The total amount of outstanding
Carer's Allowance overpayment debt rose to £251.7 million in
2023-24, increasing from £150.2 million in 2018-19. Over the same
period, the number of new overpayment cases identified each year
fluctuated between 32,500 and 60,800, according to a new report
from the National Audit Office
(NAO).
In 2023-24, the Department for Work
& Pensions (DWP) paid £3.7 billion in Carer's Allowance to
over 900,000 claimants. Currently a carer must earn no more than
£151 a week and provide at least 35 hours of care a week to
someone who receives a qualifying benefit to
claim.
Overpayments occur when a claimant
receives a payment they are not entitled to, or they receive the
wrong amount. The eligibility rules for Carer's Allowance create
a ‘cliff-edge' with no taper rate – a claimant is entitled to
either the whole allowance or none of it – meaning significant
overpayments can quickly build up.
In 2023-24, the most significant
causes of new overpayment cases related
to:
-
claimants having earnings over the
permitted limit (58% of cases)
-
claimants
ceasing to provide
care (24% of
cases)
-
other reasons where the
claimant no longer met the eligibility criteria,
e.g.
being in
receipt of an
overlapping benefit; the person being cared for had died
(16% of cases)
The number of people with outstanding
overpayment debt increased every year from 2018-19 to 2023-24 –
rising from 80,169 to 136,730, an increase of
71%.
However, the average value of new
Carer's Allowance overpayments identified by DWP fell in each of
the past four years, dropping from £1,471 in 2019-20 to £988 in
2023-24, suggesting that overpayments are being identified
earlier.
Overall, from 2018-19 to 2023-24 DWP
increased both the amount of Carer's Allowance debt recovered and
the amount written off. It recovered £28 million more in
overpayments, and wrote off £6 million more, in 2023-24 than it
did in 2018-19.
DWP has said it has a renewed focus on
making sure all overpayments are detected and are either promptly
referred to debt management for recovery or are written
off.
DWP introduced the Verify Earnings and
Pensions Service (VEPS) in 2018, which uses real-time information
provided by HM Revenue & Customs (HMRC) and allows DWP to
verify a claimant's earnings before approving new benefit
claims.
Since 2020-21, DWP has investigated
half of VEPS cases and stated that it would have to redeploy
staff from other parts of the business to increase the number of
cases investigated.
In 2022-23, 12,600 (25%) of the 50,000
VEPS cases that DWP investigated resulted in an overpayment being
detected or prevented. DWP reports it has achieved £121 million
in savings through investigating VEPS cases and is on course to
exceed its target of £139 million by
2025-26.
The number of cases DWP referred for
prosecution fell from 246 in 2018-19 to 54 in 2023-24. The
highest-value suspected fraud case referred was £44,565 in
2022-23.
DWP can offer an ‘administrative
penalty' of £350 or 50% of the overpayment (whichever is greater,
up to a maximum of £5,000) to a person as an alternative to
prosecution - the number of administrative penalties has fallen
significantly in recent years, from 774 in 2018-19 to 75 in
2023-24, a drop of 90%.
DWP also imposes ‘civil penalties' of
£50 - overall there has been an upward trend in its use of these
– the number of civil penalties increased by 50% from 20,023 in
2018-19 to 30,129 in 2023-24.
In October 2024, DWP announced a
review into Carer's Allowance overpayments to cover how and why
overpayments were accrued, operational changes to minimise future
overpayment risk, and how DWP can best support those with
overpayments.
ENDS
Notes to editors
1. The Work and Pensions Committee
held two oral evidence sessions in spring 2024 to follow up on an
earlier inquiry. In May 2024, the then Chair of the Committee
wrote to the Comptroller and Auditor General (C&AG) to ask if
we could set out the latest information on Carer's Allowance,
including on overpayment levels. In his reply, the C&AG agreed that, given the
continuing concerns about the administration of this benefit,
there would be value in us undertaking some further work on this
area. The purpose of our work
was to improve transparency and inform public debate about
Carer's Allowance. Our work was not designed to assess the value
for money of DWP's administration of Carer's
Allowance.
