MPs urge government to overhaul unpaid carer benefits ‘without delay’

Many carers are on low incomes and spend about 65 hours a week looking after a loved one. Photograph: HighwayStarz/Getty Images

A cross-party committee of MPs has urged the government to overhaul the meagre weekly benefit for unpaid carers and fix “without delay” the issues causing thousands to rack up enormous debts.

Mel Stride, the work and pensions secretary, was told that the government had failed for five years to tackle the IT problems that have left tens of thousands of unpaid carers owing sums that had plunged many into debt and left some facing criminal prosecution.

Sir Stephen Timms, the chair of the Commons work and pensions committee, said: “The government has known for years about flaws that have plagued the payments system for Carer’s Allowance but has just allowed many unpaid carers to unwittingly rack up unmanageable levels of debt.

“The Department for Work and Pensions (DWP) must now move without delay to get a grip of the problem and ensure carers are no longer subjected to the distress that such overpayments can cause.”

The MPs’ call came as a long suppressed DWP-commissioned study showed ministers were made aware three years ago of a series of problems with carer’s allowance, including the way officials “coldly” treated carers who inadvertently fell foul of confusing benefit rules as fraudsters.

The study, based on a survey and interviews with carers about their experience of receiving carer’s allowance carried out in 2020, found overpayments caused financial difficulties, stress and a sense of unfairness for carers, the majority of whom were on low incomes and typically spending about 65 hours a week caring for loved ones.

The Guardian has revealed that more than 150,000 unpaid carers – who save the UK billions of pounds a year – are repaying often huge debts due to the Department for Work and Pensions’ (DWP) failure to notify them when they have inadvertently breached earnings rules.

Overpayments happen when someone who claims £81.90 a week carer’s allowance breaches a government-imposed cap which means they cannot earn more than £151 a week in a paid job. Instead of asking carers to pay back the amount that exceeded the threshold, the DWP claws back the whole £81.90 for each work that was in breach – the so-called “cliff edge”.

This means that a carer who earned £1 more than the £151 threshold for 52 weeks, therefore, would typically have to pay back £4,258.80, not £52.

The latest figures show 156,000 carers are repaying earnings overpayments incurred in recent years, with benefits officials clawing back sums greater than £5,000 from 11,600 of them. There were 34,500 overpayments last year alone, suggesting one in five unpaid carers with a part-time job fell foul of the rules.

The work and pensions committee last week urged the government’s public spending watchdog, the National Audit Office, to investigate the DWP’s failure to tackle the crisis it promised to fix in 2019.

Sir Stephen said on Thursday that the committee wanted the DWP to commit to wholesale reform of carer’s allowance, arguing that the £81.90 a week benefit – the smallest of its kind – was leaving many “struggling to make ends meet”.

Setting out the committee’s concerns in an eight-page letter to Stride, Timms said the department should grip the problems “without delay” and urgently introduce a system to immediately notify unpaid carers as soon as they have exceeded the weekly earnings threshold.

MPs called on the government to scrap the “cliff edge” that forces unpaid carers to pay back the whole week of carer’s allowance for each week they breached the earnings limit, which has left many in severe financial difficulty. They suggested instead a taper rate “when work on its IT system allows”.

The government has failed for years to increase the limit that unpaid carers are allowed to earn a week, despite the rise in the “national living wage”. This means many people have unknowingly exceeded the £151 a week threshold simply because their wages have risen but the earnings limit has not.

MPs called on the government to remedy this by committing to an annual increase to the earnings threshold and by pegging it to a number of hours worked, instead of a monetary figure. Presently, those earning the “national living wage” while caring for a loved one can only work for 13 hours without breaching the allowance limit.

Stride was also urged to scrap the rules that means young carers are only eligible for the weekly benefit if they study for 21 hours or less, which forces many to choose between education and financial support.

A DWP spokesperson said: “Carers across the UK are unsung heroes who make a huge difference to someone else’s life and we have increased Carer’s Allowance by almost £1,500 since 2010.

“We are progressing an enhanced notification strategy as part of our ongoing commitment to customer engagement, which will help ensure customers fulfil their obligations to inform DWP when changes in their circumstances have occurred, building on existing communications.

“We are committed to fairness in the welfare system, with safeguards in place for managing repayments, while protecting the public purse.”