One rule for the government, another for the governed.

On April 6th this year, the Carers Leave Act 2023 came into force. A private member’s bill brought forward last year by Wendy Chamberlain MP, it has resulted in employees caring for an adult friend or family member in England, Scotland and Wales getting a legal right to one week’s unpaid leave. Whilst some have argued it should have been paid leave, it is seen by most people we have spoken with as at least a step in the right direction.

However, the relative positivity of this legislation has had the shine taken off it in recent weeks due to reporting about the DWP taking what many see as excessive actions against technical breeches of eligibility rules for the main welfare benefit for carers, the Carers Allowance. Key amongst these rules is that claimants must not earn more than ￡151 per week (subject to certain deductions) and if they exceed this figure by as much as ￡1, from that point they are no longer eligible for the whole benefit, currently ￡81.90 per week. Given the fact that many claimants are themselves dealing with stressful situations, what we are talking about here is in the main not benefit abuse, but inadvertent mistakes not being reported due to things like failing to account for a small pay rise or an extra hour of work.

Seemingly if one wants to be cynical, just another example of politicians giving with one hand and taking with another. If you are in a more charitable frame of mind, an example of a lack of joined up thinking and compassion when it comes to supporting the more vulnerable in our society.

Within weeks of the Carers Leave Act coming into force, the Guardian newspaper revealed that tens of thousands of unpaid carers were being fined huge sums and, in some cases, prosecuted for such minor infringements of earnings rules related to Carers Allowance. Johnny Timpson, financial inclusion commissioner who advised No 10 on its dementia strategy, subsequently resigned from the prime minister's Dementia Friendly Communities Champion Group in protest over the current carers benefit repayment system. As reported in FT Adviser1 when explaining the issue, Johnny Timpson said ‘for people who are in receipt of carers allowance or pension credit, the onus is currently on them to inform the DWP?if they have been overclaiming’.

So, unlike the FCAs approach to vulnerable clients that is operating in financial services, which requires advice firms to focus on vulnerable customers, use their own data to identify vulnerable customers, and make interventions as quickly as possible to improve vulnerable customer outcomes and avoid foreseeable harm,?the DWP’s vulnerable customer policy is based upon those in vulnerable circumstances flagging to the department?if?they are being overpaid. As Johnny Timpson is quoted again in the FT Adviser article, ‘The DWP is out of step with the expectations that the Treasury have of financial services firms and there needs to be some consistency.”

Is this a new issue? Well back in 2019, the Work & Pensions Committee report ‘Overpayment of Carers Allowance’2 suggests the DWP have known about it for at least 5 years. The report stated ‘Carers - who often lead very stressful lives and whose invaluable contribution saves the taxpayer substantial costs – can suffer considerable distress and face financial difficulties when they have to repay overpayments that they often had no idea they were accruing’.

Continuing the comparison with FCA vulnerability and consumer duty regulation, the DWPs failure to respond and proactively notify claimants that minor changes in earnings have impacted on eligibility could be considered an example of ‘sludge practices’, defined by the FCA as 'an excessive friction that hinders consumers from making decisions in their interests, by taking advantage of their behavioural biases'.3

So, its perhaps not surprising that in a recent report from ‘Policy for Practice’4 (a social policy software and analytics company) called ‘Missing out 2024’ they have suggested that this state of affairs, coupled with the complexity of this benefit in respect of both eligibility and the process of claiming, is why more than 500,000 carers are not receiving more than ￡2.2 billion in financial support each year for which they are most likely eligible. Indeed, it is estimated that Carers Allowance is the 3rd most underclaimed benefit behind Universal Credit and Council Tax Reduction. And this despite the fact that this benefit can be viewed as a sound investment when placed in the context of informal carers saving the British economy ￡162 billion a year in care costs, a saving equivalent to the total annual cost of NHS services in England and Wales.

Again, according to the FT Adviser article the DWP responded by saying ‘Carers across the UK are unsung heroes who make a huge difference to someone else’s life, and we have increased carer's allowance by almost ￡1,500 since 2010’. Whilst this is true (Carers Allowance was ￡53.90 back in April 2010 so 52 x ￡28increase to April 2024 = ￡1456), this represents a rate of increase below RPI (it should now be ￡92.65 per week) at a time when more and more people want to be cared for at home, the costs of residential care have increased significantly, local authority funding is constrained and the cost of living crisis is impacting on what can be done with the current level of Carers Allowance if received.

So, what can be done? Perhaps aligning Carer's Allowance to Universal Credit and actively using real time earnings information would help, although there is a strong argument for much wider reform. At My Care Consultant we deal with family carers on a daily basis and have done so for nearly 10 years. We believe they are under supported and that as a first step towards reforming Carers Allowance should be to break the link between the State Pension and Carers Allowance which means that anyone in receipt of the State Pension in excess of ￡81.90 per week will not be eligible for Carers Allowance and if their State Pension is less than the rate of Carers Allowance, they will receive only a balance payment in the form of Carers Allowance up to the current rate.

?Thereafter consideration could be given to increasing Carers Allowance to a more realistic level of support – for example, 50% of the National Living Wage. Based on the eligibility criteria for Carers Allowance of 35 hours a week caring, that is approximately ￡200 a week.

Where will the money come from? – as always, this comes down to political choices about what kind of a society we want to live in and the extent to which ‘unsung heroes which make a huge difference to other people’s lives’ and collectively prevent the NHS from collapsing overnight should get support. As a rough calculation, a flat non means tested payment of ￡200 a week paid to the approximately 900,000 current claimants of Carers Allowance would cost an extra ￡5.5bn. In 2024/2025, an extra 1p on income tax would generate circa ￡6.0bn.

1. https://www.ftadviser.com/protection/2024/04/26/johnny-timpson-calls-out-dwp-s-vulnerable-customer-approach/

2. https://committees.parliament.uk/work/5414/overpayments-of-carers-allowance/publications/

3. https://www.fca.org.uk/publication/consultation/cp21-13.pdf

4. https://policyinpractice.co.uk/wp-content/uploads/Missing-out-2024_23bn-of-support-is-unclaimed-each-year.pdf

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