Carer’s Allowance: Overpayments Review

Lord Young of Cookham Excerpts

Tuesday 18th November 2025 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I am afraid the noble Lord will also have to be patient for just a little longer to hear what the Government will do in response to this. It was a very detailed report of over 100 pages, with lots of detailed recommendations; we have been through it in an equally detailed manner and will publish a proper response very shortly. In the meantime, the Government have done a number of things to make a difference. For example, we have already improved guidance to help staff make judgments about the way they treat overpayments in earnings. The crucial thing, which my noble friend just asked about, is that increasing the earnings limit by so much will mean that a lot of people will not be caught by this issue at all and, by the end of this decade, another 60,000 people will be able to claim carer’s allowance. We have already taken significant steps to improve things and will do more in the months ahead, but for the details I am afraid he must wait for the response to the report.

[Lord Young of Cookham (Con)]

My Lords, further to the reply the Minister gave a few moments ago, why does the carer’s allowance, unlike other benefits, have a so-called cliff edge, where if you earn £1 over you lose all the allowance? Surely there should be a taper, as with other benefits, to avoid some of the problems which the noble Baroness, Lady Pitkeathley, has raised.

[Baroness Sherlock (Lab)]

The issue is long-standing. The real difference is that carer’s allowance, unlike universal credit, for example, is not actually means-tested. It is a benefit which is there to recognise that somebody may not be able to work, or not as much, because they are caring. The requirements are that you must be providing care for 35 hours a week to someone in receipt of a relevant DWP benefit. You must also not be in gainful employment, which we class as being 16 hours a week at the national living wage, and you must not be a full-time student. It is an individual benefit. For example, a woman in a household with no independent income of her own but with income in the household can still claim carer’s allowance.

Having said all of that, we would like to look at the way this works. Unlike universal credit, which was built with a taper in mind and automatic earnings from HMRC, carer’s allowance had none of that, either in the systems, the IT or anything else. Therefore, we have begun to look at other ways to automate certain kinds of earnings coming over from HMRC and what it would take to do a taper, but I do not want to raise expectations too quickly. This is a significant piece of work to modernise the system, which will take some years—but we are looking at it.