Not retiring: Call for review of Carer’s Allowance overpayments

Many carers go over the earnings threshold for Carer’s Allowance in error. Campaigners say a review of the system and greater understanding of carers’ reality are required.

Woman caring for older relative hugging her, both smiling

 

The news at the weekend was of the many unpaid carers who are being pursued for years by the Department for Work and Pensions for overpayment of Carer’s Allowance, often for going over the earnings limit unknowingly and by very small amounts.

The problem is one that has been known for some time. In 2019 MPs who investigated the issue found the amount and size of overpayments was largely due to administrative failures on the part of the DWP and urged that overpayments due to DWP negligence should be waived. The same year the National Audit Office said that a carer on benefits having to repay a £20,000 overpayment would spend 34 years paying off the debt. DWP says it is up to carers to inform them of any changes in their circumstances, but carers’ representatives say the system is too complicated and the earnings rules too harsh, with some not realising they have breached the earnings limit if, for instance, they get an annual increase in wages or a bonus or do an extra shift.

There is an earnings limit of £151 a week after tax, national insurance and allowable expenses for Carer’s Allowance. Even a small breach leads to the entire benefit being lost and having to be paid back. The carer may not know they have breached the limit and they may not be alerted for some months, leading to a big overpayment bill.

In 2019, the DWP said its new data-matching technology would be able to address this issue, but overpayments remain at very high levels.  Carers UK is one of a number of organisations calling for a wholescale reform and review of Carer’s Allowance, including the level it is paid at [currently just £81.90 a week] and the punishment system for overpayment. They say the wider issue is how unpaid carers are valued and treated by government and by society. They are also calling on the DWP to publish its research on the challenges carer face in claiming benefits.

There are similarities with the way the DWP has treated overpayment of tax credits with many parents facing repayments, sometimes due to errors made by officials. A 2021 report from the debt charity StepChange found 98% of the clients it surveyed struggled to cover essentials because of the deductions they faced for tax credit overpayment, with 59% being forced to borrow money to make up this shortfall.  It said the Department for Work and Pensions’ deductions system needed to catch up with best practice seen in other sectors – particularly given that the circumstances of the people subject to deductions mean that DWP “arguably cannot safely use its current approach without the risk of pushing many of those receiving support into greater hardship”.

It says there has been little progress since on reductions reform, although there is evidence that DWP is re-working its own approach to debt collection outside the deductions system (where overpayments are collected from people no longer receiving benefits to which deductions can be applied) and officials have told them they will follow good practice. Nevertheless, it says there is little transparency on any progress being made. StepChange is calling for deductions for overpayments like Carer’s Allowance to be reduced from the present 15-25% level to 5% of the standard allowance – the same level as deductions for third party debts.

There has been a lot of talk about cracking down on tax fraud. It’s about time the focus was more on those who purposefully dodge tax rather than targeting those at the bottom end of the scale who may mistakenly go over their benefits threshold and trapping them in a terrible cycle of poverty and debt, one because the system is too complex, and two because there is little understanding of the reality of life as a carer.



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