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The National Audit Office (NAO) has revealed that debt from Carer’s Allowance overpayments has exceeded £250m in the past year, an increase of £100m since 2018/19. The charity Carers UK called this report “further evidence of a broken system that is failing unpaid carers”. In October, the UK government initiated an independent review of overpayments, following severe financial hardship for some carers who were forced to pay back thousands of pounds.
Last year, the Department for Work and Pensions (DWP) distributed £3.7bn in Carer’s Allowance to over 900,000 claimants. The eligibility criteria for the allowance include caring for someone with an illness or disability for at least 35 hours each week, with a maximum threshold of earning £151 per week. Starting from April, the threshold will increase to £196 per week. There will be no taper rate for those earning £1 above the threshold, resulting in disqualification from the payment.
The NAO report identified that the eligibility criteria created a “cliff-edge”, leading to substantial overpayments that accumulated rapidly. The DWP faced criticism as despite its systems flagging when a claimant is earning too much, the department still failed to prevent overpayments. Some carers were not aware that they exceeded the threshold until years later, resulting in overpayment debts in the thousands of pounds.
Claimants earning above the permitted limit accounted for 58% of new overpayment cases last year, while other reasons for overpayments included the claimant’s cessation of care provision. The NAO stated that while the number of people with outstanding overpayment debts increased by 71% since 2018/19, the average value of new overpayments discovered by the DWP has decreased in the past four years, indicating earlier detection of overpayments.
The DWP aims to recover all benefit overpayments where a legal basis exists to do so, except in cases where it would cause financial hardship or be impractical. If it considers that an overpayment was fraudulent, the department can also prosecute, as occurred in 54 instances last year. The DWP can also offer an “administrative penalty” of £350 or 50% of the overpayment, up to a maximum of £5,000. The number of administrative penalties decreased substantially from 774 in 2018/19 to 75 in 2023/24. In contrast, there was a rise in the number of civil penalties of £50 from 2018/19, with 30,129 imposed last year, up 50%.
The government-mandated review will examine the steps to decrease the risks of overpayments and assist carers who have already accumulated overpayment debts. The review will report back by the next summer. Hannah Walker, the chief executive of Carers UK, emphasized the urgency in implementing any recommendations from the review. Dominic Carter, the director of policy and public affairs at Carers Trust, called for a comprehensive overhaul of the system as it is both “overly complicated” and “outdated”. Sir Stephen Timms, the minister for Social Security and Disability, expressed his support for carers and the independent review
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