In a significant move described as the "righting of a scandal", the Department for Work and Pensions (DWP) has announced it will reimburse or reduce the debts of almost 200,000 carers who were forced to pay severe penalties related to Carer’s Allowance overpayments.
The Overpayment Scandal Explained
The decision follows an independent review led by former disability rights campaigner Liz Sayce, which was launched in October 2024. The review uncovered that unclear government guidance was at the heart of the problem. Carers, who often juggle at least 35 hours of care with paid work, found the rules for reporting fluctuating earnings confusing.
To be eligible for Carer’s Allowance, which provides £83.30 per week, individuals must earn below a specific threshold, currently set at £196 per week. However, the Sayce Review found that guidance on how to average these earnings was not clear, preventing many from understanding what changes in their pay needed to be reported to the DWP. This lack of clarity led to tens of thousands of carers inadvertently breaching the earnings limit.
A Lifeline for Carers and Families
The financial impact on carers has been profound, with some facing penalties of as much as £20,000. Liz Sayce emphasised that this was not a case of deliberate rule-breaking. "My review found that overpayment debt has had major impacts on carers’ health, finances and family well-being, and been a disincentive to work," she stated. "This wasn’t wilful rule-breaking – it simply wasn’t clear what earnings fluctuations carers should report."
The government's response will involve reassessing cases dating back to 2015. Reassuringly for those affected, most people will have their cases reassessed without needing to contact the DWP directly.
Government and Charity Reaction
Work and Pensions Secretary Pat McFadden acknowledged the system's failure, stating, "Carers are vital to our communities, and when the system lets them down, we have a duty to put it right." He attributed the confusing guidance to the previous government but confirmed the current administration has "listened to carers, commissioned an independent review, and are now making good for those affected."
Chancellor Rachel Reeves also welcomed the move, calling it "welcome news for thousands of carers failed by the system under the previous Government."
Helen Walker, chief executive of the charity Carers UK, hailed the decision as a "landmark for the carers’ movement." She commended the government for "owning up to the mistakes of the DWP" and described the move to reassess cases and write off debt as "unprecedented" and a clear "righting of a wrong." The charity has been raising concerns about these overpayments since 2018, highlighting the immense hardship they caused.
