People who were overpaid Carer’s Allowance ‘could spend decades paying it back’
There has been a big jump in people found to have been overpaid Carer’s Allowance – and some may face decades paying back what they owe – according to a spending watchdog.
In a few cases, repayments are being sought for over £20,000 – which could potentially take someone as long as 34 years to pay off – the National Audit Office (NAO) said.
Those who support carers said they are dealing with the financial repercussions of being overpaid on top of the demanding responsibilities of looking after others.
The NAO said the Department for Work and Pensions (DWP) is now detecting more overpayments because it has recently put in place more staff and new systems, and is resolving backlogs created by previous shortages of staff.
Frank Field, chairman of the Work and Pensions Committee, urged the DWP to “end this massive scandal” and “write off the overpayments it has allowed to build up unchecked”.
He said: “Not for the first time, we see DWP squeezing those least able to afford it.
“It will chase down carers who provide such an immense service to our society, potentially cutting their income for decades – when it knows that a large part of the responsibility lies squarely at its own door.”
Carer’s Allowance is paid to people who care for those on a qualifying disability benefit.
The DWP pays £66.15 a week in the allowance to people who earn less than £123 a week and provide at least 35 hours of care a week to someone who receives qualifying disability benefit.
The DWP detected 93,000 overpayments in 2018-19 compared with an average of 41,000 a year it detected in the previous five years, the NAO said.
While many overpayments were for one week, in some cases they went on for more than a decade before they were discovered.
Emily Holzhausen, director of policy and public affairs at charity Carers UK, said: “Overpayments of Carer’s Allowance have been causing a lot of stress for carers who are worrying about the financial repercussions on top of demanding caring responsibilities.”
Sir Steve Webb, a former pensions minister who is now director of policy at Royal London, said: “DWP should recognise its own culpability in this mess and consider a much more humane approach to overpayments, with greater use of write-offs.”
The DWP will seek to reclaim overpayments over £65 that it deems to be the carer’s fault, and legislation caps the amount that carers have to repay each week.
It aims to recover around £150 million from just under 80,000 carers where the carer was deemed to be at fault for the overpayment.
The NAO said: “It will take a long time for carers to repay these overpayments. At the standard rate of repayment for those on benefits, it will take an average of three-and-a-quarter years for carers to repay their debt.
“For those on benefits with an overpayment of £20,000 this could require repayments for the next 34 years.”
The Department will not normally write-off this debt until it is repaid, the NAO’s report said.
The DWP reclaimed £22 million of overpaid Carer’s Allowance in 2018-19 by reducing people’s benefits and through mandatory deductions from employee earnings.
The NAO said: “The Department does not know how these repayments affect carers or the disabled person they care for.”
The NAO also said the DWP has a “limited understanding of underlying rates of fraud and error”.
The watchdog said it has repeatedly recommended that the Department update its estimates, and it is now working on a new estimate for 2020.
Most detected overpayments arose because carers failed, as soon as “reasonably practicable”, to notify the DWP with correct information about their earnings, the NAO said.
It said misunderstanding the rules around earnings and expenses can lead to carers accidentally accruing overpayments, while few overpayments are proven fraud.
The number of people referred for prosecution for fraud fell from 1,176 in 2014-15 to 483 in 2018-19.
In 2018, the Department cleared a backlog of 1,000 potential prosecution cases partly by applying more financial penalties.
To reduce fraud and error in the Carer’s Allowance, the DWP matches up claims with earnings data provided by employers to HM Revenue and Customs (HMRC).
The Department has improved its data matching systems, the NAO said.
A DWP spokesman said: “We are committed to preventing fraud and error in the benefit system and we welcome that the NAO’s report recognises the significant progress we have made addressing Carer’s Allowance overpayments.
“The amount overpaid represents just 0.5% of total benefit expenditure.
“We have introduced new technology to prevent overpayments and improve debt recovery.
“And we continue to make people fully aware of their responsibility to correctly report earnings and changes of circumstances.
“We have a duty to the taxpayer to recover money in cases of fraud or error but safeguards are in place to ensure deductions are reasonable.”