Work and pensions committee chair tells ministers to fix carer’s allowance issues

Ministers have been told to “immediately” fix the issues causing tens of thousands of unpaid carers to incur “enormous accidental overpayments” amid growing anger over the carer’s allowance scandal.

Related: Sunak under pressure to grant amnesty to unpaid carers fined for rule breaches

Stephen Timms, the chair of an influential parliamentary committee, said he was “very troubled” that scores of carers were being forced into financial distress as a result of the government’s mistakes.

He said the Department for Work and Pensions (DWP) should be “helping them not harassing them” and added: “It does sound to me as though things are going quite badly wrong at the moment.”

Timms, the chair of the Commons work and pensions committee and the Labour MP for East Ham, told BBC Radio 4’s Money Box programme that the DWP seemed to “completely ignore” the notifications it received when an unpaid carer earned more than the £151-a-week limit.

Instead, he said, the department was allowing people to incur “enormous accidental overpayments”, often over several years. In dozens of cases these bills have totalled more than £20,000.

The Guardian revealed this week that 156,000 unpaid carers are now repaying severe penalties – pushing many into debt or financial distress – for often unwittingly overstepping the small earnings limit while caring for a loved one. Roughly one in five unpaid carers in part-time work breached the earnings limit last year.

Timms’s intervention comes amid growing political pressure on the government over a scandal that has generated widespread outrage at the draconian treatment of unpaid carers, a group routinely praised by ministers as heroes whose sacrifices help prop up the NHS and social care system.

Rishi Sunak is facing calls for an amnesty of carer’s allowance debts after the Guardian documented the despair and stress experienced by carers forced to pay huge fines – and sometimes prosecuted on fraud charges – after unwitting breaches of earnings limits, which many blame the DWP for allowing to build up unchecked for months and sometimes years.

Timms said the DWP must “immediately” fix its failure to quickly notify carers about overpayments but added there must be wider reform of the carer’s allowance, which has drawn cross-party condemnation in recent weeks.

The senior Labour MP said the DWP’s failure to keep on top of the thousands of automatic notifications of potential carer’s allowance earnings it gets each month was a major cause of overpayments. “They need to act in respect of those notifications and not keep on ignoring them,” Timms told Money Box.

Official figures published in April 2023 show that, of 107,475 potential breaches flagged to DWP using an HMRC data feed over the previous year, just 50,046 were investigated. Critics say this risks overpayments being allowed to build up for long periods, landing unsuspecting claimants with bills for thousands of pounds.

Timms urged ministers to abolish the punishing “cliff-edge” approach that allows overpayments to accrue so rapidly. This requires carers to pay back a whole week’s worth of the benefit – currently £81.90 – instead of the amount by which they overstepped the earnings limit. But he admitted it could not be fixed overnight.

One of Timms’s fellow work and pensions committee members, the Labour MP Debbie Abrahams, called on the DWP to contact carer’s allowance claimants as soon as an alert was issued, to give them the chance to check their claim before any overpayments spiralled out of control.

She said: “The government defends the mean-spirited rules which penalise carers’ earnings beyond £151 a week and then criminalise carers for any overpayments of carer’s allowance. Given HMRC have the earnings data, why don’t they [DWP] just write to carers if they think they’ve accidentally gone over the earnings limit?”

Timms called for the carer’s allowance earnings limit to be increased in line with the national minimum wage after it was in effect frozen five years ago, leaving carers able to work for only 13 hours a week if they are to stay within the rules.

In one case reported by the Guardian, a carer and part-time charity worker was asked to repay £1,750 after his wages breached the limit by £68 in total over three months. His weekly hours had not changed, but he did not realise the earnings threshold had not been automatically uprated by the DWP in line with the national minimum wage.

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 committed to fairness in the welfare system, with safeguards in place for managing repayments, while protecting the public purse.

“Claimants have a responsibility to inform the DWP of any changes in their circumstances that could impact their award, and it is right that we recover taxpayers’ money when this has not occurred.”