Raise Carer’s Allowance by £20: note

Central fiscal result

+£1.5bn - Net fiscal impact in 2028-29

Low case: +£1.0bn. High case: +£3.5bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Models raise carer’s allowance by £20 by 2028-29.
• Baseline is current policy or published departmental plans.
• Central case uses published party or official anchors where available.
• Wider manifesto interactions are excluded unless stated.

Affected population

• Affected units are people, firms, households or providers depending on policy.
• Direct exposure follows the manifesto or government target group.
• Indirect exposure includes suppliers, workers, consumers and taxpayers.
• Weakest counts are widened in the low and high cases.

Gross impact

• Published anchor or scenario central is +£1.5bn in 2028-29.
• Gross costs or receipts are adjusted for behaviour and delivery risk.
• Tax, benefit or procurement offsets are separated in the fiscal build-up.
• The range is deliberately wider where implementation detail is thin.

Fiscal build-up, central case

• Gross programme or delivery cost: +£1.7bn
• Tax and receipt offsets: -£0.1bn
• Administration and evaluation: +£0.1bn
• Behavioural and pass-through effects: -£0.2bn

Central net impact: +£1.5bn in 2028-29.

Behaviour and pass-through

• Low case assumes stronger delivery or receipts than central.
• Central case applies moderate behavioural leakage and pass-through.
• High case allows weaker delivery, larger take-up or higher costs.
• Output effects follow incidence, capacity and investment channels.
• Distributional gains do not automatically imply GDP gains.

Phasing

• 2026-27: +£0.2bn. Phased implementation and take-up.
• 2027-28: +£0.8bn. Phased implementation and take-up.
• 2028-29: +£1.5bn. Phased implementation and take-up.
• 2029-30: +£1.5bn. Phased implementation and take-up.

Main source groups

• Chetty, "Moral Hazard versus Liquidity and Optimal Unemployment Insurance" (Journal of Political Economy, 2008): Benefit generosity can affect search behaviour, but liquidity and hardship channels also matter; relevant to welfare changes and conditionality.
• Cutler, "Why Don’t Markets Insure Long-Term Risk?" (Harvard working paper, 1996): Private markets struggle to insure long-term care risks, supporting a role for public insurance; relevant to free personal care.
• Liberal Democrats, "Funding a Fair Deal: Liberal Democrat Manifesto Costings" (2024): Party costings give 2028-29 spending, revenue and investment figures; used as starting anchors, not official costings.
• Liberal Democrats, "For a Fair Deal: Liberal Democrat Manifesto 2024" (2024): The manifesto gives announced policy detail across health, care, housing, taxes and climate; used to define the policy scenarios.