The UK government is preparing to reassess hundreds of thousands of carer’s allowance cases after an independent review found that vulnerable unpaid carers had been pushed into severe debt due to long-running failures and maladministration within the Department for Work and Pensions (DWP).
The official review, to be released on Tuesday, follows a year-long Guardian investigation that exposed how carers were hit with penalties reaching up to £20,000. Many were left in financial hardship, and some were even jailed, after being accused of breaching carer’s allowance rules.
Ministers have now pledged to cancel or reduce penalties that were wrongly imposed, after the review concluded many cases were caused by official error rather than what the DWP previously described as “wilful rule-breaking”.
However, the government has ruled out offering financial compensation. Although the idea was considered during the review, compensation has not been included in its final recommendations, which were led by disability policy expert Liz Sayce.
Over the past 20 months, the Guardian revealed the toll on carers who faced debts, ill-health and psychological strain due to administrative failings. Many reported being harassed or treated like criminals by DWP investigators, and hundreds were convicted of benefit fraud. It remains unclear how the government will address cases where carers were prosecuted due to errors made by officials.
Pat McFadden, the welfare secretary, said it was essential to restore trust with the UK’s unpaid carers. He said: “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.”
Ministers are expected to accept the vast majority of the review’s 40 recommendations. Sayce said the decision to reassess all carer’s allowance overpayments since 2015 was vital, noting that the policy had “major impacts on carers’ health, finances and family wellbeing”.
The reassessment process will focus particularly on carers whose weekly or monthly earnings fluctuated. Many were penalised even though their average earnings, when calculated over a longer period, fell within the legal threshold.
Carers who provide at least 35 hours of weekly care are entitled to £83.30 a week in carer’s allowance, provided their earnings do not exceed £196 a week. Under the strict weekly limits, anyone who goes over this threshold by just 1p must repay the entire week’s allowance.
This “cliff-edge” rule meant that someone earning just 1p above the limit for a year would face a bill for £4,331.60, plus a £50 penalty.
The situation was made worse by the DWP’s failure to alert carers when they crossed the threshold, despite having access to real-time earnings data. As a result, some carers unknowingly built up debts over several years.
Two tribunal cases this year, involving Andrea Tucker and Nicola Green, ruled in favour of carers whose overpayments were struck out after a court accepted their annual average earnings were within the legal limit. This has raised further questions over the legality of DWP policy on fluctuating earnings since 2020.
Sayce echoed concerns raised by MPs in a 2019 report, stating: “This wasn’t wilful rule-breaking – it simply wasn’t clear what earnings fluctuations carers should report.”
Many carers are disappointed that the review does not include compensation for the stress, anxiety and debt caused by administrative failures. One carer told the Guardian: “A lot of carers have suffered serious stress and worry over this. They’ve suffered ill-health as a result. It should be more than just about cancelling or reducing some overpayments.”
Carers UK welcomed the findings as a “big step forward”, while Carers Trust said it was a major acknowledgement of long-standing system failures. Kirsty McHugh, the charity’s chief executive, said the DWP’s guidance had been “both wrong and confusing” for over a decade.
Katy Styles from the We Care Campaign said: “If the Sayce review finally ensures carers can claim carer’s allowance with confidence, that’s not a minor tweak, that’s justice.”
The scandal, compared by many to the Post Office Horizon scandal, emerged after repeated warnings about the flawed system were ignored, including internal reports from whistleblowers.
At least 144,000 carers are currently repaying overpayments totalling more than £251m. Since 2019, the DWP is estimated to have overpaid more than £357m in carer’s allowance.
The government now faces intense pressure to ensure the reassessment process is fair, transparent, and offers a genuine resolution for the carers who have been left in crisis by years of systemic failures.
