DWP looking into overpayments to 185,000 people and some may be cancelled

Thousands of unpaid carers could have historic overpayments cancelled or repaid after a review found many had been faced with huge debts because of “unclear and confusing regulations”. The issue of people being penalised for going over their earnings limit for carer’s allowance even by as little as a few pence per week has previously been branded a “scandal” by charities. A year-long review, the findings of which were published on Tuesday, has concluded that many carers felt they were “treated as criminals, with resulting feelings of fear and shame”. Historic overpayments led to many carers – who had to earn £151 a week or less to qualify for the allowance – unwittingly racking up unmanageable levels of debt and some quitting their jobs as a result. The earnings threshold rose to £196 a week from April this year. Carer’s allowance, which is currently £83.30 a week, is paid to someone who spends at least 35 hours a week providing regular care to someone who has a disability and is in receipt of what is known as a “qualifying benefit” such as the daily living component of personal independence payment (PIP) or disability living allowance. The Government has now said 185,000 unpaid carers, who were in receipt of the allowance between 2015 and September 2025 in England and Wales, will have their overpayments reviewed. The review, carried out by Liz Sayce, found that the way the Department for Work and Pensions (DWP) “treats earnings, especially in averaging and allowable expenses, is inconsistent and unclear, meaning carers were unable to comply with the rules”. It said the so-called “cliff edge” – which meant someone earning just a penny over the limit saw them losing the entire allowance – “means the impact of this on carers has been severe and acted as a disincentive to undertake paid work amongst carers wishing to combine caring with some paid work”. Ms Sayce said: “My review found that overpayment debt has had major impacts on carers’ health, finances and family wellbeing, and been a disincentive to work. I’m glad Government now plans to review cases and cancel or reduce debts affected by flawed guidance. “This wasn’t wilful rule-breaking – it simply wasn’t clear what earnings fluctuations carers should report.” Carers UK chief executive Helen Walker said the issue had been “challenging and distressing” for many unpaid carers, and welcomed the review’s acknowledgement of “system failures”. She added: “The move to reassess cases and repay or write off debt in certain circumstances is unprecedented in our view, a righting of a clear wrong. “It is addressing this injustice head on.” Ms Walker said the charity is “hopeful that this can be the start of rebuilding carers’ trust in the system”. The review’s recommendations include efforts to remove the “severe ambiguity” which it said had stopped carers from understanding what they needed to report to the DWP: speed up the plans to address the “cliff edge”; modernise processes around data and benefits to “make them more fair”; and rebuild the department’s trustworthiness to carers. It also states that all overpayments caused by the systemic issues set out in the report should be reclassified as not recoverable, and to ensure in cases where carers claim universal credit (UC) and the carer’s allowance, “all UC arrears are identified and paid”. Ms Sayce said her recommendations are designed to “address the injustice of carers being faced with huge debts rooted in unclear and confusing regulations, guidance and oversight; to improve opportunities to combine paid work and caring; and to improve use of public money for the purposes intended”. The Government said it had accepted the “vast majority” of the review’s recommendations. Work and Pensions Secretary Pat McFadden said: “Carers are vital to our communities, and when the system lets them down, we have a duty to put it right. “The Sayce Review has shown us clearly that the guidance on earnings averaging was confusing. We inherited this mess from the previous government, but we’ve listened to carers, commissioned an independent review, and are now making good for those affected. “Rebuilding trust isn’t about warm words – it’s about action, accountability, and making sure our support works for the people who need it most.” Chancellor Rachel Reeves said: “This will be welcome news for thousands of carers failed by the system under the previous government. We will right these wrongs, carers give so much to their families and to their local communities, and they deserve our support.”