As of 13th April 2021, 42,400 people were repaying Carer’s Allowance overpayments.

The total original value of those debts was just over £138million; the total amount currently outstanding is £89million.

The Department has a duty to recover overpaid benefits as quickly and efficiently as possible, but it is not intended that the recovery of an overpayment should cause any customer undue financial hardship.

Overpayment recovery of Carer’s Allowance, as with all benefits is subject to various legislative limitations and safeguards.

The Government recognises and appreciates the vital role unpaid carers play in supporting loved ones who are ill, frail or disabled.

The Carer’s Allowance debts referred to Debt Management in each of the last 3 years, reflect individual overpayments; the starting dates and durations will therefore vary accordingly.

However, the average lengths of the recoverable Carer’s Allowance overpayments referred to Debt Management in each of the requested years was as follows:

I can also confirm that the median start dates for those overpayments were:

These overpayments have arisen in the main because changes have not been reported on time. DWP takes every care to explain a claimant’s responsibilities when they apply for Carer’s Allowance; this includes the need to report changes on time. The Department has improved Carer’s Allowance communications to make this even clearer.

New technology and additional staffing have now made it easier to identify and prevent overpayments.

Notes:

• The Department has a duty to recover overpaid benefits as quickly and efficiently as possible.

• Overpayment recovery is subject to various legislative limitations and safeguards so customers do not experience financial hardship.

• There are rules covering the amount of money we can take from a person’s benefit and customers are informed in advance before benefit deductions start.

• Where a person claims they cannot afford the proposed rate of recovery, they are asked to provide details of their income and expenditure. When this information is provided, their financial circumstances can be taken into account and a reduction in their rate of repayment may be agreed. In these circumstances, the situation would be reviewed at regular periods. In exceptional circumstances, a temporary suspension of recovery may be agreed.

The number of people asked to repay new overpayments of Carer’s Allowance, as referred to Debt Management between April 2016 and January 2021, is set out in the table below:

No such assessment has been made.

Debt recovery, including the recovery of Universal Credit overpayments, was paused for 3 months from April 2020, so that Debt Management staff could support processing in excess of three million new Universal Credit claims following the outbreak of COVID 19.

Those staff have subsequently been able to return to their roles in Debt Management and we have adopted a phased and controlled approach to re-instating debt recovery, allowing us to manage the demand on services.

There are no current plans to re-instate the suspension of debt recovery, but we will keep the situation under review.

We have always recognised that there will be some people who may be experiencing financial difficulty, and anyone unable to afford the rate of recovery is encouraged to contact DWP so an affordable rate of repayment can be negotiated based on their individual circumstances.

The Department does not have information available regarding Direct Pay cases with overpayments. When customers opt to use the Direct Pay service and a balance of unpaid child maintenance accrues or an overpayment occurs, normally customers need to make repayment arrangements between themselves.

The Child Maintenance Service do not record information where reimbursement occurs due to agreement between parents or where they have contacted her Majesty’s Courts and Tribunal service (HMCTS) on Direct Pay cases.

A parent can request reimbursement from Child Maintenance Service on a Direct Pay case in certain scenarios. However, there is no available published data on such reimbursements.

The Department does not have information available regarding Direct Pay cases with overpayments. When customers opt to use the Direct Pay service and a balance of unpaid child maintenance accrues or an overpayment occurs, normally customers need to make repayment arrangements between themselves.

The Child Maintenance Service do not record information where reimbursement occurs due to agreement between parents or where they have contacted her Majesty’s Courts and Tribunal service (HMCTS) on Direct Pay cases.

A parent can request reimbursement from Child Maintenance Service on a Direct Pay case in certain scenarios. However, there is no available published data on such reimbursements.

The Department is committed to ensuring that the right people are paid the right amount of Universal Credit. The vast majority of benefit expenditure is paid correctly, with front line staff working hard to prevent overpayments from occurring. We are constantly improving our processes and continue to invest in the use of data and analytics to identify fraud and error.

Where overpayments do occur, the Department has a duty to recover any debt quickly and efficiently. However, we recognise that there will be some claimants who may be experiencing financial difficulty, and anyone unable to afford the rate of recovery proposed is encouraged to contact DWP Debt Management to review the proposed rate of recovery.

During 2020 there were 290,057 Universal Credit (UC) overpayments recorded on the Department’s Debt Management system. The system does not capture how many of these overpayments were due to ‘system error’. The Department was called upon to process an additional 2.9 million UC claims from people who needed our immediate help as a result of the pandemic and there are currently 5.9 million UC claimants.

Self-employed individuals determine the amount of tax due for the previous tax year by submitting their Self-Assessment (SA) tax return.

The amount due to be paid by 31 January is the tax due per the return less any payments already made for that tax year plus the first payment on account (POA) of the individual’s tax bill for the current year. Each POA is half of the previous year’s tax bill.

The POAs due for the 20/21 tax year will be based on the liability for the 2019/20 tax year, a year largely unaffected by COVID, but individuals can apply to reduce those payments on account if they think they are too high based on their current circumstances. If they wish to do so, they can apply to HMRC by using form SA303. This can be done online through the Government Gateway or by post.

It may be helpful to explain when our customers opt to use the Direct Pay service and a balance of unpaid child maintenance accrues or an overpayment occurs, normally they need to make repayment arrangements between themselves.

However, where this action has failed and the paying parent has made a request, the Child Maintenance Service has issued 37 reimbursements for Direct Pay cases, since 2018 where overpayments occurred.

Pension schemes are only allowed to make payments that are “authorised payments” (those payments that members are legitimately entitled to under the scheme).

Any other payments made from the scheme that are not ‘authorised’ are referred to as ‘unauthorised payments’ and are potentially subject to unauthorised payment tax charges of up to 55% for members and the scheme. In most cases, overpayments would be considered unauthorised payments if not recovered.

Any potential recovery is carefully considered, including the cost effectiveness of doing so (e.g. the relative costs of recovering very small amounts). Members have the opportunity to submit evidence should they believe that either recovery should not take place or where they might require a longer repayment plan. Members overpaid and identified by the Internal Controls Framework Review (ICFR) were treated in the same way as other members where overpayments had occurred as part of business as usual.

We do not have a separate record for the total value of pension underpayments under the ICFR as these formed the majority of the rectifications needed, and members received topped up pensions accordingly as part of business as usual activities, rather than as part of a separate project to recover any amounts due.

To date £20,610 has been paid in compensation awards through the Internal Dispute Resolution process to pensioners affected by overpayments identified during the ICFR.

Pension schemes are only allowed to make payments that are “authorised payments” (those payments that members are legitimately entitled to under the scheme).

Any other payments made from the scheme that are not ‘authorised’ are referred to as ‘unauthorised payments’ and are potentially subject to unauthorised payment tax charges of up to 55% for members and the scheme. In most cases, overpayments would be considered unauthorised payments if not recovered.

Any potential recovery is carefully considered, including the cost effectiveness of doing so (e.g. the relative costs of recovering very small amounts). Members have the opportunity to submit evidence should they believe that either recovery should not take place or where they might require a longer repayment plan. Members overpaid and identified by the Internal Controls Framework Review (ICFR) were treated in the same way as other members where overpayments had occurred as part of business as usual.

We do not have a separate record for the total value of pension underpayments under the ICFR as these formed the majority of the rectifications needed, and members received topped up pensions accordingly as part of business as usual activities, rather than as part of a separate project to recover any amounts due.

To date £20,610 has been paid in compensation awards through the Internal Dispute Resolution process to pensioners affected by overpayments identified during the ICFR.

HMRC do not impose sanctions but do charge penalties. HMRC are unable to break down the figures to Working Tax Credit or Child Tax Credit, as a case may involve both.

HMRC have built on existing measures to address the risk of tax credits claimants incurring overpayments. This activity incorporates improvements to education and guidance, including to identify and address error and fraud at an earlier stage.

HMRC have delivered an ambitious training programme in 2019-20 to equip frontline staff with a wider range of tools and skills to help claimants maintain their correct entitlements. This includes continuing development of prompts to support conversations with claimants to keep their awards on the right footing.

HMRC have extended the range of their education and reminder campaigns to promote the correct reporting of the various factors that affect a claimant’s entitlement: for example, targeted letters to increase understanding of the criteria for single or joint claims or how to declare self-assessed income.

HMRC have also put measures in place to respond to the impacts of COVID-19 on claimants’ lives. In recognition that many claimants are not able to work their normal hours (including because they have been furloughed) the Government has legislated to suspend the eligibility criteria on “hours worked” in Working Tax Credit for claimants temporarily affected by the pandemic. This eliminates a potential source of overpayments.

For overpayments resulting from error and fraud, in five of the last six years for which results are available, HMRC have met the target set by ministers to restrict outturn levels to below five per cent of total expenditure. This includes 4.9% in 2018-19, the latest year for which HMRC have published Official Statistics; details of these can be found at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/920091/child_and_working_tax_credits_EF_2018-19_first_release.pdf

HMRC continue to develop options to challenge losses from error and fraud, including working with their counterparts across Government and the wider public sector.

The table below summarises the number of personal tax credits overpayments as a percentage of all personal tax credit claims for the most recent 5 years for which data is available. HMRC are unable to break down the figures to Working Tax Credit or Child Tax Credit because a case may involve both.

Source: These figures have been taken from HMRC’s annually published Child and Working Tax Credits statistics: finalised annual awards, supplement on payments for 2013/14 – 2017/18, which can be found here:

https://www.gov.uk/government/collections/personal-tax-credits-statistics

For UC claims with payments due during August 2020, around 5% (216,000 claims) had deductions for benefit overpayments. The deductions from UC for benefit overpayments include overpayments for tax credits, housing benefit and any DWP overpayments (including legacy benefits), not just UC overpayments.

The latest available data for legacy benefits shows, claims with payments due during May 2020, around 1% (213,000 claims) had deductions for benefit overpayments.

UC collects overpayments from the full range of benefits, including tax credits. As more people have moved on to UC this has resulted in a greater proportion of these overpayments being collected through UC.

Notes

• Claims figures rounded to the nearest 1,000.
• During the Covid period, deductions for benefit overpayments were suspended for three months. These began to be reinstated from July 2020, taking a phased approach, however as of August they have not been fully reinstated and some new debts may not yet have been transferred to DWP.
• Deductions for benefit overpayments include DWP, HMRC and LA fraud and non-fraud overpayments.
• Figures are provisional and are subject to retrospective change as later data becomes available.

As part of our initial response to the Covid-19 pandemic we suspended recovery of all overpayment deductions as well as pausing notification of any new overpayments. The transfer of Tax Credit debts from HMRC to DWP was temporarily suspended as part of this approach.

Recovery of existing Tax Credit overpayments from Universal Credit has now resumed, along with the transfer of new Tax Credit debt to DWP.

There have been several discussions with HMRC, who own the Tax Credit Debt, to ensure that both the action of stopping tax credit collection and restarting has taken into account the customer perspective.

We want to ensure that repayment of all debt owed to the Department is sustainable and takes into account the customer’s ability to pay. Claimants are encouraged to contact DWP if they are unable to afford the rate of recovery. The recovery rate of Tax Credit overpayments can be reduced where a claimant is experiencing financial hardship.

The latest available data, for March 2020, shows around 15% of all Universal Credit claims had a deduction for Tax Credit Overpayments.

We do not capture data on how many of the deductions taken from Universal Credit are due to the cross over period between tax credit claims ending and Universal Credit claims starting.

When a claim for Universal Credit is made and it has been established that the customer meets the basic entitlement conditions, DWP automatically instructs HMRC to end the Tax Credit award with effect from the day before the Universal Credit claim was made. Delays in ending Tax Credits are therefore minimal once the basic entitlement conditions of Universal Credit have been established.

When a Tax Credit claim comes to an end and the claimant makes a new claim to Universal Credit, any outstanding Tax Credit overpayments are transferred to DWP. HMRC will inform the claimant prior to transfer and provide details of the debt to be transferred.

Once transferred, the claimant is notified via their online Universal Credit journal about the rate of deduction in respect of Tax Credits debt. Where a claimant is in financial hardship they can contact DWP Debt Management to discuss and agree a sustainable rate of repayment.

From 3rd April 2020, other deductions, including Tax Credit overpayments, were suspended for three months due to Covid-19, resulting in none of these deductions being taken during May and June 2020.

If she will extend the suspension of benefit deductions for the recovery of universal credit and legacy benefit overpayments during the covid-19 outbreak.