The hidden cost of unpaid care: The economic price of locking carers out of work
Carers Trust commissioned Cambridge Econometrics to assess the economic impact of unpaid care in the UK and its implications for individuals, the economy and public finances.
The analysis, funded by the Standard Life Centre for the Future of Retirement, explored how unpaid carers’ partial or total disengagement from paid employment affects government tax revenues, welfare expenditures, carers’ own incomes, and the wider economy. As part of the study, Cambridge Econometrics developed a bespoke tool to estimate the return on investment (ROI) of programmes that support unpaid carers into employment.
These insights are aimed to help policymakers better understand the economic value of supporting unpaid carers, strengthening the case for effective interventions that enable carers to remain in or return to work.
Approach
We developed a structured and transparent approach, giving Carers Trust the tools and evidence to engage policymakers.
Specifically, we:
- developed a bespoke tool to estimate the ROI of programmes that support unpaid carers into employment
- focused on estimating the opportunity costs of unpaid carers not participating in paid employment
- quantified impacts on individuals’ earnings, government tax revenues and welfare payments
- assessed the wider economic impacts of reduced household income
- examined impacts across different demographic groups, including sex and age.
Economic impact analysis
The findings highlight an economic rationale for investing in social care and policies that better support carers’ access to employment. Addressing carers’ barriers to employment could deliver considerable returns to both the Exchequer and the wider economy.
Interventions, including flexible working, carers’ leave, affordable care services, and targeted employment support, are essential not only for improving carers’ wellbeing, but also for unlocking their full economic lifelong potential. Without such measures, economies risk losing the contribution of individuals with valuable skills and experience who are unable to participate in the workforce due to their unpaid caring responsibilities.
Key findings
Around 6 million unpaid carers in the UK in 2023, including 2.7 million not in work and 524,000 of working age who could potentially participate in the labour market.
The opportunity costs include
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Reduced welfare payments (£0.6 billion - £2.8 billion)
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Increased household income (£4.6 billion - £10.1 billion)
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Increased Income Tax and National Insurance contributions (£0.3 billion - £4.0 billion).
Impacts are particularly pronounced among women, and among individuals aged 25-64, reflecting peak earning potential.
The opportunity cost of non-working unpaid carers is estimated to be between £5.4 billion - £16.9 billion, depending on earnings assumptions.
Wider economic impact includes £2.5 billion - £7.2 billion in forgone GVA and £170 million - £494 million in lost VAT revenues.
Supporting unpaid carers into employment could deliver significant benefits, including:
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Higher household earnings
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Increased tax revenues
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Reduced reliance on welfare
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Stronger overall economic growth.
Outcomes
The analysis provided the charity with a bespoke economic tool and compelling evidence to help drive policy change for carers across the UK.
The tool has been widely welcomed by Carers Trust’s Network Partners.
Findings have been shared with policymakers, including at a parliamentary event.
The work aims to support ongoing efforts to promote flexible working, carers’ leave, and investment in social care.
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