DWP Carer's Allowance debt soars to £250m as 'scandal' impacts thousands

Overpaid Carer's Allowance debt has soared to a staggering £250 million. This is a huge £100 million increase in six years, a new report has said.

The public spending watchdog highlighted the trend which shows that the number of individuals with outstanding overpayment debt has consistently climbed since 2018, surging by nearly three-quarters from 80,169 to 136,730 in the 2023/24 period.

The issue of carer's allowance overpayment is already the subject of a Government-ordered review, due to report to ministers by summer next year. Historic overpayments have led to many carers unwittingly racking up unmanageable levels of debt and some quitting their jobs as a result.

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Carers must earn £151 a week or less to qualify for the allowance and charities have previously condemned the penalisation of carers for exceeding their earnings limit by mere pennies per week as a "scandal".

From April, the earnings threshold for Carer's Allowance will be increased to £196 a week. The National Audit Office (NAO), in a report published on Wednesday covering England, Scotland and Wales, said the Department for Work and Pensions ( DWP ) paid £3.7billion in Carer's Allowance to over 900,000 claimants in 2023/24.

The NAO noted the so-called "cliff edge" created by the current rules, meaning a claimant – who by law must inform DWP promptly if their circumstances change – is either entitled to the whole allowance or none of it, and said this can "quickly build up significant overpayments".

The report highlighted: "This means it is important to identify an overpayment early or, better still, prevent it from occurring." Total outstanding overpayment debt in 2023-24 amounted to £251.7million, up from £150.2million in 2018-19 but down slightly from £252.7million in 2021/22.

Between 2018/19 and 2023/24, there were between 32,500 and 60,800 new Carer’s Allowance overpayment cases annually. In the past year, 57.6% of detected overpayments involved claimants exceeding the earnings threshold, The Express reports.

The DWP recovered £47.3million in Carer’s Allowance debt in 2023/24, a significant increase from £19.6 million in 2018/19. Additionally, £9.1 million in debt was written off, compared to £2.7 million in 2018/19. The NAO noted that the DWP may write off debt if it determines there is no realistic chance of recovery or if a claimant has been deceased for more than two years.

Over the past six years, referrals for prosecution related to overpayments and administrative penalties have declined. Civil penalties of £50 which are issued when the DWP determines a claimant was negligent in providing accurate information have increased by 50%.

And just 54 overpayment cases saw referral for prosecution in 2023/24, plummeting from 246 in 2018/19.Administrative penalties introduced as an alternative to court action fell to just 75, down from 774. Civil penalties skyrocketed to 30,129, a jump of around 50% from 20,023 in 2018-19.

Helen Walker, chief executive of Carers UK said the report is "yet further evidence of a broken system that is failing unpaid carers", and described the rise in the number of people with outstanding debts as "a serious failure which has left thousands of carers experiencing emotional distress and financial hardship for years".

She added: "Any recommendations and changes that come from the forthcoming independent review should be implemented by Government as soon as possible once it reports next summer to prevent as many overpayments as possible from happening in the first place, as well as reducing the size of the debts for unpaid carers, who are often suffering financial hardship."

Carers Trust's director of policy and public affairs, Dominic Carter, said the report showed "far too many people are being allowed to rack up ruinous debts because of the broken Carer's Allowance system".

With acknowledgement that quicker identification of overpayments is in progress, they argued that during the ongoing review, "repayment demands must be stopped to prevent tens of thousands more carers falling foul of an evidently flawed system".

The charity has demanded a radical "complete overhaul" of what they slam as an "overly complicated" and "outdated" allowance system.

Sir Stephen Timms, Minister for Social Security and Disability, said: "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."

He added: "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."

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