The government is considering compensation payouts for unpaid carers who have been unfairly hit with huge financial repayments in recent years after inadvertently falling foul of harsh carer’s allowance benefit rules.
Ministers vowed to fix problems with the benefit after a Guardian investigation revealed how draconian penalties coupled with Department for Work and Pensions (DWP) administrative failures had plunged hundreds of thousands of carers into debt.
More than 144,000 carers are now repaying £251m in benefit overpayments that typically amount to £5,000 but can be as high as £20,000. Some face life-changing bills after accidentally breaching earnings rules by a few pence a week.
The Guardian’s reporting of the DWP’s often brutal treatment of carers who were accidentally caught out by carer’s allowance earnings rules caused public outrage and led to comparisons with the Post Office scandal.
The government is understood to want to move swiftly to overhaul what it sees as a legacy of more than a decade of Conservative neglect, during which problems with carer’s allowance overpayments were repeatedly ignored or covered up.
At the heart of the scandal is the “cliff edge” penalty, which punishes carers in part-time jobs by forcing them to pay back the entire benefit if they breach earnings limits by even tiny amounts. A carer who earned 50p more than the current £196 weekly threshold for 52 weeks would pay back not £26 but £4,258.80.
The problem was exacerbated by the DWP’s routine failure to check all monthly HMRC alerts flagging up potential earnings breaches, allowing carers to inadvertently accrue massive overpayments stretching back years. Until recently it was DWP policy to check just half of the earnings alerts it received.
Carers often did not realise they had breached rules because earnings thresholds did not automatically rise in line with the national minimum wage, or because holiday pay and one-off performance bonuses were counted as weekly earnings.
Carer’s allowance reform – including whether to offer financial redress for carers hit by the scandal – will be high in the in-tray of the new welfare secretary, Pat McFadden, who replaced Liz Kendall. The benefit has come to symbolise some of the worst excesses of DWP bureaucratic cruelty.
But the costs and complexity of such a move would present a formidable challenge. It would also raise questions over the hundreds of carers who acquired a criminal record after being convicted of fraud after being referred to the courts by the DWP.
Redress for carers who ran up debts as a result of DWP shortcomings would represent a big change in official attitudes. The previous government generally refused to accept any responsibility for carer’s allowance injustices, insisting that overpayments were legally the fault of carers themselves.
Ministers are mulling over an independent government-commissioned report into how the overpayment scandal occurred and how to prevent future problems. Drawn up by the disability policy expert Liz Sayce, it was handed over to ministers at the end of July.
The Sayce report is expected to be published in the next few months alongside a plan to overhaul the benefit. Ministers have already taken steps to reduce overpayments by hiring more staff to check earnings alerts, trialling a text system to warn carers of earnings breaches, and raising the carer’s allowance weekly earnings threshold.
More than 5 million people in the UK provide unpaid care to frail, ill or disabled loved ones. About 1.4 million, who spend over 35 hours a week caring, claim the £83.30 weekly carer’s allowance. Just under half of unpaid carers, most of whom are women, live in poverty.
The Liberal Democrat leader, Ed Davey, a longtime campaigner on carer issues, said: “I really hope the government will give the victims of this appalling scandal the compensation they deserve. It would be a milestone for carers across the country, and a victory for all those who have campaigned tirelessly for justice.
“The government has a chance here not just to compensate the victims, but to overhaul carer’s allowance so it properly supports carers and doesn’t punish them for working. We will keep pushing ministers to seize that chance.”
Helen Walker, the chief executive of Carers UK, said: “Far too many carers are currently repaying debts that the government should have told them about much earlier, or they should not have had in the first place. It’s been devastating for carers, many of whom have been badly hit financially and it’s taken an enormous toll on their mental health.”
A DWP spokesperson said: “We don’t comment on speculation.
“We understand the huge difference carers make, as well as the struggles they may face. That’s why we have raised the carer’s allowance earnings threshold, benefiting more than 60,000 carers by 2029-30 – the biggest ever cash increase in the earnings threshold for carer’s allowance.
“We commissioned an independent review of carer’s allowance earnings-related overpayments to see what happened and what changes can be made, which we are now considering and will publish in due course.”
