Carer’s allowance and overpayments: déjà vu

Introduction

As of May 2024, around 135,000 carers collectively owed £251 million to the DWP in overpaid carer’s allowance (CA).1 In 70 per cent of cases, the cause of the overpayment was the carer having earnings above the ‘earnings threshold’ – the amount a carer can earn before losing entitlement to CA.2 Thirty-two per cent of those overpaid were men and 68 per cent women. (Women make up the majority of carers and are therefore more likely to have been overpaid.)

Overpayments on this scale, and for these reasons, are not a new phenomenon. In 2019, the House of Commons Work and Pensions Committee published the findings of its inquiry into overpayments of CA.3 It reported that the DWP estimated that it was overpaying CA by £160 million a year, had been made aware of the issue in 2010 by a whistleblower, but had failed to act.4

Combining work with caring responsibilities

CA is paid to claimants who provide at least 35 hours of care a week for a severely disabled person.5 Payable at a flat rate of £81.90 a week (2024/25 rate), it is not means tested, and so savings and most types of income have no effect on the benefit. Carers should be able to combine part-time work with caring – but the law sets a limit with reference to earnings. Most CA overpayments are caused by earnings. A carer with earnings of up to £151 a week (the ‘earnings threshold’ in 2024/25) can be paid CA for that week. Earnings above the threshold, on the other hand, mean the loss of 100 per cent of CA for that week, however small the excess.

This ‘cliff edge’ earnings threshold is a problem for carers in part-time work, many of whom look for jobs where they can control their own work schedule.

‘[My daughter] always came first, and all of the jobs that I had were always sympathetic, so I would either take unpaid leave or holiday; quite a few of the jobs were flexi-time so I could work around [her] hospital appointments.’6

Earnings

Stable, predictable wages are not a defining feature of part-time employment. Earnings may fluctuate because of zero-hours contracts, shift work or flexible hours being altered at short notice. They may be higher than expected in one or more weeks because of holiday pay, back pay, a bonus, pay rise or employer error. Changes to the national living wage have also had an impact: the number of hours carers can work while receiving the benefit fell from just under 15 hours a week in 2019 to roughly 13 hours in 2024. Carers may also be unaware that they can offset certain expenses against their earnings.

Carers claiming means-tested benefits such as universal credit (UC) are sometimes overpaid for a different reason. Having reported relevant changes to UC or Jobcentre Plus, they were unaware that they nonetheless had to notify the Carer’s Allowance Unit too.

There is little evidence that matters are improving over time. In May 2024, the DWP finally published a report it had provided to Ministers in 2021 on carers’ experiences of claiming CA.6 This revealed that around 10 per cent of carers surveyed had earnings above the threshold. It also published its strategy for tackling fraud, Fighting Fraud in the Welfare System, which includes proposals to reduce overpayments of CA.7 These relate to an ‘enhanced notification strategy’, involving targeted contact with carers by text or email to alert them to potential overpayments. The same methods may be used to invite carers to make contact with the DWP or to notify changes affecting entitlement. If this sounds familiar, it may be because six years ago, while giving evidence to the Work and Pensions Committee’s inquiry into CA, the Director General of Service Excellence at the DWP said that the Department was ‘looking at using text messages to communicate with claimants’.8

The Work and Pensions Committee responds

In its March 2024 report on the adequacy of benefit levels in the UK, the Work and Pensions Committee again took evidence on the administration of CA and the problem of overpayments.9 The Committee noted a disappointing lack of progress since its 2019 report and called on the DWP, as a matter of urgency, to improve the administration of CA. It welcomed the DWP’s proposals to improve communication with claimants but said that changes must be implemented without further delay.

Neither having your cake nor eating it

In July of this year, Carers UK published its own report: Carer’s Allowance Overpayments. The report identifies the reasons carers are overpaid. Given the fact that HMRC provides regular reports to the DWP about claimants’ earnings, it asks why the DWP does not use this information to halt overpayments of CA as soon as they occur. One of the report’s most startling findings concerns how long it can take for a carer to repay a large overpayment: it can take more than 34 years to pay off an overpayment of £20,000, for example.

Some of the carers surveyed said they had cut their working hours or given up employment entirely: the impact of even small changes in earnings caused too much anxiety. Others stopped claiming CA, defeated by their experience of the benefit. They reported increased anxiety and stress, low mood, difficulty sleeping and depression. Some reported feeling suicidal.

The charity’s recommendations included a thorough review of CA and an increase in the earnings threshold, to an amount equivalent to 21 hours a week at the national living wage (£240.24 a week at current levels).

Can they really do that?

The DWP does indeed have the power to recover the majority of the overpayments described. In cases where the carer – innocently or otherwise – did not report earnings above the threshold, recovery is possible on the basis of failure to disclose or misrepresentation.10

Carers who argue that they met their responsibilities by notifying Jobcentre Plus or UC about their earnings will find existing caselaw unhelpful. Separate notification to the office dealing with the benefit concerned (ie, the Carer’s Allowance Unit) is required.11 This leaves asking the DWP to use its discretion not to recover the overpayment. In some cases, a complaint should be considered – for example, where an overpayment resulted from a decision maker failing to act on information provided by the carer. Even if the DWP recovers the overpayment, the carer might be awarded compensation following an investigation by the DWP or because the Independent Case Examiner recommends it.