Tens of thousands of unpaid carers in financial crisis

Tens of thousands of unpaid carers are facing years of financial crisis because of benefits overpayments being clawed back by the government, a report has found.

Charity Carers UK say about 134,800 people have been overpaid carer’s allowance as of May 2024, at an average of £4,000.

Some carers have been overpaid by as much as £20,000 – a debt that will take 34 years to repay.

It’s yet another financial worry for carers – earlier this year, a Guardian investigation revealed unpaid carers were being taken to court and given huge fines.

How much is carer’s allowance?

Carer’s allowance is one of the lowest paid benefits at £81.90 a week.

You need to spend at least 35 hours a week looking after someone with a disability or an illness, meaning it’s equivalent to just £2.34 an hour. To qualify, you can’t earn even a penny over £151 a week after tax, national insurance and expenses.

Many carers have said the limit is a barrier to paid work, as they’re forced to cut their hours to be eligible for the allowance. The government haven’t said whether they would do away with or raise the limit, though they are considering paid carer’s leave, which Carers UK have been calling for.

Why have there been overpayments?

Most overpayments were made because of people going over the earnings limit, while others were mistakes by the Department for Work and Pensions (DWP). Fewer than 500 cases were due to fraud.

Over two thirds of overpayments (70%) happened when people went over the earnings limit because of:

• fluctuating earnings, like zero-hours contracts, being self-employed or doing shift work
• working extra time, for example by covering a colleague or working slightly over your shift
• getting a pay rise or minimum wage increase
• getting extra pay one month, such as holiday pay or a bonus
• employer mistakes

Carers UK say many carers don’t understand the rules around the earnings limit. They often think their earnings will be averaged over a year (it’s usually just five weeks) or don’t know what deductions are allowed.

Most carers were unaware they’d gone over the limit until they were told they’d been paid too much or their payments stopped.

The impact of overpayments

Many carers said having to pay back the overpayment had made them stressed, anxious or depressed. Some felt they were being punished for trying to do the right thing, while others said they’d had suicidal thoughts because of it.

Paying the debt back also caused further financial hardship with carers forced to use their savings, take out loans or borrow money from family or friends. Many cut back on their spending and others sad it affected their ability to pay for costs related to caring.

Robbing Peter to pay Paul

A quarter of carers are already cutting back on essentials and nearly two-thirds say they’re worried about their monthly costs – and that’s before potentially having to pay back overpayments.

The amount varies between carers, but the most common repayment method seems to be taking them from other benefits payments, according to Carers UK.

One carer’s disability-related personal independence payment (PIP) was being cut by £200 each month to repay an overpayment debt. Another was fined and had payments docked from her wages – despite telling the DWP about a change in circumstances plenty of time in advance.

What Carers UK and the DWP say

Carers UK said they want the DWP to:

• conduct a full review of carer’s allowance, including eligibility criteria and processes
• increase the earnings threshold to the value of 21 hours a week at the national living wage rate
• write off past overpayments (where the DWP should have told carers sooner)
• taper earnings like other benefits, like universal credit
• increase staffing and improve training
• act quickly on info from carers and share between departments
• modernise the ways carers can send info to the DWP
• let carers say how their pay is averaged
• quickly tell carers about potential overpayments
• make earnings rules easier to understand
• improve customer support

Responding, the government said they were considering the report’s findings and “moving quickly” to understand what went wrong so they could “put things right”.

We’re here for you

If you’ve been told to pay money back from an overpayment but can’t afford to, you’re not alone. Around 30% of the people we support have turned to us because they’re struggling to repay overpaid benefits.

We might be able to help you with free and impartial debt advice online or you can give us a call.