn over £151, a penny over £151, you lose that benefit.

"130,000 people who have gone over by a little bit are seeing it clawed back. It is a ridiculous benefit. Most benefits work by a taper. If you go over the allowance, you lose a little bit for each amount you go over the allowance. This is a cliff-edge.

"You may have a fiscal event in October. Will you fix the nonsense of Carer's Allowance that means you lose the entire benefit for going a penny over? It's a disincentive to work. It's a disservice to carers in this country who are the backbone and basically cut the cost of the NHS and the state. You know, I'm sure you know about the issue. Are you going to fix it?"

Jeremy Hunt: "Well thanks, Martin. The first thing I would say is I absolutely agree with you that carers do an incredibly important job. They save the NHS billions of pounds. They do. They have really, really big responsibilities and we are right to support them.

"We are now looking into the system that makes sure that people don't unintentionally claim it when they're not entitled to it. That is the right thing to do because although it's a very important benefit, it is paid for – hang on let me finish – by other taxpayers, and so it's only fair to other taxpayers that we pay it to the people who are entitled.

"And that's why we are reviewing the system. There's a change in the processes to try and make sure that happens."

The Chancellor says he will look into 'all measures' that encourage people back to work

Martin: "Will you review the cliff-edge as well, Chancellor?"

Mr Hunt: "Of course, to answer your bigger question – do I want to, to answer your bigger question, do I want to make sure that we remove cliff-edges in the tax system and the benefits system that stop people wanting to work? Yes, and that's why I did something that you've been campaigning for, which is increase, the threshold at which you have to pay back Child Benefit, the High Income Child Benefit charge from £50,000 to £60,000.

"So, of course, we'll continue to look at all measures that encourage people to get back into work."

Martin: "Chancellor, we really appreciate your time. I shall send you a paper on the Carer's Allowance cliff-edge. I hope you will read it. You did on Child Benefit and I appreciate that. Thank you for joining us this morning."

Mr Hunt: "Thank you."

Martin explains how people can accidentally build up Carer's Allowance overpayments

Martin's co-host Susanna Reid: "Very interesting that he turned that question about that taper versus a cliff-edge for Carer's Allowance into saying there are people who are claiming Carer's Allowance who shouldn't be."

Martin: "So there are two issues going on here. So you heard what I said. With a little bit more time, people will understand, we only have a limited amount of time with the Chancellor.

"What the cliff-edge means is normally in most benefits, if you earn £1 above a threshold, you might lose 20p of your gain type thing. Here you earn a penny over the threshold. You lose the whole £80.

"Now, I had – I was going to read out, we didn't have time – I'm going to read you one from Helen Nelen on Twitter. Got in touch with me: "My dad is blind. His wife is his carer and works 13 hours a week, minimum wage. She's been told she owes £5,000 and it's going to be taken. Her worst offence: working 50 minutes over because others didn't turn up for work. Government going after easy prey with no voice".

"138,000 people are having a claw back on Carer's Allowance, often because minimum wages went up and they didn't realise it pushed them over the threshold. A penny over the threshold, you lose the whole amount and they are claiming it back.

"So he's [Mr Hunt] saying they're looking into the clawback system, which clearly doesn't work. But the reason the clawback happens is because there's a cliff-edge and that is an unfair form of benefits, an unfair form of tax. It doesn't work on other benefits. It needs to be changed. We put it under his nose, let's hope if there's another fiscal event and I'll write to the Shadow Chancellor as well on the same issue."

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