Ministers set aside £75m to fix failures that caused carer’s allowance crisis | Carers
Ministers have set aside £75 million to fix systemic failures that have left hundreds of thousands of unpaid carers hit with huge bills after unwittingly breaching complex and confusing benefit rules.
An independent review published on Tuesday found outdated technology, unclear guidance and a failure of leadership by ministers and senior welfare officials led to punitive sanctions against vulnerable families.
It follows a year-long Guardian investigation into how hundreds of unpaid carers have been criminally prosecuted and hundreds of thousands of people punished for mistakes that were mostly concluded were not “deliberate rule-breaking”.
Social care minister Pat McFadden this week promised the government would fix the “mess” left by previous administrations.
The Department for Work and Pensions (DWP) has said it will reassess 145,000 cases where people were paid extra carer’s allowance and it is possible that some of these debts will be written off or repaid. But the DWP stopped short of offering a formal apology or compensation.
Figures released on Wednesday as part of Rachel Reeves’ budget showed ministers have earmarked £75 million from 2026 to fix problems uncovered by the review led by disability rights expert Liz Sayce.
It is understood the bulk of the £75 million will be paid to a number of officials needed to reassess 145,000 overpayments. A smaller amount is expected to be used to either write off debts or repay unpaid carers who have already paid.
Official documents show £20 million will be spent in 2026-27, £35 million the following year and £20 million in 2028-29. The money will be used to cover the costs of “reassessing overpayments from 2015 to 2025 resulting from incorrect operational guidance.”
“Incorrect operational guidance” mainly refers to guidance issued to DWP staff in 2020, which caught carers whose weekly or monthly earnings fluctuated and were penalized despite their “average” total earnings in a given period being within allowable earnings limits. The directive resulted in an increase in overpayment penalties.
Unpaid carers who look after their loved ones for at least 35 hours a week are entitled to a carer’s allowance of £83.30 per week, as long as their weekly earnings from part-time work do not exceed £196. If they exceed this limit, even by as little as 1p, they must pay back the full weekly allowance under “cliff edge” rules.
This means a carer who exceeds the earnings threshold by 1p a week for a year will have to repay £4,331.60 plus a £50 fine, not 52p.
Carers working zero hours or seasonal work were particularly vulnerable to penalties. A part-time NHS worker was forced to pay back her £300 carer’s allowance after receiving a one-off £200 Covid bonus, leaving her £100 out of pocket, the review says.
The review said the rules were flawed, confusing and contrary to social security law. While it was stated that “it is not clear why the new guideline was introduced,” it was also stated that it appeared to have been made without testing or legal control.
The guidance was never published and carers were left in the dark about whether it was permissible to average their earnings. Carers told the review they had received conflicting advice from the DWP. The new guideline was introduced in September this year.
Helen Walker, chief executive of Carers UK, said the fix was a challenge. “It is a vital step towards addressing the injustices that carers have faced for far too long.” He added: “Over the coming days we will examine how much of this funding will directly benefit carers and how much will be used to implement new systems and processes that are urgently needed to prevent this from happening again.”
