Carer's Allowance overhaul urgently needed to prevent 1,000s being chased for overpayments, says charity
Demands to repay Carer's Allowance overpayments are having a "shocking" impact on unpaid carers' lives, according to a new report from Carers UK. The charity has called for urgent action to prevent carers from unwittingly building up huge debts – an issue MoneySavingExpert.com (MSE) founder Martin Lewis has also raised with the Government.
Carer's Allowance is a weekly benefit of £81.90 paid to those who are unable to work full-time due to their caring duties. You're allowed to earn £151 a week after tax and expenses. But earn a single penny over the limit and you'll lose your entitlement to the benefit – something commonly referred to as a "cliff-edge". Martin called for an end to this "perverse" system in a letter to the new Chancellor, Rachel Reeves, last week.
Yet because of a disconnect in the system, it can mean people are still paid the allowance for months, or even years after they're entitled to. So even though they may have only earned a pound or two more than the threshold at the time, they're later asked for unaffordable £100s or £1,000s back.
In response to today's calls, which we outline in more detail below, Sir Stephen Timms, minister for social security and disability, said: "With respect to overpayments of Carer’s Allowance, we are moving quickly to understand exactly what has gone wrong so we can set out our plan to put things right."
What Carers UK is calling for
Carers UK's key calls on the Government are to:
Undertake a full review of Carer's Allowance
to ensure unpaid carers are being adequately supported and encouraged to work where possible.
Increase the Carer's Allowance earnings limit to the value of 21 hours work a week at the National Living Wage, which is what the Government calls minimum wage.
Write off substantial overpayments where carers could have been notified sooner. Carers UK says this should cover carers who have received overpayments for six weeks or more.
End the cliff-edge by introducing a taper similar to other benefits, such as Universal Credit.
The charity's findings are based on information from 121 carers who face debts of between £150 and £20,000 due to demands to return overpayments. It found that most carers were unaware they had gone over the earnings limit. In addition, many told Carers UK that the earnings limit had pushed them to reduce their work hours, turn down a pay rise or leave paid employment entirely. Read Carers UK's full report.
If you're claiming Carer's Allowance and think your earnings may be above £151 a week, contact the Department for Work and Pensions as soon as possible.
Carer: 'The Allowance is so complicated and needs to be more straightforward'
Elizabeth Tait is an unpaid carer who was working as a part-time supply teacher while caring for her now-late husband and her son. She was shocked to receive a letter asking her to repay £1,623 in overpaid Carer's Allowance and now no longer claims the benefit as she's "terrified of asking for support".
She told Carer's UK: "I was worried about my husband's declining health and having to pay back the Carer's Allowance caused me a great deal of upset and worry. Carer's Allowance is almost like a trap. It's so complicated and needs to be more straightforward."
She added: "The system really needs to change, so that people like me do not suffer needlessly when they are seeking support."
Martin and MSE have called for an end to the 'perverse' cliff-edge
Here's what Martin said on Carer's Allowance in his recent letter to Ms Reeves (to read the whole thing, which includes calls for changes to Child Benefit, student living loans and Lifetime ISAs – see Martin's blog).
Unpaid carers are unsung national heroes who save the economy and the NHS billions and provide a national wellbeing boost. Carer’s Allowance is a not particularly generous benefit that those on very low incomes, who care for people in need for over 35 hours a week, can get. Yet its structure is broken, old fashioned, unjust and in need of urgent change. Earn £151 a week or less, and those eligible can claim the £81.90 per week allowance. Yet, earn a penny more – £151.01 – and they get nothing. This is perverse – most benefits, including Universal Credit, have a taper, so if you go over the threshold, the payment received is gradually reduced. Carer’s Allowance only has a cliff-edge, leaving many to plummet off. Worse, the system seemingly sets people up to slip over the threshold unwittingly. Many on Carer’s Allowance need to restrict any working hours to avoid hitting it (a strange disincentive to work), yet if their wage increases slightly, eg, when the annual minimum wage increases, they can fractionally bust the threshold. If that happens, the terrible disconnectedness and poor benefits systems mean they’re often still paid the allowance for months, or even years. Then, even though they may have only earned a pound or two more, they’re later asked for unaffordable £100s or £1,000s back. I’d ask you to look at ending the cliff-edge going forward, and retrospectively for those carers who are facing requests for crippling back-payments – adding to the burden many are already faced with. The system is fundamentally unjust, and hits many of society’s most venerable and vulnerable.
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3 December 2024
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