National Audit Office Press Releases
Investigation into overpayments of Carer’s Allowance
The Department for Work & Pensions (the Department) is detecting significantly more Carer’s Allowance overpayments now, that it could have detected before, because it has recently put in place more people and new systems.
Carer’s Allowance is paid to people who care for people on a qualifying disability benefit. The Department detected 93,000 overpayments in 2018-19 compared with an average of 41,000 a year it detected in the previous five years. While many overpayments were for one week, some cases went on for more than a decade before they were discovered.
As a result, the Department is seeking more repayments from carers for overpayments of Carer’s Allowance, in a few cases for over £20,000. The Department aims to recover around £150 million from just under 80,000 carers where the Department deems the carer was at fault for the overpayment.
It will take a long time for carers to repay these overpayments. At the standard rate of repayment for those on benefits, it will take an average of three and a quarter years for carers to repay their debt. For those on benefits with an overpayment of £20,000 this could require repayments for the next 34 years. The Department has reclaimed £22 million of overpaid Carer’s Allowance in 2018-19 by reducing people’s benefits and through mandatory deductions from employee earnings.
The Department does not know how these repayments affect carers or the disabled person they care for. A typical scenario would see a carer relying on Income Support and Carer’s Allowance for their income to pay for general living expenses such as food, bills and clothing; a repayment of £11.10 would represent around 10% of a such a carer’s income.1 The Department has not conducted any recent evaluation of the impact of its debt recovery policies and nor is it required to under legislation. The Department currently offers hardship rates of recovery to nearly 1,000 carers struggling with repayments.
The Department has a limited understanding of underlying rates of fraud and error. The Department uses sampling to estimate the underlying levels of over (5.5%) and underpayments (0.1%) of Carer’s Allowance. The assumed rates are based on measurements from more than 20 years ago. The NAO has repeatedly recommended that the Department update its estimates, and it is now working on a new estimate for 2020.
Most detected overpayments arose because carers failed, as soon as ‘reasonably practicable’, to notify the Department with correct information about their earnings. It classifies 89% of the value of overpayments as fraud or claimant error, which are the claimant’s fault and need to be repaid.
Misunderstanding the rules around earnings and expenses can lead to carers accidentally accruing overpayments. Some carers are involuntarily caught out by the eligibility rules which create a cliff edge: carers are either entitled to the whole allowance or none of it. The Department acknowledges that it needs to improve its communications with carers to raise their understanding of their obligations. It is reviewing its initial and annual letters to carers, as well as the online guidance, to ensure carers’ obligations are clear.
Few overpayments are proven fraud. The number of people referred for prosecution for fraud fell from 1,176 in 2014-15 to 483 in 2018-19. In 2018, the Department cleared a backlog of 1,000 potential prosecution cases partly by applying more financial penalties, known as administrative penalties. The Department agreed 1,253 administrative penalties in 2018 compared with an average of 860 in the previous four years.
Some errors are the Department’s fault where it has the information to assess an award but makes a mistake. The Department has internal estimates of official error rates based on samples of new claims and changes in circumstances. These showed an overpayment rate of 1.8% and an underpayment rate of 0.8% in 2017-18.
The Department’s strategy for reducing fraud and error in Carer’s Allowance focuses on matching claims to earnings data provided by employers to HM Revenue & Customs (HMRC). This flags cases where carers may be earning more than the earnings limit which then need to be followed up manually. The Department has to check them with the carers themselves to verify the information. Over the past five years the Department has improved its systems of data matching so that they are more timely and more of the cases investigated lead to a detected overpayment.
In the past the Department lacked enough staff to follow up every case flagged by data matching. Between 2016 and 2018, for staffing reasons, only a monthly average of 380 (12%) cases of a potential 3,220 worthy of investigation were investigated. Around two thirds of carers with debts for overpayments over £2,500 caused by failing to correctly declare their earnings would have had their overpayments stopped earlier if there were sufficient staff. The Department has decided not to investigate all of the remaining cases flagged under previous systems because it believes ongoing overpayments will be caught by the new systems.
The Department underestimated both staff turnover and how claims for Carer’s Allowance would increase. This led to backlogs which peaked at 52,000 unprocessed new claims in September 2017 and 104,000 unprocessed changes in circumstance in November 2018. Delays in processing claims and changes meant that overpayments were not identified in a timely manner.
The Department has recently introduced a new system that flags data matches more promptly. The Department estimates that the system will produce additional savings of £136 million by 2025-26 but has two limitations. Firstly, the new system produces many more matches which need to be investigated, which it only does manually. Secondly, the new system will not detect all overpayments. For example, where carers are no longer paid Carer’s Allowance, the system has no means of detecting historical overpayments. The Department is also currently unable to register 254,000 carers (30%) due to software issues but is trying to resolve these.
Notes for Editors
- This is based on a carer who is not working, and claiming Income Support alongside Carer's Allowance, giving a total income of £109.10 a week. This excludes other benefits that are linked directly to non-general living expenses such as Housing Benefit and Council Tax Reduction.
- The NAO undertook this investigation because MPs have expressed concerns about the level of Carer's Allowance overpayments and the impact on claimants of the Department's attempts to recover them.
- The Department for Work & Pensions (the Department) pays £66.15 a week in Carer's Allowance to people who earn less than £123 a week and provide at least 35 hours of care a week to someone who receives a qualifying disability benefit. In 2017-18, the Department paid £2.9 billion in Carer's Allowance to 826,000 carers. The number of people receiving Carer's Allowance has increased by 50% since 2010, in part due to the growth in the number of people receiving qualifying benefits, such as Personal Independence Payment.
- Carer's Allowance is subject to overpayments and underpayments, where the claimant has received more or less than they are entitled to. This can be due to claimant fraud or error, or error by the Department, known as official error. The Department's official estimate of total overpayments in 2017-18 was £160 million (5.5% of Carer’s Allowance expenditure).
- Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
- The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 785 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £741 million in 2017.
Full report: Investigation into overpayments of Carer’s Allowance
NAO Press Office
+44 (0)20 7798 7400 or email email@example.com
Latest News from
National Audit Office Press Releases
Help to Buy: Equity Loan scheme – progress review14/06/2019 12:15:00
The Help to Buy Scheme has increased home ownership and housing supply. However, many of those using the scheme would have been able to buy a home anyway, according to yesterday’s report by the National Audit Office (NAO).
Ensuring food safety and standards13/06/2019 09:15:00
The Food Standards Agency (FSA) and other departments must work together to make food regulation financially sustainable and manage emerging risks such as climate change, population growth, crop disease, food fraud and potentially importing more food from non-EU countries, according to yesterday’s report by the National Audit Office (NAO).
Departments’ use of consultants to support preparations for EU Exit10/06/2019 11:15:00
The National Audit Office (NAO) recently published its investigation into the use of consultants by government departments to support preparations for EU Exit.
Early review of the new farming programme06/06/2019 11:15:00
The government’s new farming policy will be a significant change for farmers in England and the Department for Environment, Food & Rural Affairs (Defra) has a lot to do to prepare for its implementation at a time when its resources are already under immense pressure from its preparations for EU Exit.
Whole of Government Accounts 2017-1824/05/2019 16:15:00
The National Audit Office (NAO) has today published its report on the Whole of Government Accounts (the WGA)
Investigation into the response to cheating in English language tests24/05/2019 11:10:00
The National Audit Office (NAO) has today published its investigation into the Home Office’s response to widespread cheating by international students in English language tests. Clearly widespread cheating did take place but some people may have been wrongly accused and in some cases, unfairly removed from the UK.
Improving the A303 between Amesbury and Berwick Down21/05/2019 11:15:00
The Amesbury and Berwick Down project – which involves building a tunnel beneath the Stonehenge World Heritage Site – is at an early stage but there are risks and uncertainty around it being delivered on time and achieving the benefits government hopes it will bring, according to yesterday’s report by the National Audit Office.
Preparing for trade negotiations20/05/2019 09:15:00
The National Audit Office (NAO) recently (17 May 2019) published a briefing on the Department for International Trade (DIT)’s preparation for future trade negotiations.
Managing the BBC’s pay-bill16/05/2019 16:15:00
The BBC has taken significant steps to improve the consistency, transparency and fairness of its staff pay and working practices, and is well ahead of other organisations on pay transparency and the gender pay gap. It now needs to ensure it has stronger oversight of its costs at the top of the organisation according to today’s report by the National Audit Office (NAO).