Carer’s Allowance Overpayment Debt Reaches £250 Million

Outstanding liabilities stemming from Carer’s Allowance overpayments climbed to over £250 million last year, as reported by the government’s financial oversight body. The National Audit Office (NAO) indicated that this sum had increased by £100 million since the 2018/19 period. Carers UK, a charitable organization, stated that the report provided “further evidence of a broken system that is failing unpaid carers”. In October, the government initiated an independent review into these overpayments, following instances where some carers were compelled to repay thousands of pounds, leading to significant financial distress for many. According to the NAO’s report, the Department for Work and Pensions (DWP) disbursed £3.7 billion in Carer’s Allowance to more than 900,000 claimants during the previous year. Individuals who dedicate a minimum of 35 hours weekly to caring for someone with an illness or disability may qualify for this allowance, which is currently set at £81.90 per week. To be eligible, a person’s earnings must not surpass £151 weekly. This income threshold is scheduled to increase to £196 per week starting in April. Should a carer’s earnings exceed this amount by even a single pound, there is no gradual reduction (taper rate), and they lose all eligibility for the payment. The NAO characterized this as creating a “cliff-edge,” which allows substantial overpayments to accumulate rapidly. Claimants are legally obligated to promptly inform the DWP of any changes in their circumstances. However, the department has drawn criticism for its failure to prevent these overpayments, despite its internal systems being capable of flagging when a claimant’s earnings are too high. Some carers have informed the BBC that they were unaware of having surpassed the earnings limit until they were notified years later, by which point the amounts owed had grown into thousands of pounds. Last year, claimants earning above the permissible limit accounted for 58% of new overpayment cases. Other factors contributing to overpayments include the claimant no longer providing care, such as in cases where the person being cared for has passed away. Approximately 136,730 individuals had outstanding overpayment debt last year, marking a 71% rise compared to 2018/19. Nevertheless, the NAO noted that the average value of new overpayments identified by the DWP has decreased over the past four years, suggesting that these issues are being detected earlier. The DWP endeavors to recover all benefit overpayments where a legal basis exists, unless doing so would cause financial hardship or prove not to be cost-effective. The department also has the option to refer cases for prosecution if it deems an overpayment to be fraudulent, a course of action taken in 54 cases last year. Alternatively, it can impose an “administrative penalty” of £350 or 50% of the overpayment, whichever is greater, up to a maximum of £5,000. The number of administrative penalties has significantly declined in recent years, from 774 in 2018-19 to 75 in 2023-24. Concurrently, there has been an increase in the application of civil penalties of £50, with 30,129 imposed last year, representing a 50% increase from 2018-19. The government-commissioned review, tasked with examining methods to mitigate overpayment risks and provide assistance to carers who have already incurred debts, is expected to deliver its findings by next summer. Helen Walker, chief executive of Carers UK, urged that any recommendations emerging from the review be implemented without delay. Dominic Carter, director of policy and public affairs at Carers Trust, advocated for a “complete overhaul” of the allowance system, characterizing it as “overly complicated” and “outdated.” Sir Stephen Timms, Minister for Social Security and Disability, commented: “This report sets out the scale of the challenge and underlines the importance of our independent review into overpayments so we can make the system fairer for thousands of selfless carers.” Sir Stephen Timms further added: “Carers deserve to be supported, which is why we are boosting the earnings threshold, benefiting more than 60,000 people, while our review will get to the bottom of the problem so we can protect carers from unfair debt and protect taxpayers’ cash.” Sir Ed Davey, leader of the Liberal Democrats, stated that the situation had caused “misery and distress” and called upon ministers to suspend repayment demands until the review concludes. He remarked: “I’m glad that campaigners were able to secure a review into this scandal, but it cannot be right to keep pursuing tens of thousands of carers for repayments while that review does its work.”