Independent Review into Carer’s Allowance Overpayments: What should the government do?  

We are expecting the Independent Review of Carer’s Allowance Overpayments and the UK Government’s response to be published before the end of the year.

Whilst delayed, publication is welcome and a chance to look at some of the challenges that need to be tackled now, and make the case for the wider reforms Carers Trust have long called for.  

Back in October 2024, the Government announced an independent review into Carer’s Allowance overpayments led by Liz Sayce OBE.

This was in large part due to the journalism of Patrick Butler in the Guardian who exposed the scandal of unpaid carers being told to pay back often thousands of pounds of Carer’s Allowance. It was great to work alongside him at the time for this now award winning campaign.


How did this happen? 
Carers can only earn up to a set limit while claiming Carer’s Allowance. Many unknowingly crossed that line, often by just a few pounds, and the Department for Work and Pensions (DWP) failed to warn them. Instead, debts piled up - sometimes thousands of pounds - before carers even realised. 

Liz Sayce OBE was tasked with looking into how these overpayments accrued in the first place, what can be done to reduce the risk of overpayments in the future and what support can be given to carers who have already built up overpayments. Carers Trust met with Liz Sayce and her team, and organised sessions for local carer services to speak directly to her. 

DWP has three main areas to tackle – what to do about past debt? What can be done now to ensure carers do not accrue large debts? And what can be done in the future?  


Past debt 
Carers Trust believes the fairest solution to the previous debts accrued is for the DWP to write them off. By the end of last year, Carer’s Allowance debt reached  £250 million “owed” by around 135,000 carers. It’s vital to say that we believe the vast majority of these debts are a result of honest mistakes from carers.

It is known that Carer’s Allowance fraud is extremely low, but the stress, guilt and financial impact of being penalised is very high. 


The Present 
DWP have already increased their capacity to check Verify Earnings and Pension (VEP) alerts and is now committed to checking 100% of VEP alerts coming into the department. The impact of this should be two-fold: more potential overpayments are initially identified, which unfortunately could mean more penalties, and more positively, overpayments are identified earlier so as to stop debts mounting.

DWP has also trialled different ways of communicating with claimants, for example through text messages, to ensure carers have the information they need to alert DWP to any change in circumstances.  
Trying different ways of communicating with claimants is welcome but the issue remains fundamentally the same.

DWP have put the onus on carers, who, if they claim Carer’s Allowance, already care for at least 35 hours a week - and DWP found that 52% of claimants care for more than 65 hours a week - to contact them if they think they may have a change in circumstances. The balance of responsibility needs to be shifted to ensure the government is not asking carers to do even more.  


The Future 
DWP has already increased the earnings limit, pegging it to 16 hours of the Living Wage. This will make it simpler for carers to understand how much they can earn before losing their Carer’s Allowance entitlement. 

This is welcome, however, it will help around 60,000 carers who are able to balance work and care, whilst there are nearly 1 million Carer’s Allowance claimants. It will do little to support those with the most intense caring roles.  

DWP has also said it is looking into the merits of a taper system for earnings, similar to the one used in Universal Credit. A taper system would help those who can balance care and paid work by removing the current all-or-nothing cliff-edge that leads so many carers to fall foul of the earnings limit rule accidentally. 

Changes are also likely to make the process of averaging earnings more straightforward, so there is more transparency and consistency on how that is done. 


What’s (actually) needed 
However, Carer’s Allowance overpayments and these disparate changes are not happening in a bubble. The Timms Review will look at reforming Personal Independence Payments, which will impact carers as 50% of Carer’s Allowance claimants are caring for someone on PIP. 

Changes to the education system make it increasingly difficult to justify the so-called “21-hour rule” which prevents young adult carers from claiming Carer’s Allowance if they are in full-time study. DWP will also have to contend with the recommendations set out by Liz Sayce’s report.  

With all these changes happening, Carers Trust believes now is the time to bring these different strands together, and commit to a wholesale review of Carer’s Allowance.
 
Carer’s Allowance was created in 1976. It has hardly changed since then. At £83 a week, Carer’s Allowance is barely sufficient to support people financially. It feels like DWP risks continuous tinkering with the system, when a whole system change is needed. 

The government should acknowledge that Carer’s Allowance is completely outdated and has not kept pace with how society works now. Caring should be acknowledged not as the exception but as part of norm.  We need to reform Carer’s Allowance to make sure it is fit for the 21st century.