Carer’s Allowance: Overpayments

Debate between Baroness Sherlock and Lord Young of Cookham

Tuesday 2nd December 2025 Lords Chamber

[Baroness Sherlock (Lab)]

I thank my noble friend for that question and for her work. I pay tribute to the millions of unpaid carers across this country; the Government greatly value them and the work they do. Carers are also fortunate to have some excellent advocates, including many Members of this House—and I think we would probably all acknowledge that supreme among them is my noble friend, whose work in this area has for so very long been recognised by us all.

Carer’s allowance provides support to around 1 million people and, for most of those who receive it, the experience is positive and the rules are clear. But my noble friend is right that, when we came into government, it became clear that there were far too many cases where working carers had been left with large overpayments to be repaid. That is why we commissioned an independent review of earnings-related overpayments. We are very grateful to Liz Sayce for her recommendations, but also to her advisory panel and especially to the unpaid carers who shared their experiences to make that right. We have accepted or partially accepted 38 of the 40 recommendations in the report, we have begun working on many of them already, and we will set out the details in the new year. We will be very clear and transparent: many of the recommendations regard reviewing how we write to people, how we make things clear and how transparent we are. Above all, when the Government make mistakes, they should acknowledge them and put them right, and that is what we are doing.

[Lord Young of Cookham (Con)]

When we discussed this matter a few days ago, I raised with the Minister the issue of the so-called cliff edge, whereby if you earn 1p over the earnings limit you lose the whole allowance. The Minister replied with characteristic sympathy, but she said that modernising the system would take “some years”. The independent review referred to by the noble Baroness, Lady Pitkeathley, takes a totally different view. It says that addressing the impact of a cliff edge is urgent, and asks the department to be

“creative in its thinking about options for short term changes to remove or reduce this impact more quickly”.

Does the Minister accept that recommendation?

[Baroness Sherlock (Lab)]

My Lords, what I said last time we discussed this is absolutely the Government’s position. For the reasons I explained then—I will not go back into them again—carer’s allowance is traditionally not a classic means-tested benefit, so we want to find ways to tackle this. It will take time, because everything about the system has been built in ways that were designed around a simple, non-means-tested benefit. However, we have already done significant things to make a difference; one of the most important of those was to raise the level at which people could earn by the largest cash amount since the benefit was created. This means that if you earn less than 16 hours a week at the national living wage, there is no problem at all. We have also gone through to make sure that most of the ways in which people have fallen foul of the system can be corrected. For example, we have taken action on guidance and communications, and we are now checking automatically all the data that comes in directly from HMRC. We are doing all the things that can be done in the short term.

Much as I do not want to say this, the noble Lord will have to be patient. To be able to remove a cliff edge, the first requirement is to automate earnings coming from HMRC, which cannot be done overnight. We have already begun the work and we are looking for all possible workarounds in the short term. This problem has been around for a long time and no one paid any attention. We spotted it, we are taking action and we will sort it.

Carer’s Allowance: Overpayments Review

Debate between Baroness Sherlock and Lord Young of Cookham

Tuesday 18th November 2025 Lords Chamber

[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.

Welfare Reform

Debate between Baroness Sherlock and Lord Young of Cookham

Tuesday 18th March 2025 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I am grateful to my noble friend for raising that question and I apologise to my noble friend Lady Lister for having forgotten to deal with it in my response to her. I commend my noble friend Lady Pitkeathley for all that she does in this space. First, she knows more than anyone that we are investing in carers: we have just significantly raised the amount of money that somebody can earn before they will lose their carer’s allowance. We have also launched an independent review of carer’s allowance to make sure that the system works. The eligibility change will benefit 60,000 carers-plus by 2029-30.

My noble friend makes the excellent point that the overlap between caring and disability is sometimes more intertwined than we realise. Again, I reassure her that if somebody is on PIP, neither the carer nor the person being cared for will lose that money unless and until there is a reassessment and their eligibility is found to have changed. More than that, we made a specific commitment in the Green Paper to look carefully when considering the consultation responses at how we can support any unpaid carers who find they are affected by the changes that we are proposing. In light of that, I strongly encourage anyone such as her or people she may know to respond to the consultation, to engage with us and to make sure that we understand any unforeseen consequences and can think about how we deal with them.

[Lord Young of Cookham (Con)]

The noble Baroness has announced a wide range of reforms. Can she say which require primary legislation and which can be done by secondary legislation? Can she outline the implications for those who work in her department of the reforms she has just touched on?

[Baroness Sherlock (Lab)]

With parliamentary approval, we will use primary legislation to address the changes in universal credit and PIP eligibility. Assuming that we have parliamentary approval and that time is found for Bills by whoever makes these decisions, we will bring forward legislation on those. Some of the other aspects of the reforms that we are consulting on in the Green Paper, if taken forward, will also need primary legislation, but of course they are the subject of consultation, so, as the noble Lord will understand, I would not commit to doing them at this stage; it depends on the result of the consultation. Some of those will need consultation, and primary legislation for them, with parliamentary approval, would have to be done in a subsequent Session.

On the impact on people in my department, we have looked carefully and have been working with colleagues across the department to make sure that the changes that we want to make are deliverable—that has been very much at the forefront. Somebody asked me recently what the biggest difference is between being in opposition and being in government. It is that, when you are in opposition, your primary concern is policy; when you are in government, one of your concerns is how you can actually deliver things. We are very conscious that we have to make sure not only that the system has the right elements to it but that it is deliverable, and we are determined to do that.

Household Support Fund

Debate between Baroness Sherlock and Lord Young of Cookham

Wednesday 24th July 2024 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I assume that the noble Lord is talking about a vote in the other place on the two-child limit. I certainly would not comment on the decisions of the Chief Whip here—never mind at the other end—who is of course always right. I simply take gentle issue with the suggestion that people taking a particular view are putting party before country. I recognise that there is a concern about the two-child limit, but our new Prime Minister could not have shown a greater commitment on child poverty. One of the earliest major announcements he made, in his second week, was to create a major commission on child poverty, with Ministers drawn from across government. It will of course look at important questions such as household income, but poverty is not just about that. It is going to draw in and look at education, childcare and health—all the things that prevent our children having the best start in life—and I am really excited about that.

[Lord Young of Cookham (Con)]

Does the Minister recall that, the last time we debated this, the outgoing Government agreed to extend the household support fund for a further six months until September? Does she recall that, at that time, I intervened to suggest that, instead of a cliff edge at the end of September, there should be some form of taper? Will the Government consider that?

[Baroness Sherlock (Lab)]

I remember that very well. In fact, I read the Hansard of the last time this came up and noticed that the noble Lord made that point. When I looked at how the financing had been provided, I saw that the money had been provided for only six months. Therefore, there is currently nothing in the budget to go beyond that. But I take his broader point about cliff edges and short notice being unhelpful. As I said, we need to get back to a space where we can support councils with longer, multiyear funding to give them the kind of stability they need but simply have not had recently.