DWP urged to address benefit 'crisis' as Martin Lewis labels system 'perverse'

Martin Lewis has urged to Department for Work and Pensions (DWP) to address the 'crisis' around carers being forced to repay thousands in benefits.

Earlier this year, the DWP announced it would launch a review into Carers Allowance after it emerged tens of thousands of claimants had been overpaid due to unknowingly breaching the earnings threshold.

Carers who claim the benefit are currently entitled to £81.90 a week if they care for someone for 35 hours a week or more. However, if they earn more than £151 a week, they lose the benefit entirely for that week.

READ MORE: DWP issues update as it vows to 'get to bottom' of benefit overpayments for carers

Some carers who had unknowingly breached the threshold have been sent demands to repay thousands of pounds back to the benefits office and threatened with legal action if they do not pay.

Martin Lewis is among the many campaigners that have criticised the DWP for the 'cliff-edge' system, which sees carers have to pay back the benefit payment if they earn even £1 over the limit.

This week, the DWP published the terms of reference for its upcoming review, confirming that it will look into why overpayments have been made and how the system can be changed to reduce the risk of it happening in the future. The review is expected to deliver its findings and recommendations to ministers by next summer.

However, Mr Lewis has raised concerns that the review may not go far enough. In a social media post on X, he said the review's "worthy aim" was to "examine how to stop the overpayment crisis that's left [more than 100,000 people] unwittingly owing state money". But, he suggested, it may not tackle the "the big issue", which he says is the "hideous cliff-edge" carers face if they are earning.

He explained: "Carers allowance provides those on low income who care £82 a week income, but you can only get it if you earn under £151 per week. Go 1p over that limit and you lose it all. That is perverse. Other benefits don't work that way - they're tapered." He said this 'cliff-edge' system was the "clear cause of the problem".

Mr Lewis further explained: "Overpayments happen because many carers are stressed overworked vulnerable people, if they get a slight pay uplift (eg min wage rise) and don't notice, the benefits office keeps paying them. So they could've earned 1p a week over for 10 weeks, then be asked to pay an unaffordable £820 back."

He said he had asked the consultation body to ensure the issue would be examined as part of the review, adding: "If not the whole thing would feel farcical."

On Monday, when the DWP published the review's terms of reference, Sir Stephen Timms, the minister for social security and disability, said: "Carers wishing to pursue more financial independence should be encouraged to do so and not be unknowingly punished. We need to get to the bottom of what has been going on. Publication of the terms of reference is the next step in this important work."

It comes as the earnings threshold is due to increase next April. Around 60,000 more people will be able to access Carers Allowance when the threshold increases by £45 a week.

It means that from next year, carers will be able to earn £196 a week before losing their benefit entitlement. Also from April next year, benefits will be uprated in line with inflation at 1.7 per cent. That means Carers Allowance will be worth £83.29 a week - around £332 a month.