Carer’s Allowance: Overpayments Review

Tuesday 18th November 2025 Lords Chamber

Question

14:37

Asked by

[Baroness Pitkeathley]

To ask His Majesty’s Government when they plan to publish the final report of the Independent Review into Carer’s Allowance overpayments.

[The Minister of State at the Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, the Government would like to thank Liz Sayce for the work and insights that went into the independent review of earnings-related overpayments of carer’s allowance. We are carefully considering the findings of the review and will publish the report and our response by the end of this year. We have already taken steps to improve carer’s allowance, including implementing the highest-ever increase to the earnings limit.

[Baroness Pitkeathley (Lab)]

I thank my noble friend for that response. I trust that I can feel hopeful about it and that, when the government response comes, it will be both positive and compassionate. I hope she will agree that the most important thing we have to avoid in future is prosecution of carers and the great distress caused to them by inadvertently going over the earnings limit when claiming carer’s allowance. The Government have pledged to increase the earnings limit and to keep it pegged to the national living wage. Can my noble friend confirm that this will happen from next year?

[Baroness Sherlock (Lab)]

My Lords, I am grateful for my noble friend’s patience; I am afraid that I must ask her to be patient for just a little longer. On the important question of earnings-related overpayments, we are very conscious that some carers found this extremely difficult—hence the need for the report. As I said, we have committed to keeping the weekly carer’s allowance earnings limit pegged to 16 hours of work a week at the national living wage level. That meant that, last April, there was a record jump in the earnings limit from £151 a week to £196 a week. We will announce the new earnings limit from next April in the next few weeks. I hope the House appreciates how difficult this has been but also that we are determined to get to the bottom of it. Carer’s allowance is an unusual benefit: if you earn £1 below the threshold, you get the lot; if you earn £1 over it, you get nothing. It has taken quite some work, but we hope the report will be out very soon.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for that reassurance, and we will of course wait for the independent review. In the meantime, what steps are the Government taking to ensure that carers are not unfairly penalised for minor or unintentional breaches of earnings rules? Will they consider writing off historical overpayments where department error is a significant factor?

[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.

[Lord Laming (CB)]

My Lords, in the preparation of this report, could the opportunity be taken to pay a very warm and well-deserved tribute to carers for what they do? As a society, we should always indicate how indebted we are to the people who care for other people with very special needs.

[Baroness Sherlock (Lab)]

I am so grateful to the noble Lord—trust him to say the thing I should have said right at the outset, but I am very grateful to him for raising it. With all of his experience, he has seen this close-up. As he knows, anyone who has worked in professional social care knows just how much we all depend on the tier of unpaid carers who make all of this possible. I am told that 20 November is Carers Rights Day, so I take this opportunity to pay tribute to all of the unpaid carers who work so hard, day in, day out, to look after not only themselves but the people they care for. The whole of society depends on them. I thank the noble Lord for that very helpful nudge, and I am very pleased to pay tribute to them.

[Lord Sahota (Lab)]

My Lords, since the Government halted the recruitment of overseas care workers in July 2025, around 40,000 visa holders who came here in good faith to work in the care sector remain unemployed. What specific steps are the Government taking to support them and to ensure they are able to find suitable jobs in the care industry?

[Baroness Sherlock (Lab)]

My Lords, the care route admitted more than 150,000 workers in three years. There have been changes to the Immigration Rules, but that will not prevent those who want to from building a career in the sector, because there is a transition period until July 2028, which allows, for example, in-country applications from people who came in by other visa routes. This means that care providers could recruit graduates, for example, or people who come in other ways.

My noble friend is absolutely right that, on 1 July, we laid changes to the Immigration Rules, which included closing the social care visa route to overseas recruitment. That said, there remain significant numbers of international care workers who are looking for work in the UK who have not had the chance to support the system as they wanted. New measures have already come into effect which require care providers in England to prioritise recruiting international care workers who are already in the UK and require new employment.

More generally, DWP is doing a lot to try and encourage people into social care. We are working with adult social care bodies in developing recruitment events for the sector to encourage people into it. We want people who are committed professionals and who want to work in the sector, and we will do what we can to encourage them.

[Viscount Younger of Leckie (Con)]

My Lords, it is a pretty sobering statistic that 150,000 children provide more than 50 hours of care a week. What is being done in schools to understand who these pupils are and to give them the optimum support as they undertake their studies?

[Baroness Sherlock (Lab)]

The noble Viscount raises a very important point. Certainly, I have met with organisations over the years that work with young carers. Schools are becoming increasingly aware of these pressures. Good schools with good pastoral care systems are identifying them and making sure both that these young carers get the support they need and that they themselves are aware of broader issues in the home of which other authorities might need to know. The noble Viscount will know that this does not stop at 18, and there are issues for young adult carers who want to carry on and complete their studies. Fortunately, if somebody is doing less than 21 hours a week of supervised study, they can still claim carer’s allowance, but we are looking at how we can best identify and support young carers to enable them to combine their study with their caring. We want to make sure that their childhood is not ruined and that young adults have a chance to make a life for themselves as well as caring for those whom they love.

[Baroness Lister of Burtersett (Lab)]

My Lords, the level of carer’s allowance, understandably, was not part of the terms of reference of the review, but its very low level, relative to other similar benefits, contributes to the disproportionate risk of poverty faced by carers. Is this something that the Government might look at in the future?

[Baroness Sherlock (Lab)]

I will say to my noble friend that one of the differences, as I began to explain to the noble Lord, Lord Young of Cookham, is that carer’s allowance is not a means-tested benefit. If someone is on a low income and is doing some caring, they can also apply for a means-tested benefit, such as universal credit or, if they are older, pension credit. Although they cannot usually get both of those benefits, if they do get one of those benefits, they can get an extra £2,400 a year in universal credit or pension credit to acknowledge that caring. Having said that, the Government are determined to make sure that this maintains its value and is increased by CPI every year, and new rates for 2026 will be announced in the next few weeks. The Government are spending a record £4.5 billion this year on supporting a million carers through carer’s allowance.

[Baroness Fraser of Craigmaddie (Con)]

My Lords, as the noble Lord, Lord Laming, reminded us, unpaid carers do a challenging, varied and extremely difficult job, but they do it invisibly. What are the Government doing to ensure that the visibility of unpaid carers is heightened, and that, whether they are in DWP or the health and care services, those providing complex support to this invisible and important population are seen and are supported?

[Baroness Sherlock (Lab)]

The noble Baroness raises a very important question; I am not surprised, given her charity work, that she is aware of this and the role of carers. Let me mention a couple of quick things. What DWP and other parts of government do is support those events which highlight them. For example, as I am sure she knows, Carers Week was back in June and Carers Rights Day is on Thursday, and the departments have been involved in those, trying to highlight the importance of this and engage with people. For example, tomorrow night Carers UK is holding a reception, and I know that my right honourable friend Sir Stephen Timms, who is a Minister in my department, and Minister Kate Dearden from DBT, are both going to that reception to mark it. The noble Baroness raises a really important point. Hopefully, even our having this conversation will help to raise awareness of that.