Harsh fines imposed on unpaid carers who unknowingly “overpay” thousands of pounds after breaching benefit rules are to be overhauled, the Guardian understands.
The move comes six months after a guardianship inquiry saw tens of thousands of vulnerable unpaid carers ordered to pay back high fees – and threatened with criminal prosecution for breaching the minimum income rules.
Known as the “carer's allowance scandal”, it often exposed the frightening and humiliating penalties imposed on carers by the benefits authorities, causing public outrage and leading to comparisons with the Post Office scandal.
The Government believes that both the excess money allowed to accumulate under the previous administration and the financial and emotional impact on vulnerable carers is unacceptable. An independent chairman is expected to be appointed to review the overpayments.
The move comes ahead of a Westminster opposition day debate by the Liberal Democrats, whose leader Ed Davey has made reforming carer's pay a key party policy and has pressed Labor to make changes.
Davy, who carers for her disabled teenage son John, will tell the Commons that the benefit is “not fit for purpose”. He is expected to criticize the Department for Work and Pensions (DWP), which has failed to do much in recent years to prevent carers from being hit by high payments that have left many people with huge debts.
“This is a terrible scandal. Tens of thousands of caregivers have fallen victim to the system that should have supported them. The previous government should have acted then. But it didn't happen. So I can urge the government today: act now,” Davey is expected to say.
The Lib Dems have been calling for Carer's Payment rates to be increased for months and overhauling its complex earnings rules. They insisted that existing carer's overpayments – owed a total of around £250m by around 34,5000 claimants – should be waived.
Around 5.8 million unpaid carers in the UK look after loved ones who are ill, disabled or frail. Over 1 million people are living in poverty. Around 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 around 13 hours on the National Minimum Wage.
A fifth of all Carer's Allowance claimants will have to pay back huge sums after the £151 earnings threshold was inadvertently cut, new research suggests. It also found anxiety and frustration among carers about being “felt like criminals” as they face severe penalties for breaching income limits of up to £1 a week.
The results of a survey of 12,500 unpaid carers seen by Carers UK, the Guardian, found that 40% of those claiming or claiming Carer's Allowance, one in five said they had been overpaid because they were over an income limit, overtime paid or received a bonus.
Harsh penalties for breaking income limits are notorious among carers: they must pay back the full benefit even if they go over the weekly limit by £1. A carer who earned £1 more than the £151 threshold for 52 weeks would repay £4,258.80, not £52.
One carer said in the survey that he had gone 4 pounds over the limit during the four-month period during the Covid-19 outbreak due to wage fluctuations due to furlough. He said: “I was made to feel like a criminal … I had to pay almost £400 back and feared a criminal record. The stress caused me to become very depressed. Very scary.”
Another said: “I earned £1 more than 19 weeks and have had to pay all Carer's Allowance since then. I used credit cards to cope. I had to give up a carer's allowance to get another job to make ends meet. My husband is 70 and on government pension. It cripples us mentally and physically.
Four in 10 claimants in the survey said the fear of restrictive rules on Carer's Allowance and the risk of severe penalties had led them to give up paid work. Some said they had turned down pay rises and had to give up paid training opportunities to remain eligible for Carer's Allowance.
One carer told the survey that she had reluctantly given up work after 45 years to retain eligibility for carer's allowance: “Trying to balance work and home is difficult at the best of times, but with caring it's impossible. Some real compassion and common sense should be considered to consider what is a reasonable limit,” they said.
Helen Walker, chief executive of Carers UK, said: “It's a scandal that so many carers who have unknowingly been overpaid face extra stress and anxiety. Many are already under great stress and in precarious financial positions because of their caring role.
The Government is trialling a text alert system to alert carers when incomes are over the threshold, campaigners are increasingly concerned, and the DWP has failed to reverse overpayments despite promising to do so five years ago. Calculate correctly.
Revelations by the Guardian in recent months have highlighted a series of failings in the administration of Carer's Allowance over the years, despite warnings from MPs and auditors. It has raised questions about the governance and culture of the DWP and the priorities of former ministers.
Questions have also been asked about the DWP's policy of prosecuting some carers for income breaching authorities. Could have stopped early. One of the worst cases involved the use of proceeds of crime laws to extort £16,000 received by a carer from the mother he cared for, even after agreeing to repay the money at the first opportunity.
