Debt from overpayments to unpaid carers stood at just over £250m last year, the National Audit Office has found, as the Department for Work and Pensions publishes the next steps for its review into the scandal.
Outstanding debt from carer’s allowance payments has shot up by nearly £100m since 2018-19 to hit £251.7m in 2023-24, according to the NAO’s latest report.
The watchdog found the number of people with outstanding overpayment debt has grown every year for the last five years – swelling by 71% from 80,169 to 136,730 in that time.
DWP identified between 32,500 and 60,800 new cases of carer’s allowance overpayments during the same five-year period.
However, the report also found the average value of new carer’s allowance overpayments identified by DWP has fallen for four years in a row, dropping from £1,471 in 2019-20 to £988 in 2023-24, "suggesting that overpayments are being identified earlier".
And DWP recovered £28m more in overpayments in 2023-24 than it did in 2018-19 – as well as writing off £6m more.
Unpaid carers who look after someone who receives certain benefits for at least 35 hours a week are eligible for the allowance, which is worth £81.90 a week. Last year, DWP paid £3.7bn in carer’s allowance to more than 900,000 claimants.
However, carers can only claim the benefit if they earn less than £151 a week – set to rise to £196 a week in April – from paid work after tax, National Insurance, pension contributions and allowable expenses.
Earlier this year, a Guardian investigation revealed tens of thousands of carers had been hit with overpayment notices after breaching the earnings limit. If carers earn even a penny over the £151 limit, they lose the entire benefit that week.
Carers breaching the earnings limit was the biggest reason overpayments were made, accounting for 58% of cases last year. A further 24% were down to claimants having stopped providing care, and 16% were down to other reasons such as receiving other benefits that made them ineligible for the allowance or the person they cared for having died.
In October, work and pensions secretary Liz Kendall announced that she had commissioned an “open and transparent” independent review of carer’s allowance overpayments, saying that there were particular concerns about carers who had been forced to make repayments after breaching the earnings limit for the benefit by a “small amount”.
The review – which is now expected to be completed in early summer next year – will only look at carer’s allowance overpayments related to earnings. It will not look at eligibility requirements for the benefit or broader support for unpaid carers, financial or otherwise, according to the terms of reference.
It will aim to answer three questions: how and why overpayments linked to earnings accrued; what changes can be made to reduce the risk of overpayments accruing in future; and how best to support people who have racked up overpayment debt.
It “should give due regard to the potential sustainability and long-term impacts of any recommended changes”, the terms of reference say.
The review will be non-statutory and “has been commissioned to obtain an independent view of the situation and its causes, and to recommend potential solutions for the government to consider”, the document adds.
It will include a process for people and organisations to share their evidence and views, which the documents says will be taken into account when forming conclusions and recommendations. Roundtable events will be used "to test the lines of enquiry for the review and emerging conclusions".
All government departments and agencies are expected to cooperate with this review, and to provide the independent reviewer, Liz Sayce, with access to all relevant information she needs.
Sayce – who was previously chief executive of the charity Disability Rights UK and interim chair of the Social Security Advisory Committee – will convene a small advisory panel to provide advice and “act as a critical friend to the review”. DWP will provide secretariat support for the review.
Sayce, who is now a visiting professor in practice at the London School of Economics, said she was pleased her “important work on this review is now starting in earnest”.
“I have already started to hear from carers about the impact overpayments have had on them, in a context in which people face multiple pressures in their lives,” she said.
“I will be collecting views and evidence as I review the issues and develop recommendations. In doing so, I will be able to advise the government on ways to minimise overpayments of carer’s allowance related to earnings accruing in future and how it can best support those already affected.”
Social security and disability minister Sir Stephen Timms said: "Carers wishing to pursue more financial independence should be encouraged to do so and not be unknowingly punished. We need to get to the bottom of what has been going on. Publication of the terms of reference is the next step in this important work.
"The review also builds on the action we’ve already taken to boost the earnings threshold, which will benefit more than 60,000 carers."