Minister for Social Security and Disability (Sir ): The Government has today
published the report from the Independent Review into
overpayments of Carer's Allowance linked to earnings and the
Government's response to its recommendations. These are available
on GOV.UK and copies will be placed in the Library.
Finding out what went wrong with Carer's
Allowance
The Government inherited a system where some busy carers, already
struggling under a huge weight of caring responsibilities, have
found themselves with unexpected debts due to overpayments of
Carer's Allowance. This only affected some of the relatively
small number of Carer's Allowance claimants who also do paid
work, but the impact on some of these unpaid carers has been
significant.
Liz Sayce OBE was asked to lead an Independent Review into the
matter. The Review's report has been invaluable in helping us
assess how these overpayments have arisen; what we can do to
support unpaid carers who have incurred debts in the past; and
how we can minimise further overpayments in future.
For those who receive Carer's Allowance, 92% say they have a
positive experience, and most find the rules easy to understand.
However, the Review has shown that some mistakes were made, and
we are determined to put them right. We welcome the report and
are accepting or partially accepting 38 of the 40
recommendations. In some cases, we have already made the changes
the report is asking for. Others will take more time to put in
place.
The Review finds that some carers could not have known that they
were building up overpayments because it was not clear how their
earnings would affect their entitlement, and this lack of clarity
was due to issues with operational guidance. The Government
accepts this and we will act to put it right.
Averaging earnings and putting things right
The earnings limit in Carer's Allowance is a weekly one, but in
some cases, earnings can be averaged over a number of weeks. The
Review found issues with Departmental guidance. And we accept
that, between 2015 and summer 2025, the guidance on whether and
how to average earnings did not accurately reflect the statutory
position.
The Department will, therefore, be reassessing Carer's Allowance
cases with an earnings-related overpayment in England and Wales
between 2015 and summer 2025 where the treatment of fluctuating
earnings may have given rise to an incorrect overpayment. If that
was the case, then the Department will reduce the outstanding
overpayment accordingly, and pay back any debts it should not
have pursued in the first place. We will set out plans in the New
Year.
The Independent Review went beyond averaging earnings though and
made recommendations in a number of other areas which we are
accepting. For example - rebuilding trust with carers; improving
communications and processes; and appointing a Senior Responsible
Owner, who will be responsible for taking forward the agreed
recommendations and reporting on progress.
Modernising for the future
Carer's Allowance was introduced in 1976 and – unlike Universal
Credit, which is the other main benefit to support unpaid carers
– it has not kept up with changes in how people work or modern
patterns of unpaid care. Many carers now want the flexibility to
combine more paid work with their caring responsibilities.
The Government acknowledges this and has taken action to:
- increase the weekly Carer's Allowance earnings limit to match
16 hours work at National Living Wage levels. This change from
April this year resulted in the largest ever increase in the
limit to £196 net earnings a week and the highest percentage
increase since 2001. It means more than 60,000 additional people
will be able to receive Carer's Allowance between 2025/26 and
2029/30;
- put in extra resources to process the earnings information we
receive from HMRC through the Verify Earnings and Pensions
System. This allows us to contact people if it looks like they
may have exceeded the earnings limit, meaning we can take action
to prevent overpayments from building up;
- correct and improve our guidance so carers and our own staff
are clearer about what the benefit rules are and what information
needs to be provided; and
- begin scoping work to explore potential solutions to reduce
the impact of the cliff edge, and automating the handling of
earnings where possible using data collected by HMRC.
