Carer’s Allowance overpayment debt up by £100 million since 2018

Outstanding Carer’s Allowance overpayment debt has risen to more than £250 million, up by £100 million on six years ago, according to a new report.

The public spending watchdog said the number of people with outstanding overpayment debt has risen every year since 2018, and is up by almost three quarters from 80,169 people to 136,730 in 2023/24.

The issue of carer’s allowance overpayment is already the subject of a Government-ordered review, due to report to ministers by summer next year.

Overpayments

Historic overpayments have led to many carers – who must earn £151 a week or less to qualify for the allowance – unwittingly racking up unmanageable levels of debt and some quitting their jobs as a result.

The issue of people being penalised for going over their earnings limit for carer’s allowance even by as little as a few pence per week has previously been branded a “scandal” by charities.

The earnings threshold will rise to £196 a week from April.

The National Audit Office (NAO), in a report published on Wednesday covering England, Scotland and Wales, said the Department for Work and Pensions (DWP) paid £3.7 billion in Carer’s Allowance to over 900,000 claimants in 2023/24.

Cliff edge

The NAO noted the so-called “cliff edge” created by the current rules, meaning a claimant – who by law must inform DWP promptly if their circumstances change – is either entitled to the whole allowance or none of it, and said this can “quickly build up significant overpayments”.

The report stated: “This means it is important to identify an overpayment early or, better still, prevent it from occurring.”

Total outstanding overpayment debt in 2023-24 amounted to £251.7 million, up from £150.2 million in 2018-19 but down slightly from £252.7 million in 2021/22, the NAO said.

There were between 32,500 and 60,800 new Carer’s Allowance overpayments each year between 2018/19 and 2023/24, with claimants having earnings exceeding the threshold accounting for 57.6% of overpayment cases detected in the past year.

The department recovered £47.3 million in Carer’s Allowance debt in 2023/24, up from £19.6 million in 2018/19, and wrote off £9.1 million in debt compared to £2.7 million in 2018/19.

The NAO said DWP can write off debt if it assesses there is no realistic possibility of recovering it, and where a claimant has been dead for more than two years.

Referrals

Referrals for prosecution for overpayments fell over the past six years, as did administrative penalties, while civil penalties of £50, where DWP judges someone to have been negligent in failing to provide accurate information, rose by half.

There were 54 overpayment cases which DWP referred for prosecution in 2023/24, down from 246 in 2018/19.

Administrative penalties, as an alternative to prosecution, numbered 75, down from 774 in 2018/19.

There were 30,129 civil penalties, up by around 50% from 20,023 in 2018-19, the NAO said.

The Government, having announced its review in October, has said it is committed to learning lessons and getting to grips with the issues around overpayments.

The review will look at overpayments, what changes can be made to reduce the risk of such overpayments in future and what the department can do to support carers who have already accrued debts.

Helen Walker, chief executive of Carers UK said the report is “yet further evidence of a broken system that is failing unpaid carers”, and described the rise in the number of people with outstanding debts as “a serious failure which has left thousands of carers experiencing emotional distress and financial hardship for years”.

She added: “Any recommendations and changes that come from the forthcoming independent review should be implemented by Government as soon as possible once it reports next summer to prevent as many overpayments as possible from happening in the first place, as well as reducing the size of the debts for unpaid carers, who are often suffering financial hardship.”

Ruinous debts

Carers Trust’s director of policy and public affairs, Dominic Carter, said the report showed “far too many people are being allowed to rack up ruinous debts because of the broken Carer’s Allowance system”.

They welcomed overpayments being identified more quickly but said while the review is ongoing, “repayment demands must be stopped to prevent tens of thousands more carers falling foul of an evidently flawed system”.

The charity called for a “complete overhaul” of an allowance system it described as “overly complicated” and “outdated”.

Minister for Social Security and Disability, Sir Stephen Timms, said: “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.

“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.”