Penalties for unpaid caregivers in benefits scandal must end, says Ed Davey

Sanctions imposed on thousands of unpaid carers who breach discredited carer benefit rules should be suspended until the Government fixes the system, Liberal Democrat leader Ed Davey has said.

A Guardian investigation last year found that hundreds of thousands of unpaid carers had been saddled with huge debts – and in some cases prosecuted for fraud – after being accidentally trapped by chronic flaws in the benefit design and administration.

Although the government promised to reform healthcare benefits a year ago, there is growing impatience among campaigners over the lack of progress and concerns that hundreds of unpaid caregivers are facing new reimbursement demands every week.

“It cannot be right that the government is still pursuing healthcare providers for reimbursements long after this scandal came to light and even after we obtained an independent review, but before anything has been done to put things right,” Davey said.

In December, the government commissioned an independent review into carers’ allowance, led by disability policy expert Liz Sayce. Sayce presented her findings to ministers three months ago, but it is unclear when the government will publish her report or formal response.

“The government must now suspend reimbursements, publish the investigation’s findings without further delay and get on with fixing the system so it actually works for healthcare providers,” Davey said.

A liberal democrat change Following the Government’s Fraud and Error Bill due to be debated in the Lords next week, the Department for Work and Pensions (DWP) is being called on to stop pursuing reimbursements from care providers until the Government’s plans to reform benefits are implemented.

Lord Palmer, the Liberal Democrat spokesperson for work and pensions in the Lords who tabled the amendment, said it was wrong that unpaid carers were still being unfairly punished by a system that was clearly not working. He called the informal care allowance scandal “a national shame”.

At least 144,000 carers are now paying back more than £251 million in overpaid care benefits, usually between £2,000 and £5,000, but sometimes up to £20,000. These draconian penalties are applied when carers working part-time exceed the income limits attached to the benefit of £82.30 per week.

This ‘cliff edge’ penalty means that healthcare providers will have to pay back the full benefit if they go even a small amount over the income limit. A carer who received 50p more than the £196 weekly threshold for 52 weeks would pay back £4,258.80, not £26.

The impact has been exacerbated by the DWP’s routine failure for years to investigate all electronic notifications it receives alerting them to potential revenue breaches. This has led to applicants for healthcare benefits unknowingly accumulating overpayments over a number of years.

Campaigners have consistently called for overpayments of health benefits to be written off, given the previous government’s chronic inability to solve the problems they were warned about many years ago internally through a DWP whistleblower and externally after issues were raised by MPs.

Emily Holzhausen, director of policy and public affairs at Carers UK, said: “It is vital that we see the publication of the independent investigation very quickly, with a clear timeline for action to ensure this scandal is addressed head-on. With each day that passes, unpaid carers continue to be subject to overpayment claims, operating under what everyone has recognised, is a broken system.”

She added: “Given the devastating impact this can have on unpaid caregivers who unknowingly fall over the income threshold, it is vital that we make this change as soon as possible to prevent more caregivers from being put in such a terrible situation.”

A DWP spokesperson said: “We stand on the side of carers. That’s why we commissioned an independent review into the carer allowance overpayment and delivered the largest ever cash increase to the benefit’s income threshold – helping 60,000 carers between 2029 and 2030.

“We will respond to the independent review in due course and in the meantime we must balance our duties to taxpayers while ensuring that the Care Allowance is administered fairly and accurately and supports those who use it as best as possible.”