Britain's fragile economy is losing more than £5bn a year as a result of a growing crisis in social care funding aggravated by the Government's austerity measures.
People are giving up an estimated £4bn in pay – cash that would have been channelled back into the economy – because they are being forced to leave work to care for elderly or disabled relatives. The Treasury is also missing out on £1bn of taxes they would otherwise have paid, while carers are claiming some £300m in benefits to help cover their living costs.
The "missing" £5.3bn is equivalent to more than 0.3 per cent of Britain's gross domestic product, charities warned last night. More than 300,000 people quit work in 2010-11 to look after relatives – and the number is increasing because of continuing cuts to care budgets, they said.
The extent of the losses to the economy was disclosed in a report from Age UK and Carers UK, building on work by the London School of Economics. They said the problem would worsen unless ministers reversed cuts to town hall budgets that were affecting services, and finally acted to settle the long-term funding of social care.
Social services chiefs estimate that care budgets have been trimmed by £1.9bn in two years in England – at a time when numbers of old people continue to rise – with the result that eligibility rules are being tightened and care charges are rising. Critics have also complained of a "care lottery", with widely varying levels of provision in different parts of the country.
They say the funding shortfall will increase, leaving elderly people who do not have relatives to care for them trapped in their homes.
A recent survey by The Independent found that councils were cutting spending on the vulnerable by up to 10 per cent, forcing them to shut care homes and make social workers redundant.
Michelle Mitchell, the charity director general of Age UK, said: "Social care is being whittled down to the bone, resulting in families having to make agonising choices between earning a much-needed wage and leaving work to take on the role of full-time carer."
She added: "Further delays to reform the funding of the social care system will not only compromise the health and dignity of older and disabled people, but may well contribute towards stalling growth to the economy."
Helena Herklots, chief executive of Carers UK, said: "The national crisis in care is not just bringing a high personal cost to families – it is costing the UK billions. The crisis is costing businesses and the economy hundreds of thousands of workers and the loss of their skills, tax contributions and spending power often because their families just cannot rely on support from the social care system to help them juggle work and care."
Liz Kendall, the shadow Social Care minister, said: "Our failing care system is harming the economy because unpaid family carers are being forced to quit their jobs or work reduced hours because they can't get the help they need.
"The Government is completely out of touch with the care crisis. It needs to wake up and understand how improving care for older people and their families will boost our economy too."
Meanwhile, ministers continue to agonise over how to implement proposals by the economist Andrew Dilnot for a cap of £35,000 on the care costs individuals can face in their lifetimes.
Mr Dilnot also proposed action to stop people having to sell their family homes by raising the "asset threshold" over which people would have to contribute to the cost of their residential care from £23,350 to £100,000.
His recommendations were initially put on ice following dismay in the Treasury over their potential annual cost of £2bn.
A spokesman for the Department of Health said: "This Government is taking real action to help carers have a life outside of caring and remain in employment. Helping families to stay in work alongside caring not only helps carers' careers and family finances but is crucial for our workforce and economy."
"We have committed to give carers the right to request flexible working and as part of our reforms of social care are working with employers, academics, the voluntary sector and carers themselves to explore ways in which those who give care can be further supported in employment."
Case study: Financially, it's a struggle
Lee Murray, 53, lives in Dudley in the West Midlands. He is a full-time carer to his wife and son Edward, 24, who has Angelman syndrome.
"Edward can't read or write and his communication is limited. He has no sense of danger and he's lively– so you always have to watch him. About 10 years ago, my wife took ill with rheumatoid arthritis. I was made redundant, and became his full-time carer. At first I felt ashamed. I was an engineer for 26 years and I didn't want say I was on benefits. Financially, it's a struggle. I get £55.20 a week.
This is 24-7 – it's not something you can just walk away from."