UK (Parliament Politics Magazine) – UK government may compensate carers hit by harsh allowance rules, as DWP overpayments left thousands in debt, prompting calls for urgent reform.
As reported by The Guardian, ministers are considering payouts for carers who faced large financial penalties under strict carer’s allowance rules.
How did thousands of carers end up in debt over benefit errors?
Ministers pledged to tackle benefit issues after a report revealed harsh penalties and Department for Work and Pensions failures, leaving thousands of carers in financial hardship.
Over 144,000 carers are currently repaying £251m in benefit overpayments, with individual amounts ranging from £5,000 to £20,000. Minor breaches of earnings rules have plunged some carers into financial hardship, with debts they cannot easily repay.
An investigation by The Guardian exposed the DWP’s harsh treatment of carers over minor earnings breaches, prompting public outrage and comparisons with the Post Office scandal.
The government reportedly aims to quickly reform a legacy of Tory neglect, during which carers’ allowance overpayments were often overlooked or concealed.
At the core of the scandal is the “cliff edge” rule, which penalises part-time carers by reclaiming their entire benefit for even minor earnings overages. A 50p breach above the £196 weekly limit for a year would see a carer face £4,258.80 in repayments.
The crisis was sparked by the DWP’s routine neglect of HMRC warnings over potential earnings breaches, leaving carers unknowingly amassing huge overpayments as officials checked only half the alerts they received.
Many carers unknowingly broke the rules as thresholds stayed frozen despite minimum wage rises, while holiday pay and one-off bonuses were counted as weekly income.
Pat McFadden, who has taken over from Liz Kendall as welfare secretary, is under early pressure to reform carers’ allowance and consider payouts for those affected by the scandal. The scheme now stands as a stark example of DWP bureaucratic cruelty at its worst.
The scale and cost of the reform pose major obstacles, while also raising questions about carers left with criminal records after fraud prosecutions.
Providing financial redress to carers left indebted by DWP mistakes would represent a clear break from past governments, which long held carers solely liable for benefit breaches.
Officials are considering a commissioned review into the origins of the overpayment scandal and steps to prevent similar issues arising again. The report, authored by disability policy expert Liz Sayce, was delivered to ministers at the end of July.
What will the Sayce report reveal about fixing carer’s allowance?
The Sayce report is set to be released in the coming months, alongside government plans to reform the benefit system. Ministers have started addressing overpayments by hiring more staff to review earnings alerts, testing text message warnings, and raising the weekly earnings limit for carer’s allowance.
More than 5 million Britons provide unpaid support to sick, elderly, or disabled family members. Around 1.4 million people providing over 35 hours of care each week receive the £83.30 weekly carer’s allowance. Nearly half of unpaid carers, most of them women, are living in poverty.
Ed Davey’s views on the government to do for carers
Ed Davey, the Liberal Democrat leader and a campaigner on carer matters, stated,
“I really hope the government will give the victims of this appalling scandal the compensation they deserve. It would be a milestone for carers across the country, and a victory for all those who have campaigned tirelessly for justice.”
They added,
“The government has a chance here not just to compensate the victims, but to overhaul carer’s allowance so it properly supports carers and doesn’t punish them for working. We will keep pushing ministers to seize that chance.”
What did the DWP say about carers’ allowance overpayments?
A DWP spokesperson stated,
“The carer’s allowance overpayment rate is the lowest on record. And we are going further by increasing funding and bringing in more staff to check 100% of alerts to help prevent carers falling into debt.”
They added,
“We are absolutely clear that we want to eliminate waste and ensure people get the money they are entitled to, so we can invest in our public services as part of our plan for change.”
What did Helen Walker say about the debt burden on carers?
Helen Walker, the chief executive of Carers UK, stated,
“Far too many carers are currently repaying debts that the government should have told them about much earlier, or they should not have had in the first place. It’s been devastating for carers, many of whom have been badly hit financially and it’s taken an enormous toll on their mental health.”
Key facts about the carer’s allowance scandal
Over £357 million in Carer’s Allowance has been overpaid since 2019, pushing many carers into financial distress. The number of carers owing debt rose from 80,000 in 2019 to nearly 135,000 in 2024 due to complex and slow DWP processes.
Thousands have received large debt recovery letters, driving many into poverty and hardship. The government has launched an independent review to prevent future errors and support affected carers.