Ministers are to review carer’s allowance overpayments after the Guardian revealed tens of thousands of unpaid carers were being forced to collectively pay back millions of pounds – and in some cases faced criminal prosecution – for unwitting and often minor breaches of benefit rules.
What are the issues the independent review will need to look at, and what options may be available to fix the problems?
The problem: ‘Cliff edge’ earnings penalties
Perhaps the aspect of the scandal that has shocked readers the most has been the draconian penalty imposed on carers who breach the strict £151-a-week earnings limits. Overstepping the limit even by just one penny requires the entire £81.90 benefit to be paid back. So a carer who earned £1 over the threshold for 52 weeks would be forced to pay back not £52 but £4,258.80. Some carers say fear of being hit by overpayments has caused them to stop work.
Potential fixes: Campaigners have argued that a taper should be applied to earnings over the £151 limit, universal credit-style, so that carers who earn over the limit see reductions in their allowance rather than losing it entirely. Officials argue modernising the benefit in this way would be complex, costly and time-consuming.
The problem: Department for Work and Pensions administrative failures
One of the most alarming aspects of the overpayments scandal has been what the late MP Frank Field called “shocking ineptitude” in the DWP’s handling of carer’s allowance. Although the DWP receives electronic alerts from HMRC when a carer has potentially breached earnings limits, it checks only around half of these alerts. As a result, carers can be left for months running up overpayment penalties when the breach could have been spotted and investigated almost immediately. The DWP boasted in 2019 that the alerts would make overpayments a thing of the past – this didn’t happen.
Potential fixes: Hire more staff to ensure all alerts are properly checked – campaigners argue that a properly staffed carer’s allowance unit should be able to spot and investigate potential earnings breach alerts immediately, in theory eradicating almost all overpayments, and saving the DWP millions.
The problem: Restrictive earnings limits.
The carer’s allowance earnings limit is £151 a week, which is equivalent to just over 13 hours at the minimum wage. Carers say this is too restrictive: higher earners are limited to even fewer hours, and many say they have had to work extra hours for free or hand back bonuses to stay under the limit and avoid being penalised. Carers have also been caught when the earnings limit in carer’s allowance is uprated at less than the minimum wage – pushing unsuspecting carers over the limit even when the number of hours they work each week doesn’t change.
Potential fixes: Carer’s UK says extending the earnings limit to 21 hours a week (£240 a week at the national minimum wage) would enable more carers to work more hours without fear of being penalised. More generous earnings limits would help more carers stay in work. It would be positive for the economy and good for carers’ finances and mental wellbeing, and fewer carers would run up overpayments. The earnings limit could be linked to increases in the national minimum wage.
The problem: DWP staff treatment of carers
A common complaint from carers is they are treated “like criminals” by DWP staff, even when they admit to an oversight and offer to repay overpayments. Some have spoken of being reduced to tears by officials and feeling harassed and bullied. Others say dealing with the DWP can be frustrating – like being lost in a bureaucratic maze whose component parts don’t always share vital information.
Potential fixes: Corporate culture change is hard, and the DWP would argue it needs to be robust in its duty to prevent potential fraud. Campaigners say the DWP should and could be more empathetic and compassionate. Some argue the DWP should be subject to the same fairness rules as the consumer finance sector when treating vulnerable carers who have incurred overpayments
The problem: Being penalised for getting a performance bonus or a pay rise
Some carers complain they are punished if they are paid a one-off sum – for example, an annual bonus, holiday pay, or back pay – because it is counted as an earnings breach for a particular week, rather than income that should be spread over a year. Others say they are unfairly discriminated against for having fluctuating weekly earnings – they are at more risk of being penalised than claimants with regular monthly salaries because they cannot average out earnings.
Potential fixes: Clarify the rules on averaging earnings and expenses disregards, and allow carers more choice in how their income is spread.
Is the independent review wide enough in scope?
The terms of reference for the review have not been published yet. Some campaigners fear it may be too focused on ending overpayment horror stories at the expense of much-needed wider reform to carer benefits and support. Some want it to consider whether £250m of existing overpayment penalties should be written off. Others want it to examine stopping the criminal prosecution of carers for inadvertent breaches of earnings limits. Many want it to assess whether the rate of carer’s allowance – currently £81.90 a week, the UK’s lowest benefit – should be increased.
