DWP carer’s allowance update as action promised for people ‘owed thousands’ | Personal Finance | Finance

The Government has vowed to address the debacle of overpayments to carers, which has seen many inadvertently amass unsustainable debts, with some even forced to abandon their jobs.

Labelled a “scandal” by a leading charity, the issue centres on individuals being penalised for exceeding their Carer’s Allowance earnings threshold by mere pennies each week.

Carers UK has highlighted cases where individuals are now indebted for “hundreds, thousands and sometimes tens of thousands of pounds” to the DWP (Department for Work and Pensions).

The charity reports that “many carers” have felt compelled to quit their jobs due to the financial repercussions of these overpayments, while “many more” have cut back on work hours or declined salary increases for fear of surpassing the earnings cap.

Urging for “concrete changes” Carers UK is advocating for an increase in the earnings threshold for the allowance, debt forgiveness in certain scenarios, and improved clarity and communication for carers.

A Government study from 2021, only made public in May this year, indicated that three percent of a sample group of claimants had been overpaid carer’s allowance. Given that approximately 1.3 million people receive this allowance, the Carers Trust charity warns that the number of those overpaid could be in the tens of thousands.

Former work and pensions committee chairman Sir Stephen Timms has highlighted the “distress” caused by overpayments, urging the Government to “get a grip of the problem”. Carers UK is set to meet with Sir Stephen to discuss the severe impacts highlighted in their report.

The report urgently calls for action to prevent carers from financial hardship and ill-health due to repaying overpayments, emphasizing that it’s the accumulation over time that exacerbates the debt burden. “Carers UK has been campaigning for changes to be made to Carer’s Allowance since 2018 and was part of the original work with the Select Committee and the NAO. We have repeatedly raised overpayments with the DWP.”

In the fiscal year 2024/25, the weekly rate for Carer’s Allowance stands at £81.90, with an earnings threshold of £151 per week. The Carers UK report reveals a staggering 134,800 individuals are currently facing outstanding Carer’s Allowance debts, amounting to £251 million as of mid-May 2024.

The previous year saw 34,500 overpayments due to earnings limit breaches, with 70% of all overpayments attributed to this cause. Now a Government minister for social security and disability, Sir Stephen remarked ahead of the meeting: “Our country would grind to a halt without the millions of carers who provide care and continuity of support for vulnerable people every day.”

“We recognise the challenges they are facing and we are determined to provide unpaid carers with the support they deserve.”

“Meeting organisations like Carers UK and individual carers and hearing their views and experiences is key to helping us to establish the facts and make informed decisions.”

“With respect to overpayments of Carer’s Allowance, we are moving quickly to understand exactly what has gone wrong so we can set out our plan to put things right.”

Carers UK chief executive Helen Walker remarked: “We’re pleased that Sir Stephen Timms is listening to carers and taking this opportunity to meet with us.”

“We are providing widespread evidence of the devastating impact this is having on thousands of carers’ lives and feel encouraged that he has a good understanding of the key issues involved.”

“Caring often limits your ability to earn a full income and adds to extra costs that you would not otherwise have.”

“It’s a scandal that so many carers, who have unwittingly received overpayments, are facing additional stress and anxiety. Many are under huge pressure already and in precarious financial positions due to their caring role.”

“It is heart-breaking to hear of instances where thousands of pounds of debts have been accumulated. This has been going on for years and not enough has been done by Government to fundamentally change the situation. It simply cannot continue.”