Minister vows to end scandal that left thousands of UK carers in debt

Draconian penalties that caused unpaid carers to rack up thousands of pounds of debt after unwittingly falling foul of benefit rules are to be overhauled, the government has announced.

The move comes six months after a Guardian investigation revealed tens of thousands of vulnerable carers were being ordered to repay hefty overpayments – and even threatened with criminal prosecution – over minor breaches of carer’s allowance earnings limits.

The secretary of state for work and pensions, Liz Kendall, said she had commissioned an “open and transparent” independent review of carer’s allowance overpayments to assess how overpayments were allowed to be accrued on such a vast scale.

Kendall told the Guardian: “Like many people, I have read distressing accounts in this newspaper from carers who have had to pay back large sums of overpaid carer’s allowance.

“Carers have felt shock, frustration and anxiety as a result. Families are often pushed to breaking point just for looking after the people they love. They deserve to be recognised, supported and valued for all they do.

“I am determined to be open and transparent about what has happened in carer’s allowance and to learn all the lessons. This review marks a big step forward for unpaid carers, shedding light on this issue so we can put things right.”

A series of Guardian articles in recent months revealed what has become known as the “carer’s allowance scandal”, highlighting the often frightening and humiliating punishments imposed on carers by benefits officials, causing public outrage and leading to comparisons to the Post Office scandal.

The review, will be headed by Liz Sayce, the former chief executive of the charity Disability Rights UK. “My work aims to get to the bottom of how overpayments have occurred and how to prevent people who devote such time and care to others facing these difficulties in future,” she said.

The review announcement came on the eve of a Westminster opposition-day debate on carer’s allowance called by the Liberal Democrats, whose leader, Ed Davey, has made reforming carer’s allowance a key party policy, and who has been pressing Labour to make changes.

Davey, who is a carer for his disabled teenage son, John, will tell the Commons the benefit is “not fit for purpose”. He is expected to criticise the Department for Work and Pensions (DWP) for failing in recent years to do more to prevent carers being hit with overpayments that have left many with huge debts.

“This is a terrible scandal. Tens of thousands of carers have become the victims of a system that is supposed to be there to support them. The last government should have acted then. But it didn’t. So can I urge the government today: act now,” Davey is expected to say.

The Lib Dems have for months called for carer’s allowance rates to be boosted and its complex earnings rules overhauled. They have also insisted existing carer’s allowance overpayments – about £250m in total owed by approximately 34,500 claimants – be written off.

There are about 5.8 million unpaid carers in the UK who look after ill, disabled or frail loved ones. More than 1 million are in poverty. About 1 million carers claim carer’s allowance, a weekly benefit worth £81.90 a week. Claimants are allowed to earn £151 a week from paid work, equivalent to about 13 hours at the national minimum wage.

New research indicates as many as one in five of all carer’s allowance claimants had to repay large sums after inadvertently falling foul of the £151 earnings limit. It also found anxiety and despair among carers “made to feel like criminals” after they were harshly punished for overstepping earnings limits by as little as £1 a week.

Findings from a survey of 12,500 unpaid carers by Carers UK, seen by the Guardian, found of the 40% who claim or had claimed carer’s allowance, one in five said they were hit by overpayments after unknowingly breaching the earnings limit, often because they had been paid overtime or received a bonus.

The draconian punishments for breaching earnings limits are notorious among carers: even going £1 over the weekly limit means they must repay the entire benefit. A carer who earned £1 more than the £151 threshold for 52 weeks, therefore, would pay back not £52 but £4,258.80.

One carer told the survey she went £4 over the limit over a four-month period during the Covid-19 pandemic due to wage fluctuations caused by furlough.

She said: “I was made to feel like a criminal … I had to pay nearly £400 back and was terrified about getting a criminal record. I became very depressed over the stress of this. So horrendous.”

Another said: “I earned £1 too much for 19 weeks and have to pay all the carer’s allowance from that time. I ended up using credit cards to cope. I’ve had to give up carer’s allowance to get another job to cope financially. My husband is 70 and on state pension. This is crippling us mentally and physically.”

Four in 10 claimants in the survey said fear of the restrictive rules for carer’s allowance and the risk of harsh punishments led them to give up paid work. Some said they had turned down pay rises, and had to forgo paid training opportunities to enable them to retain eligibility for carer’s allowance.

One carer told the survey they reluctantly gave up work after 45 years to maintain eligibility for carer’s allowance: “Trying to balance work and home is difficult at the best of times but with caring it is impossible. Some real compassion and common sense to consider what is a reasonable threshold needs to be considered,” they said.

Helen Walker, chief executive of Carers UK, said: “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.”