Go back a step

Contact calls for DWP to drop its pursuit of overpayment of Carer’s Allowance and focus on sorting out the earnings threshold in line with the National Living Wage

Wednesday 15th May 2019

Today MPs on the Work and Pensions select committee are investigating the Department for Work and Pensions' decision to recover £150 million in overpaid Carer's Allowance from 80,000 carers.

Some of the families Contact supports have been affected by this and we are calling on the government to drop its pursuit of carers who have been overpaid mostly due to innocent mistakes and the department's own administration issues.

Una Summerson, Head of Policy at Contact, said: "Instead of pursuing carers for repayment, we urge the Department for Work and Pensions to address the Carer's Allowance earnings threshold which currently means some families having to choose the lesser of two evils - cut their working hours and lose out on free childcare and Working Tax Credit or keep their hours and lose out on Carer's Allowance. It is an indictment on our welfare system that carers who are doing so much are faced with this lose-lose situation."

"We know that the majority of cases of overpayment are due to innocent mistakes such as a carer not understanding how an increase in their earnings might affect their Carer's Allowance, or is unaware that starting a full-time course of education meant they were no longer entitled."

Carer's Allowance and the National Living Wage

In order to get Carer's Allowance from April 2019, earnings after allowable deductions must be no more than £123 per week. However, with the National Living Wage for the over 25s also having increased to £8.21 per hour in April, someone working 16 hours a week now has earnings of £131.36 per week. Because their wages are £8.36 more than the amount they are allowed to earn, they are no longer likely to qualify for any Carer's Allowance. 

A parent in this position may be tempted to cut their hours so their earnings do not increase. However, depending on their circumstances, cutting hours to below 16 could mean they no longer qualify for Working Tax Credit. This penalises lone parents most of all. In addition a working parent with a three-four year old, dropping your hours will also mean that you will no longer qualify for an extra 15 hours free childcare. 

We are hearing from parents that they are being put under pressure to work extra hours and having to say no to their employers because to do the extra hours would mean they lose their Carer's Allowance. This needs to be addressed urgently.