Carer’s Allowance Overpayments

Ruth George Excerpts

Tuesday 27th November 2018 Westminster Hall

[Ruth George (High Peak) (Lab)]

I beg to move,

That this House has considered overpayments of carers allowance.

I called for the debate because of cases that have started to emerge and reports that there are hundreds more, if not thousands. It was reported earlier this month that George Henderson from Preston, who is 58 and cares for his mentally ill son, who is also a heroin user, is being taken to court for an overpayment of carer’s allowance of £19,500. George was not aware of the earnings limit and claimed carer’s allowance for six years until a Department of Work and Pensions compliance check discovered that he had exceeded it.

Not only was George taken to court earlier this summer, when he was told to pay back £106 a month out of his disability payment, but the DWP prosecuted him again earlier this month under the Proceeds of Crime Act 2002, seeking repayment of the full amount of overpaid carer’s allowance by Valentine’s day next year, forcing him to sell his house or face seven months in jail. His house is now up for sale, and he faces being unable to continue to care for his son, either because he will have to work more hours—if he can; if he gets the operation he needs—to be able to pay rent and afford a house, or because he will be in jail.

The Guardian reported last month that DWP plans to go back over its records for the last eight years—the period since such a check was last done properly—will result in at least 10,000 cases of historical overpayment of carer’s allowance, with around 1,000 carers facing criminal prosecution. I ask the Minister, as I ask the House: is that the message that we want to go out to carers?

There are 6.5 million unpaid carers in the UK—estimated to increase to 9 million by 2037—who save the economy an estimated £132 billion a year. The “better care, closer to home” model for the NHS and social care relies heavily on unpaid family or friends, in spite of more older people living alone. We therefore need to encourage more carers to come forward who are not necessarily the partner or even the child of the person they care for.

I pay tribute to all unpaid carers. They are indispensable to the person they care for and vital to society. Less than half of carers work, and one in six has given up work at some point to fulfil their caring role. The benefits of their caring roles are well recognised, as are the benefits of work both to carers, in providing some respite from their caring role, boosting their self-esteem and providing them with more interaction with others, and to society, because helping carers into the labour market prevents their skills from being lost. Work also provides income, which is important, as 35% of carers are in poverty, which is 14 percentage points higher than adults overall.

By caring for someone full time, a carer saves a local authority the cost of a care home place, which is about £750 a week in my area in Derbyshire, but much more in more expensive parts of the country. For that minimum of 35 hours of care a week, a carer can receive carer’s allowance of £64.60 a week—about £700 a week less than the cost of a local authority care home. It is also equivalent to, at most, £1.85 an hour, or £3,360 a year, so obviously many carers must work to make ends meet. The person they care for will be on disability benefits, which have not kept pace with the cost of living for people on low incomes, and they will have no way to increase their income.

Most carers cannot work full time so they seek part-time work to fit around their caring duties. That is often necessarily low-paid shift work. A carer can earn a maximum of £120 a week while also claiming carer’s allowance, so their maximum income from both work and caring is £184 a week, or £9,600 a year. It is no wonder that carers are disproportionately poor. However, unlike almost every other benefit and despite the principle enshrined in universal credit, a carer earning just £1 over the £120 threshold ceases to be eligible for any of the £64.60 carer’s allowance. That cliff edge causes huge problems. When I worked for the Union of Shop, Distributive and Allied Workers, I saw people receiving a pay rise of just 1% or 2% unwittingly going over the earnings limit and being due to repay hundreds or sometimes more than £1,000 in carer’s allowance at the end of the year, causing huge hardship.

There is a case online of a carer desperately seeking advice. They had a 10p an hour pay rise, meaning that they unknowingly exceeded the earnings threshold over nine months by just £1.08 a week. For the extra £42.12 that they earned, they were forced to repay £2,500 in carer’s allowance. How does the Minister think that fits with the principle of a fair benefits system in which someone is always better off in work? The distress that it has caused is obvious from the post. The carer’s partner says:

“We are not criminals, we simply didn’t realise. We have enough to do looking after our disabled daughter, we can’t afford to pay this back, what can we do? Please, please help. Why have we got to pay so much back? Will it be a black mark on our credit rating? Will it be a conviction against my wife, who works in a school and may not be able to do so anymore? We are so upset.”

Their being upset is understandable.

If someone on carer’s allowance earns £120 a week, their total income will be £184.60, but if their pay goes up by just £1, their total income will be £54.60 a week less—just £121. With such a cliff edge, it is vital that carers are well aware of the earnings limit, but there is lots of evidence that they are not. Carers UK does a great job of supporting carers with an online forum on which carers report their problems. It told me of one carer who looks after someone who is severely disabled and who knew that they would earn more than the threshold for two months running. They dutifully contacted DWP to report their change in circumstances, but then received a notice of overpayment over the previous year, which came as a total shock and surprise. They had not realised that they were earning several pounds over the threshold. They are now paying back the overpaid allowance over 18 months while on a severely reduced income, putting them even more into poverty.

When the Work and Pensions Committee quizzed the DWP’s permanent secretary, we were told that a letter that carers receive about carer’s allowance gives them the full information about the earnings threshold and what they have to declare every year. I have with me the standard letter, which has been the same for six years. Yes, on page 1 of that four-page letter it says:

“From 09/04/2018 you can earn up to £120.00 each week from work you do for an employer or as self employment, after taking off certain expenses, before your Carer’s Allowance is affected.”

For starters, it does not set out what the “certain expenses” are, and nowhere that I can find, other than in the regulations, does the Department—the Government—actually do that. The information on the gov.uk website is certainly very unclear, and even when people receive a compliance form to complete, they are simply asked, “What expenses do you incur?” They are given no guidance on what those expenses might be.

The standard letter, which sets out the changes of circumstance that the DWP needs to know about, does not set out that people need to inform the Department if their earnings exceed £120 a week. Yes, under the heading “Changes we need to know about” it says, “When you start work, whatever your earnings, you need to let us know,” but it also says:

“If you have already told us that you are working, you must tell us if your earnings go up or any expenses already claimed change. You must also tell us if you work any overtime or receive a bonus.”

That simply does not fit with the reality of today’s low-paid shift work, whereby people’s hours go up and down all the time. There is rarely a concept of overtime anymore, because people do not have set hours of work. There are very rarely bonuses for people doing such work. The advice fits with a long-gone era in which people had a contract for set hours of work and received extra in overtime. Also, nowhere does the letter say clearly, “If you earn £120 in any one week, you will cease to be eligible for carer’s allowance that week, unless you pay out certain expenses”—with those expenses set out—“and you must inform us.”

It is therefore not surprising that carers are unaware of the rules. Even if they are aware, the letter, which comes from the DWP—its logo is at the top—is signed simply by a “Manager”. It does not inform the claimant that they have to inform the Carer’s Allowance Unit specifically of any changes. Among the examples that Carers UK has come across is that of a carer who said:

“There is a very strong possibility that I have been overpaid Carer’s Allowance for almost three years. As you can imagine I feel sick to the pit of my stomach.”

I am not surprised: they will have been overpaid about £10,000. The carer continues:

“I did not realise that it was ‘means-tested’. I thought because I’d had contact and had updated the DWP when I was moving from Income Support into work that they’d know.”

Claimants are informing the Department for Work and Pensions of their work circumstances, but they are not informed in the letter that they need specifically to inform the Carer’s Allowance Unit.

With the lack of information and the huge cliff edge, it is obviously imperative that the Department takes a responsible attitude to compliance checks for carer’s allowance—there are such huge losses for people if they are overpaid. When I worked at USDAW, we would see difficult cases, but for a maximum of a year. Now, we see cases lasting three or four years and racking up thousands of pounds in overpayments. I ask the Minister: why is that the case when real time information has given the DWP monthly earnings data since 2014? In 2014, the number of cases taken up dropped drastically. In 2011-12, there were more than 30,000 cases of overpayment of carer’s allowance, but in 2014, 2015 and 2016, that more than halved to just 14,500 cases, despite the Department having much more detailed, and electronic, information. Bearing it in mind that two thirds of cases of carer’s allowance overpayment involve earnings over the threshold, it seems like thousands of cases have been missed in the last few years, since the dramatic drop in 2012-13 when cuts were made to administrative staff in the DWP. Staff have been drafted in from the compliance unit in Ramsgate and from pensions offices in Motherwell and Ilford to deal with the backlogs, but those backlogs can now go back over several years, costing carers thousands of pounds. Carers are starting to come forward and, on the evidence seen so far, are being dealt with extremely harshly. A case reported a couple of weeks ago from Belfast was of a carer from whom a payment of more than £14,000 of carer’s allowance is being sought in full by 5 January or—again—they face a jail term.

I have some questions for the Minister. Does he think that the information given to carers about the earnings threshold is clear enough to be fully understood and acted on by individuals who are in a very demanding role and combining that with paid work, while doing all the juggling that people have to do when they are on a very low income? Will the Minister please commit to looking at that information, both in the letters received by all carers and online, and making it clearer? Does he believe that the DWP has used all its ability to seek to ensure compliance with carer’s allowance earnings rules and to keep overpayments to a minimum? Does he think that, in the circumstances, it is proportionate to seek such huge sums from low-paid carers? One compliance officer working in the Carer’s Allowance Unit has calculated that more than 30% of recent overpayments were for amounts of earnings less than 20% over the threshold, so for less than £24 a week, people are being prosecuted for £64.60 a week going back over many years and thousands of pounds.

Will the Minister please look again at the policy for these people who have been overpaid as he looks at the information for carers? Also, I hope that, with a new regime in the Department for Work and Pensions and a new Secretary of State, the Department will look again at the report from the Work and Pensions Committee on carer’s allowance and the cliff edge, and reconsider the possibility of a taper so that we cease to see huge overpayments, cliff edges and the impoverishment of carers, to whom we owe so much.

[The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)]

It is a pleasure to serve under your chairmanship, Mr Betts. I thank the hon. Member for High Peak (Ruth George) for opening the debate. She displays a huge amount of knowledge, passion and care in this area, and she has raised many points that the Government and I would agree with.

Carer’s allowance actually falls within the remit of my hon. Friend the Minister for Disabled People, Health and Work. There is an outstanding relationship with Carers UK, both at ministerial level and with officials. There are regular meetings with Carers UK, and many of the points raised in this debate have been raised previously and are being looked at and reviewed, so the debate is very timely.

As an individual, I share much of the passion that we have heard today. Not a lot gets me emotional, but I remember, in my early days as a constituency MP, meeting young carers, who are often forgotten in debates about carers. I am talking about children who have often lost the things that we all took for granted when growing up, as they have taken on caring responsibilities. It was a particularly moving meeting, and one that I have never forgotten, so I was happy to step in for this debate.

The Government recognise and appreciate the vital contribution made by informal carers, who provide invaluable support for relatives, partners, friends and neighbours who may be ill, frail or disabled. We also recognise the important role that many carers’ organisations play across the country in supporting carers, including those in the hon. Lady’s constituency, such as the Blythe House and Buxton carers’ support groups, which I am sure that she, as a diligent constituency MP, will have had much involvement with.

The Government are already supporting carers in a number of ways, including through the benefit system. About 850,000 people currently receive carer’s allowance. Since 2010, the rate of carer’s allowance has increased from £53.90 to £64.60 a week, with a further increase to £66.15 planned for April 2019, meaning an additional £635 a year for carers since 2010. By 2023-24, the Government forecast a spend of around £3.4 billion a year on carer’s allowance, which is a real-terms increase of more than one fifth since 2016-17.

Carer’s allowance offers a measure of recognition of the vital contribution that carers make to our society, although we fully appreciate that many make substantial sacrifices to care for their loved ones. That is why in June 2018, the Government published “Carers action plan 2018 to 2020: supporting carers today”, which sets out a two-year programme of targeted work to support unpaid carers. The plan puts a focus on practical actions to support carers and gives visibility to the work already under way or planned within Government.

However, I recognise that there are concerns about carer’s allowance, particularly around earnings and the possibility that a number of claimants may have been overpaid. Again, I pay tribute again to the hon. Lady, who raised some of those issues, which have been raised in the media, through the work of the Work and Pensions Committee and through her own recent, diligent parliamentary questions. It is in everyone’s interest that we deal with fraud and error effectively, preferably by stopping it happening in the first place.

We have been discussing updating our measurement of carer’s allowance fraud and error with the National Audit Office over the last year or so. We now plan to start the measurement during 2019, with the intention of publishing revised estimates during 2020. This is vital, because the last time we did this was in 1996-97. A huge amount has changed since then—not only the technology, but the way people work and their circumstances, as the hon. Lady mentioned. We suspect that the estimate of 5.5% fraud and error, which was set in 1996-97, does not reflect the reality today. The new measure, which will come in next year, can accurately set out where we should be, and where we should then target and prioritise our resources to prevent, identify and counter fraud and error even more effectively and efficiently.[Official Report, 6 December 2018, Vol. 650, c. 12MC.]

However, we are not complacent about fraud and error and already have a number of measures in place to deal with it. We are also reinforcing to carers their responsibility to inform us of changes to their earnings and other circumstances. Our priority has been to try to clear new carer’s allowance claims as quickly as possible, including during a period when the number of carer’s allowance claims has increased significantly. In part, that increase is due to the great work of stakeholders to raise the profile of carer’s allowance. We have also done our part by introducing the new online claim system, which is easier to use and—perhaps surprisingly for a Government online system—has a 90% satisfaction rate, so there are certainly some lessons for us to learn there.

Our performance here has been consistently improving, partly as a result of recruiting new staff—an additional 150 in the last 12 months alone. Many of them are based in the Preston, Blackpool and Swansea offices. I know that the Minister for Disabled People, Health and Work visited the Preston office in the summer, in her role as the Minister responsible for carer’s allowance. She was very impressed with the enthusiasm and hard work of the staff.

[Ruth George]

The Minister says that performance is improving. In what way is it improving? Does he mean that they are now going back over these historical overpayments and requesting them back from carers? Most carers and most people in this House would not see putting right the wrongs of previous years by finally investing in compliance to be a performance improvement, at least not for the carers that it affects.

[Justin Tomlinson]

I am coming on to what those staff will be doing and the improvements that we are bringing forward. As well as focusing on new claims, we are working hard to reduce backlogs elsewhere in the system, remind carers of their responsibilities and make better use of available technology.

The Department for Work and Pensions takes every care to explain a claimant’s responsibilities when they apply for carer’s allowance. This includes the need to report changes on time. Our annual notifications help remind claimants how important that is. We also provide information on the website gov.uk, while customers who need additional advice can contact the Carer’s Allowance Unit for further information, and we encourage stakeholder groups to help to share that information.

I absolutely understand the points the hon. Lady made about whether the guidance is perfect. When the Work and Pensions Committee raised questions with the Minister, we recognised that there were improvements to be made in this area. We have already made significant changes to the website. I also accept the points made about the letter, which the hon. Lady went through. I will encourage the Minister for Disabled People, Health and Work to meet with her personally to discuss the specific points about the quality of that guidance and information. We absolutely have to get that right, and it was a fair point to raise.

The consequences of not keeping the DWP up to date, including the need to repay overpayments, are clearly stated during the initial claim process and in our annual uprating letters. Therefore, every claimant has an obligation to tell us when their circumstances change. As with all benefits, the DWP has a responsibility to recover an overpayment where a claimant has failed to disclose a change that would affect their entitlement. Where there is an overpayment, the DWP will always look to recover the debt through a sustainable repayment plan. Where a claimant is having difficulty repaying a benefit overpayment, they can request a reconsideration of the amount that is being taken. It is also important to note that once a claimant has told us of a change of circumstances, they would not be responsible for overpayments from that date. However, we must recognise that we need to work with claimants to help them avoid overpayment and to ensure that we pay the correct amount.

In recent years, the DWP has introduced new technology to make it easier to identify and prevent overpayments, with cases checked against earnings information held by Her Majesty’s Revenue and Customs. The new verify earnings and pensions—VEP—system, allows us better to check earnings declared by carers to the DWP against tax records, and it allows staff to quickly take any action to clear up any discrepancies. Where we do have arrears from previous exercises, our priority is to ensure that the benefit is being paid at the correct rate in order to provide regular financial support. Once we have done this, we can determine any overpayment that might have accrued. Even when there has been a delay in dealing with a change in circumstances, as a carer’s allowance claimant can earn £120 net of allowable expenses a week, many of these claimants will have been paid correctly anyway. We will be increasing the carer’s allowance earnings limit again from £120 to £123 a week from April 2019. The Office for Budget Responsibility forecasts that average earnings will increase by around 5.1% between 2017 and 2019, whereas we will have increased the carer’s allowance earnings limit by 6%.

The Government acknowledge the vital role played by carers and the valuable work that carers’ organisations carry out on behalf of carers. We recognise that the UK’s 6 million carers play an indispensable role in looking after friends or family members who need support, which is why it is so important that carers should continue to have access to a dedicated benefit that recognises their particular contribution to society. Our staff work hard to support carers and pay people the right entitlement. I know that the Minister for Disabled People, Health and Work is very passionate about this, and it is a real priority for her. Equally, there are improvements in place that mean that we are tackling arrears and have a much smoother process for taking account of any earnings changes going forward. I thank the hon. Lady for giving me the chance to talk about carer’s allowance.

Question put and agreed to.