Carer's Allowance debt rises to £250m as hundreds of thousands affected by overpayments

According to a new report, the outstanding debt from Carer’s Allowance overpayments has surged to more than £250 million, marking an increase of £100 million compared to six years ago.

The public spending watchdog highlighted that the number of individuals with outstanding overpayment debt has been on the rise annually since 2018, with figures soaring by almost three quarters from 80,169 people to 136,730 in the fiscal year 2023/24.

A Government-ordered review is currently underway, set to present its findings to ministers by the summer of next year. Many carers, who are required to earn £151 a week or less to be eligible for the allowance, have inadvertently accumulated unsustainable debt levels, leading some to leave their jobs.

Charities have previously condemned the penalisation of carers for exceeding their earnings limit for the allowance by even marginal amounts per week as a "scandal". From April, the earnings threshold for carer's allowance will increase to £196 a week.

The National Audit Office (NAO), in its Wednesday report covering England, Scotland, and Wales, stated that the Department for Work and Pensions (DWP) disbursed £3.7 billion in Carer’s Allowance to over 900,000 claimants in 2023/24. The NAO pointed out the existing "cliff edge" effect of the rules, which stipulate that a claimant must promptly inform the DWP of any changes in circumstances, resulting in entitlement to either the full allowance or none at all, thereby potentially leading to significant overpayments.

The report highlighted the urgent need for identifying or preventing overpayments, with the statement: "This means it is important to identify an overpayment early or, better still, prevent it from occurring."

The National Audit Office (NAO) revealed that total outstanding overpayment debt in 2023-24 reached £251.7 million, a rise from £150.2 million in 2018-19, but a marginal decrease from £252.7 million in 2021/22. It continued to report on the occurrence of new Carer’s Allowance overpayment cases annually between 2018/19 and 2023/24, ranging between 32,500 and 60,800, with the majority of these overpayments—57.6% detected last year—being due to claimants having earnings over the threshold.

Helen Walker, Carers UK's chief executive, called the report "yet further evidence of a broken system that is failing unpaid carers" pointing out the troubling increase in individuals with outstanding debts as "a serious failure which has left thousands of carers experiencing emotional distress and financial hardship for years".

Minister for Social Security and Disability, Sir Stephen Timms, has responded by recognising the urgent need: "This report sets out the scale of the challenge and underlines the importance of our independent review into overpayments so we can make the system fairer for thousands of selfless carers."

Sir Timms also highlighted the government's efforts to assist carers, stating: "Carers deserve to be supported, which is why we are boosting the earnings threshold, benefiting more than 60,000 people, while our review will get to the bottom of the problem so we can protect carers from unfair debt and protect taxpayers’ cash."