Five years ago the Tory MP Nigel Mills asked one of Whitehall’s most senior civil servants whether he would apologise for the fact that “many thousands” of unpaid carers were in hardship because official failures had landed them with huge debts running into tens of thousands of pounds.
Mills’s directness reflected an undercurrent of shock among MPs on the work and pensions select committee. Tipped off by a whistleblower, and an article in the Guardian, it had begun an inquiry into why so many carers, claiming relatively trivial amounts of carer’s allowance, were being effectively accused of benefit fraud.
Two months later the committee issued a scathing judgment: there was no evidence of mass fraud; rather, the surge in tens of thousands overpayments to carers – which led to hefty penalties imposed on them for often minor breaches of rules on how much they can earn – was largely the fault of the Department for Work and Pensions (DWP).
Administrative failures at the department meant carers who claimed the government allowance, but who also worked part-time and failed to realise they earned more than the strict weekly earnings limits (currently £151), were being heavily and unfairly penalised. These were mainly “honest mistakes”. Worse still, the DWP could have identified these breaches at an early stage, but didn’t.
The failure to spot earnings breaches for months or even years meant the amount carers were overpayed would typically grow to between £1,000 and £5,000 and in extreme cases to more than £40,000. At some point, the DWP would contact the claimant, tell them the earnings breach was their fault and demand they repay the sums or face prosecution.
The amounts were so big in part because of an oddly anachronistic carer’s allowance design quirk. If claimants breached earnings limits for a week by just £1, they would have to repay to the DWP the entire week’s allowance (currently £81.90). A 26-week breach then, would result in a “cliff edge” repayment of not £26, but £2,182.
At the time, the then chair of the committee, Frank Field, caught the essence of MPs anger at this injustice in an article for House magazine in which he accused the DWP of “shocking ineptitude” and “bullying” carers. The DWP, he said, “was all too divorced from human and economic reality”.
Peter Schofield, the DWP permanent secretary, did not apologise to MPs, and did not accept that carers were being pushed into hardship by the repayments. He was, however, keen to say help was at hand: new technology would put an end to the overpayments “in some cases before they happen”.
Sadly for carers, the technological solution suggested by Schofield appears not to have worked. Despite the introduction of the verified earnings and pensions tool (known as VEP) the number of overpayments (26,700 in 2022-23) and the amounts repaid (36 that were more than £20,000, and 835 of between £5,000 and £20,000) remains brutally high.
Although the data-matching VEP technology used by the DWP issues thousands of alerts a month identifying when a carer’s earnings rise above the limit – often through a pay rise or a new job – less than half are investigated. Five years ago, MPs blamed understaffing issues for the failure to undertake timely checks, and it seems this area is still woefully under-resourced.
The DWP says it is not responsible for overpayments, that it is legally incumbent on claimants to notify any changes in their earnings that take them over the limit. Critics say the DWP is in denial about its part in the misdirection of tens of millions in taxpayers’ money each year, and the human misery caused when it tries to recover it.
Questions remain about why the DWP insists on prosecuting carers for overpayments cased by earnings breaches, even where they agree to repay the sums. Key criteria for referral to the courts include the sum recoverable being more than £5,000, evidence of premeditated or organised fraud and previous conviction for benefits fraud.
A trawl of recent court cases reported by local media suggests many of the carer’s allowance fraud prosecutions are not clearcut. As the magistrate noted in one recent case involving the conviction of a carer relating to a £6,000 overpayment: “We think it’s been one of those things where it [the earnings breach] has been an oversight [by the carer].”
The problems with carer’s allowance have been known for two decades, so it seems strange governments that say they want to encourage carers back into the labour market – and prevent employees from giving up work entirely when they start caring – fail to overhaul a benefit that critics say so easily impedes part-time working, and so often brutally punishes carers when they do try to work.
Prof Sue Yeandle, an expert in care and work at the University of Sheffield, called for a fundamental overhaul of carer’s allowance, simplifying it and making it more generous. “A benefit which so many people fall foul of is basically telling you its badly designed,” she said.
