Government launches inquiry into Carer’s Allowance payment scandal

The government has announced an independent review into Carer’s Allowance overpayments, after families were forced to pay back thousands of pounds which pushed many into debt and financial distress.

Earlier this year it was revealed the government was seeking to recover money from more than 134,000 carers in the UK.

Some have told the BBC that the sudden demand for repayment of sometimes thousands of pounds put them under great financial strain, while it pushed others to quit their jobs.

The review will focus on how and why the overpayments were made, and what can be done now to help support affected carers.

It is unclear if families still owing the government need to continue with repayments while the inquiry is underway. The Liberal Democrats have called for the Labour government to write off the majority of the repayments.

Prime Minister Sir Keir Starmer welcomed the review saying it would look at “the circumstances of the overpayments to see what went wrong and therefore what can be done to put it right”.

But he was asked by MPs at Prime Minister’s Questions why it had taken so long for a review to be announced.

Carers have said they were not aware they had been wrongly overpaid the benefit because many did not realise they had exceeded the earning limit for it – which is capped at £151 a week, or just over 13 hours work on the minimum wage.

The government gives an £81.90 allowance for people who care for someone for more than 35 hours a week. But anyone who earns even a few pence more than £151 a week from other work is required to repay all of their Carer’s Allowance.

Critics have called that a “cliffs-edge” – and said many carers found themselves in unexpected situations where for example, working an extra shift or receiving a bonus, had cut them off completely from the benefit.

The earnings threshold has previously been described by critics as very low.

Emma Martin, from Devon, is a full-time carer for daughter Mia, 27, who has autism, epilepsy and learning disabilities.

A few years ago, she received a demand from the Department for Work and Pensions (DWP) for £1,500 after they told her she had been overpaid Carer’s Allowance while working part-time.

The 53-year-old had to borrow the money from family to pay it back.

“We get paid less than the unemployed,” she says.

“There’s no way that the state is going to pay the thousands of pounds a week it would cost to pay for my daughter’s care while I worked full-time.

“So they get me for £80 a week and demand that I don’t earn a penny over £151 a week at the same time.

“We’re shafted every possible way.”

Carers Trust chief executive Kirsty McHugh said the review was “hugely welcome”, adding “too many people have had their lives ruined by being pursued for huge sums of money simply because they made an honest mistake”.

She also expressed how she hoped the government might review and reform the “archaic and unfair” Carer’s Allowance system as a whole.

Lib Dem leader Sir Ed Davey, who is a carer for his disabled son and cared for his mother when he was young, said the strict income threshold of £151 had led to many carers wanting to give up working or caring in some cases.

“When badly designed government policies for carers push them over the edge, the real cost is to the taxpayers and the economy,” he said.

The Department for Work and Pensions (DWP) failed to notify some recipients they had been overpaid for years and when they were asked for repayment retrospectively, the debt owed was in the tens of thousands of pounds.

Work and Pensions Secretary Liz Kendall said the department was “determined to put this right” with the inquiry – which will be chaired by Liz Sayce, the former chief executive of Disability Rights UK – a leading charity representing the rights of disabled people.

The review will look at “operational changes” to minimise the risk of overpayments in the future and also examine how people with overpayments can be supported.

A report released earlier this year surveying 1,000 carers made the estimate that 3% had to make repayments after changes in circumstances meant that they received the benefit in error, but the researchers said this may be an underestimate.

Official statistics show that 1,377,000 people currently claim Carer’s Allowance in Great Britain.

The same report released in May found the DWP had known since 2021 that overpayment of Carer’s Allowance has left some people in financial difficulty.