National Audit Office to investigate growing scandal over carer’s allowance

The government’s spending watchdog is to investigate the growing scandal over carer benefits that has plunged tens of thousands of vulnerable unpaid carers into debt after they unwittingly breached benefit rules.

In a letter, the National Audit Office (NAO) told the Commons work and pensions select committee its intervention was triggered by public and political concerns over the mounting human and financial costs of carer’s allowance overpayments.

An ongoing Guardian investigation has caused widespread outrage after revealing the government’s failure to fix overpayment problems has resulted in unpaid carers hit with bills as high as £20,000 – and in some cases criminal prosecution.

The NAO’s intervention comes almost exactly five years after the watchdog published a critical inquiry report highlighting serial failures by the Department for Work and Pensions (DWP) to tackle carer’s allowance overpayments. This in turn triggered an 2019 MPs inquiry report which called for major reforms to the benefit.

At the time ministers promised parliament they would fix the problems by “stopping overpayments occurring in the first place” but figures recently revealed by the Guardian show that the level of overpayments has barely shifted in five years, with unpaid carers and taxpayers paying a heavy price.

The letter, from the NAO head, Gareth Davies, said: “I have been following the recent debate on carer’s allowance and, given the continuing concerns about the administration of this benefit, I agree that there would be value in us undertaking some further work on this area.”

Overpayments occur when someone who claims £81.90 a week carer’s allowance, often for looking after a frail, disabled or ill relative, breaches a strict government-imposed “cliff edge” earnings cap, which means they cannot earn more than £151 a week in a paid job.

If the carer breaches that limit, even by a penny, their whole allowance is deemed to be an overpayment, which the DWP forces them to repay. A carer who earned £1 more than the £151 threshold for 52 weeks, therefore, would typically have to pay back £4,258.80.

Unpaid carers interviewed by the Guardian have revealed how the government’s continuing failure to tackle overpayments has pushed them into debt and ill health, stripped them of savings and inheritances and in one case their home, and landed them with a criminal record.

Many carers would never have been affected had officials routinely checked electronic alerts notifying it that a carer’s income had potentially breached the earnings threshold. This failure can result in carers unwittingly racking up thousands of pounds’ worth of overpayments over months and years.

The latest figures show 134,000 carers are repaying a total of £251m. Benefits officials are clawing back sums greater than £5,000 from 11,600 of them. There were 34,500 overpayments in 2023-24 alone, suggesting as many as one in five unpaid carers with a part-time job fell foul of the rules.

The DWP says it its ultimately the responsibility of carers to prevent overpayments but campaigners have argued it is unethical for carers to be penalised when the DWP’s own systems enable it to have spotted the earnings infringement at an early stage, but it has chosen not provide enough staff to check the earnings alerts.

Grilled by the work and pensions select committee about overpayments on Wednesday morning, the DWP permanent secretary Peter Schofield confirmed that only about half of the potential earnings breach alerts it received were investigated. He said checking alerts was “incredibly time-consuming – you need quite a lot of skilled resource to do the work.”

At the same committee hearing, the work and pensions secretary, Mel Stride, was asked whether he thought wider reform of the benefit was needed: “Any level of overpayment is too much. I’d like to squeeze it down to zero. That’s rather unrealistic but that’s always got to be the goal,” he replied.

The chancellor, Jeremy Hunt, confirmed the government was “reviewing the system” of carer’s allowance earnings limits during an interview with the personal finance expert Martin Lewis on ITV’s Good Morning Britain on Wednesday. The chancellor had been asked by Lewis whether ministers would fix “the nonsense” of the carer’s allowance earnings limit cliff edge.

Helen Walker, chief executive of Carers UK said: “Five years on from the NAO’s original report on this issue, little has changed for thousands of unpaid carers up and down the country who are still receiving overpayments in large numbers and are being allowed to accumulate significant debts as a result. This must urgently change.”

Dominic Carter, the director of policy at Carers Trust, said: “The NAO is right to examine the lack of progress by the DWP. Like us, they will be immensely frustrated by the inaction since their first investigation”.

A DWP spokesperson said: “Carers across the UK are unsung heroes who make a huge difference to someone else’s life and we have increased carer’s allowance by almost £1,500 since 2010.

“We are progressing an enhanced notification strategy as part of our ongoing commitment to customer engagement, which will help ensure customers fulfil their obligations to inform DWP when changes in their circumstances have occurred, building on existing communications.