Outstanding debt from Carer’s Allowance overpayments has soared by over £100 million in the past six years, according to a recent report. The National Audit Office (NAO) revealed that the number of individuals with outstanding overpayment debt has been increasing annually since 2018, rising by almost 75% from 80,169 to 136,730 in 2023/24.
This issue has caught the attention of the Government, with a report expected to be presented to ministers by the next summer. Many carers, who are required to earn £151 or less per week to qualify for the allowance, have found themselves accumulating unmanageable debt due to historical overpayments, forcing some to give up their jobs.
Charities have criticised the penalty for exceeding the earnings limit, even by a small amount per week, describing it as a “scandal”. To address this, the earnings threshold for the allowance will be raised to £196 per week starting in April. In 2023/24, the Department for Work and Pensions (DWP) paid out £3.7 billion in Carer’s Allowance to over 900,000 claimants, as reported by the NAO.
The NAO also highlighted the existing “cliff edge” in the current rules, where claimants are either entitled to the full allowance or none at all, resulting in significant overpayments. To mitigate this, it is crucial to identify overpayments early on or prevent them from occurring in the first place.
The total outstanding overpayment debt in 2023/24 reached £251.7 million, up from £150.2 million in 2018/19 but slightly lower than £252.7 million in 2021/22. Between 32,500 and 60,800 new Carer’s Allowance overpayment cases emerged annually from 2018/19 to 2023/24, with claimants surpassing the earnings threshold accounting for 57.6% of overpayment instances identified last year.
Despite the challenges, the DWP reclaimed £47.3 million in Carer’s Allowance debt in 2023/24, a significant increase from £19.6 million in 2018/19, and wrote off debts amounting to £9.1 million compared to £2.7 million in 2018/19. The DWP has the discretion to write off debt when there is no realistic chance of recovery, particularly for cases involving claimants who have been deceased for over two years.
In response to the report, the Government announced a review last October, emphasizing a commitment to rectifying past mistakes and addressing overpayment concerns. The forthcoming review aims to assess the current overpayment situation, suggest potential changes to prevent future risks, and explore ways the department can support carers burdened with debt.
Helen Walker, Chief Executive of Carers UK, expressed concern over the increasing number of individuals with outstanding debts, describing it as a “serious failure” that has left many carers in emotional distress and financial hardship for years. She urged the Government to swiftly implement any recommendations from the review to prevent further overpayments and reduce the financial burden on unpaid carers.
Dominic Carter, Director of Policy and Public Affairs at Carers Trust, echoed the need for urgent action, stating that the current system allows too many individuals to accumulate debilitating debts due to flaws in the Carer’s Allowance scheme. While the review is ongoing, Carter stressed the importance of halting repayment demands to prevent more carers from falling victim to a faulty system.
Sir Stephen Timms, Minister for Social Security and Disability, responded to the report by acknowledging the scale of the challenge and highlighting the need for a fairer system for carers. The Government aims to protect carers from unfair debt while ensuring taxpayers’ money is safeguarded through the ongoing independent review.
The road ahead involves a concerted effort to overhaul the Carer’s Allowance system, simplify its complexities, and provide effective support to those in need. The Government’s commitment to addressing these issues is crucial to ensuring the well-being of carers and upholding fairness in the welfare system.