We welcome the release of the report from the Independent Review of Carer’s Allowance Overpayments inquiry and the Government’s response. Following award-winning investigative journalism led by Patrick Butler at the Guardian exposing the scale and impact of Carer’s Allowance overpayments on carers, the Secretary of State for Work and Pensions commissioned this independent review in March 2025, led by disability policy expert Liz Sayce OBE.
The 2025 review had a tightly defined scope: it aimed to establish how overpayments of Carer’s Allowance linked to earnings occurred, how to support carers who accrued them, and to recommend how to avoid these problems. Crucially, it acknowledges the devastating impact of Carer’s Allowance overpayments and the resulting debt on carers’ lives, and identifies the failures in policy and administration which led to these. The review heard from carers affected by overpayments, as well as a wide range of carers organisations, welfare rights advisers and DWP teams.
The Government, and their predecessors, have known about these flaws for many years. A House of Commons Work and Pensions Select Committee inquiry in 2018/19 heard evidence of “significant distress and anxiety”, including from carers who felt suicidal due to issues related to overpayments. Since then, evidence collated by the National Audit Office indicated that little meaningful action was taken after this – with an additional £100m in overpayments made to carers, and £47m of debt recovered from them. We hope that this landmark review represents the first step towards much-needed more far-reaching and comprehensive reform of this benefit and the wider system of financial support for carers. While it is hugely important that the injustice of the overpayments scandal is rectified, we couldn’t agree more with the review’s overarching conclusion that, “as the country’s demography and the world of paid work has changed, an outdated benefit has become ever less fit for purpose” (p122) and that an overhaul is needed.
The review’s key recommendations include:
Tackling existing overpayments and debt accrued by carers:
- The review recommends reclassifying Carer’s Allowance overpayments caused by the systemic issues it identifies as “not recoverable” by DWP. In effect this would mean writing off these debts, and refunding carers for debts they have already paid. The review acknowledges that “there is a trade-off between a nuanced approach that reviews the circumstances of individual cases and limits reclassification but takes considerable resource and time to carry out, versus a broader-brush application to a larger group of people affected by earnings related overpayments. This latter option would have a higher direct cost and may make unrecoverable some debts that should have been repaid, but could be carried out faster, resolve the issue for those affected more promptly and require less DWP staff resource” (p119). The Government response adopts the former approach, saying it will re-assess individual cases dating back to 2015. As a matter of social justice and given the volume of cases involved (there were 134,800 people with an outstanding debt in May 2024), we are concerned that this could take a considerable amount of time for a department already under resource-pressure. We know that 62% of Carer’s Allowance claimants (half a million people) live in poverty.
- The review does not recommend that compensation is offered to carers subject to repayments, despite being clear about the fear, shame and trauma caused. Neither has the Government offered an official apology to the carers affected. This is disappointing, given the precedent set by the Post Office scandal, and does not acknowledge the additional burden of repayments placed on carers already facing additional costs and the impact caring has on their ability to earn and save.
Preventing future overpayments and debt:
- The review concludes that addressing the “unforgiving” cliff-edge nature of the earnings threshold is vital to preventing future overpayments. However, it stops short of recommending alternative options, stating that this is out of scope. It notes that many contributors to the review were in favour of introducing an earnings taper; this was recommended in the 2018/19 inquiry report, but rejected by the Government at the time, saying that this would take years to implement. The Government is now actively exploring how a taper could work. Almost all welfare rights advisers interviewed for Centre for Care research felt strongly that the benefit should not have an earnings threshold – given the administrative resource required to manage it and the importance of recognising the contribution of carers.
- Improving guidance, communication and transparency about the way that DWP calculates average earnings. We agree that this is essential, and long overdue, for carers with fluctuating earnings – for example due to zero hours contracts or because they are self-employed or seasonal workers. We welcome the introduction of clearer parameters for exercising discretion to handle issues such as employer error and backpay. However, it will be crucial that this is exercised in a way which displays the commitment to an empathetic culture that Sayce rightly demands. Additional guidance, principles and worked examples will be useful – but many carers are likely to require support from a welfare rights adviser in order to understand exactly what this means for their personal circumstances.
- Implementing automation of earnings processing, linked to Real Time Information (RTI) from HMRC directly, for the majority of cases. We welcome a shift in the balance of responsibility for updating the system with changes in circumstances, especially as carers are time-poor. Carer’s Allowance claimants are required to care for at least 35 hours per week, and DWP’s own research found that 52% of claimants spent 65 or more hours caring in a typical week.
- Improving DWP processes and communications, so that carers can more easily understand the requirements and their financial position, and can upload and report information more easily. This is to be welcomed, but must not assume that everyone can or wants to use online systems.
- The review recommends that interactions between Carer’s Allowance, Universal Credit and other benefits work more seamlessly for carers – particularly a specific issue with Carer’s Allowance overpayments, where some carers are repaying or have wrongly repaid debts that should have been offset by Universal Credit arrears. Our research finds that even many welfare rights advisers find these interactions between benefits to be highly complex and confusing. Some welfare rights services do not advise carers on Universal Credit, sometimes due to the limits of their funding, but often also due to the fear of giving the wrong advice due to its complexity. This highlights the need to explore ways to simplify the benefits system for carers in the long term.
Shifting the culture of benefits administration and ensuring that benefits claimants are treated with empathy and care:
- Perhaps one of the most important recommendations in the review is to “rebuild DWP’s trustworthiness to carers” and to “ensure holistic consideration of the core purposes of Carer’s Allowance (income replacement, recognition and supporting carers where they wish to combine caring with paid work) in decision-making, underpinned by a commitment to empathy”. Many of our research participants described a ‘one-sided’ nature to interactions with DWP – where they felt that claimants were subject to a highly punitive approach if they did not report relevant information quickly enough, but that there is a lack of accountability when DWP does not meet its own stated deadlines or standards. In addition, they described the detrimental impact of long waiting times and delays on claimants’ mental health and day-to-day living standards. We also found deep frustration with difficulties getting through to someone at DWP who can offer knowledgeable and effective help with a case.
- The review recommends re-categorising error and fraud figures in published statistics so that the ‘fraud’ category does not include cases where no intention of fraud has been found. Disappointingly, the Government has rejected this. We agree with the review that DWP’s broad definition of fraud “risks distorting the understanding of the level of fraud on Carer’s Allowance overpayments related to earnings” – which perpetuates damaging narratives in the media and public discourse about the level of benefits fraud. This fear and stigma deters people from seeking financial support which would improve their day-to-day lives.
The first step to reform
While we agree with the overall direction of the Sayce review, emerging findings from our research with both carers and welfare benefits advisers suggests that this should be just the first step to fundamental reform, not only of Carer’s Allowance but of how the entire welfare benefits system works for carers. Our work has highlighted the lived experience of carers, grappling with an outdated benefits system that seems fundamentally at odds with caring and undervalues their crucial role in society. We shared their feedback and findings from Centre for Care research with policymakers and organisations advocating for change at a Policy Breakfast in June 2025. Our Case for Change outlined the reform our evidence indicates is needed to Carer’s Allowance- a benefit which has been largely unreformed since 1976.
Key areas that the Government should now turn its attention to include:
- The inadequacy of the weekly amount of Carer’s Allowance (£83.30) which does little to even partially replace lost wages, to address the additional costs of caring or to recognise people’s caring role in society. The majority of claimants are not in paid work, due to the highly demanding nature of their caring responsibilities (DWP estimates that approximately 15% of Carer’s Allowance claimants are in paid work).
- Supporting carers to juggle paid employment alongside caring, as much as they feel they are able to. We believe that there is a strong case for consideration of significantly increasing or even abolishing the earnings threshold.
- The complexity, and often unfairness, of interactions between different benefits which can be almost impossible for many carers to navigate without professional advice and support from a welfare rights sector under immense strain.
- A focus on changing the culture of benefits administration, particularly for vulnerable claimants.
- Ensuring that the Timms Review of Personal Independence Payment (PIP) takes into account the impact of its proposals on carers. Around half of all Carer’s Allowance claimants are eligible because they are caring for someone on PIP, and therefore any tightening of PIP eligibility could mean that they lose their Carer’s Allowance.
How did overpayments of Carer’s Allowance happen?
Carer’s Allowance allows carers to earn up to £196 a week after tax, National Insurance and certain other deductions (from 7 April 2025). When a person’s earnings exceed this weekly threshold, they are responsible for notifying the Carer’s Allowance Unit of the Department for Work and Pensions (DWP). The eligibility rules for Carer’s Allowance is a ‘cliff edge’ – earning a penny over the limit means that you are not entitled to receive the benefit, and must repay the entire £83.30 weekly payment. When this happens, DWP classifies it as an ‘overpayment’ which it can recover.
Carers UK has found that carers with fluctuating earnings – e.g. because they are self-employed, on zero hours contracts, received holiday pay, or took on some additional hours – are especially vulnerable to this. Until April, the earnings threshold was not pegged to the National Minimum Wage, which meant that every time this statutory minimum was increased, they would need to reduce their working hours in order to remain below the weekly threshold.
About the authors
Becky joined the Centre for Care in June 2022 as a Research Associate. Currently, she is working with Louise Overton, Maxine Watkins and Kate Hamblin on a research project investigating complexity and inflexibility in the welfare benefits system for unpaid carers. She is also involved in the children, young people and families theme, with projects on kinship carers and children’s residential care.
Kate Hamblin is Professor of Social Policy and Director of the Centre for Care. She joined the University of Sheffield in 2018 to work on the Sustainable Care programme. She also currently leads the Centre for Care’s Digital Care research theme and is the UK Networks and geographical lead for the North and East-Midlands in the IMProving Adult Care Together (IMPACT) evidence implementation Centre. She is also the Policy and Practice Liaison lead for the NIHR School for Social Care Research at the University of Sheffield.
