Ministers have announced an overhaul of the way carer’s allowance overpayments are checked in an attempt to fix the failing system which has left thousands with life-changing debts,fines and criminal records.
In a significant policy change, the Department for Work and Pensions (DWP) has been ordered to hire extra staff to investigate 100% of the carer’s allowance earnings breach alerts it receives and swiftly notify carers if they are at risk of falling into debt.
Last year, the Guardian revealed that for the last six years, the DWP has chosen to investigate just 50% of alerts on cost grounds – even though this has led to huge numbers of carers unknowingly accruing massive overpayments.
Campaigners are optimistic the move could, over time, significantly reduce the numbers of carers falling foul of the system – but warned thousands more will be unfairly hit by overpayments as huge backlogs of alerts are processed over the next few months.
Carers in England and Wales who breach carer’s allowance earnings limits of £196 a week must return the full £83.30 a week benefit payment, a “cliff edge” penalty that means going £1 a week over the limit for one year would result in the claimant being hit with a repayment demand not of £52, but £4,330.
The DWP’s dogged refusal over many years to properly check the real-time alerts of carer’s earnings it gets from HMRC and use the data in timely manner to prevent carers unwittingly running up overpayments has been a central feature of the carer’s allowance scandal, exposed in a series of Guardian articles over the past year.
Critics have accused DWP of in effect creating a lottery in which some carers are alerted to earnings breaches after a few weeks while others are allowed to accrue years of overpayments before being asked to repay large sums, in some cases as high as £20,000, causing widespread financial and emotional distress.
An independent government-commissioned review of the carer’s allowance is expected to report in the summer. The review, which will look at how the overpayment scandal came about and how to fix it, is part of what ministers have promised will be a “new settlement” for carers.
The chief executive of Carers UK, Helen Walker, welcomed the move: “When the alerts target was set at 50%, thousands of carers were missed and experienced large and damaging overpayments, in a situation that could have been largely avoided,” she said.
But she warned that until the new policy took effect, tens of thousands more carers will continue to be hit with overpayments, including an estimated 20,000 at risk when a huge backlog of paper-based alerts related to national insurance credits, which the DWP allowed to build up, is finally tackled.
“As the DWP works to clear the current backlog, the human cost of a system which needed an overhaul years ago will still continue to rise. Sadly, clearing the backlog is likely to result in a further rise in overpayments debts,” said Walker.
The government’s current position, outlined in a letter to charities last week by the social security minister, Sir Stephen Timms, indicated the handling of overpayments would be “business as usual” and there would be no pause on repayment demands, fines, or potential prosecutions for fraud.
The Liberal Democrat leader, Ed Davey, called for carer’s allowance overpayments to be written off, saying it was wrong carers continued to be punished by a system the government admitted was broken. “It is totally unacceptable that more and more carers are being caught up in this scandal, so long after it was exposed,” he said.
after newsletter promotion
A DWP spokesperson said: “We are drafting in extra staff so the backlog of all under- and overpayments are investigated promptly and corrected. We will agree affordable repayment plans and, when issuing debt management notifications, signpost to independent advice services.”
Campaigners have long argued the complexity of carer’s allowance rules meant carers who worked part-time were unaware when they breached weekly earnings limits, often by only a few pounds or pence, and that the DWP should use the earnings data it had at its disposal to warn them in timely fashion so they could make adjustments.
Although the DWP promised MPs six years ago the introduction of electronic earnings alerts from HMRC would eradicate overpayments, it has repeatedly neglected to deploy enough staff to carry out the checks. Overpayments have continued to spiral, with 144,000 carers currently repaying over £250m.
The National Audit Office revealed in December that DWP policy was to investigate half of all alerts on the grounds this was the maximum it needed to process to meet its internal financial savings targets.
Timms said: “Carer’s allowance alerts have been coming in to the department, but many haven’t been processed. In future, we plan to act on all of them. This will be an important step in reducing overpayments.
“We are delivering on the change we promised when elected by drafting in extra staff. Reviewing 100% of alerts will allow us to tackle overpayments when they arise, rather than waiting until carers have built up large debts.”
