Thousands of unpaid carers to face benefit repayment demands despite government fix

Thousands of unpaid carers will continue to be hit with hefty and potentially unfair benefit repayment demands, it has emerged, as a government initiative gets under way to fix welfare injustices that have drawn comparison to the Post Office scandal.

Ministers will on Monday launch an audit of more than 200,000 historical carer’s allowance benefit cases, with an estimated 25,000 carers issued with unlawful overpayments since 2015 likely to see their repayment debts cancelled or reduced as a result.

The so-called reassessment exercise marks a big step in the government’s attempt to “put right” systemic injustices that led to hundreds of thousands of vulnerable carers having debts of up to £20,000 through no fault of their own.

However, the government has admitted its existing “business as usual” overpayment recovery policies will be maintained while a full overhaul of the benefit is completed, in effect ensuring that carer’s allowance penalties will continue to be imposed.

Furthermore, it is still unclear how ministers will compensate thousands more carers who were unlawfully issued with overpayment demands because of longstanding system faults linking universal credit and carer’s allowance, or who were wrongly told to repay money after officials lost evidence that they had reported changes in earnings.

About 22,500 carer’s allowance claimants were issued with overpayments in the three months after an independent review was published, according to a freedom of information request published this month.

These include a stockpile of overpayments identified in 2025, which were rushed out by officials to about 1,400 carers in January even though they knew the decisions to penalise carers were based on unlawful and discredited earnings-averaging guidance that had been formally discontinued by the Department for Work and Pensions (DWP) in September.

The government acted last year after an award-winning Guardian investigation revealed senior welfare officials and Conservative ministers had for years ignored warnings that carers had been unfairly pushed into debt and ill health, and in some cases convicted of fraud, as a result of failings in the carer’s allowance system.

The two-year, £75m reassessment exercise, which will focus only on cases where carers were unlawfully prevented from averaging their annual earnings to avoid earnings penalties, was welcomed by Liz Sayce, the author of the independent government-commissioned review into carer’s allowance overpayments.

Her scathing report, published in November, found that system errors and management shortcomings at the DWP inflicted avoidable hardship and distress on hundreds of thousands of carers and led to hundreds of millions of pounds of public money being misspent.

It found that one in five unpaid carers who claimed carer’s allowance and worked part time were hit with overpayments totalling more than £300m between 2019 and 2024 alone, with hundreds receiving criminal convictions for fraud.

Sayce, a disability rights expert, said: “I’m pleased [the DWP] are getting going with the reassessment exercise. That it is happening is the result of everything carers have worked for and the Guardian has been reporting on.”

The welfare secretary, Pat McFadden, said: “We inherited a system that left unpaid carers building up debt through no fault of their own, something we’re determined to put right. That’s why we accepted the vast majority of the Sayce review’s recommendations and are now getting to work implementing them.”

While ministers have been clear on the need to reform carer’s allowance, the DWP hierarchy has struggled to convince MPs and campaigners it has the credibility to fix the benefit and gain the trust of carers. Sayce herself has expressed frustration at what she called the presence of “forces of resistance” in the department.

Helen Walker, the chief executive of Carers UK, said: “We are pleased to see this government taking decisive action to start putting right the failings of the past and provide carers with the redress they deserve. The reassessment process marks an important step in tackling these systemic failures.”

Kirsty McHugh, the chief executive of the Carers Trust, said: “It’s heartening to see the government do the right thing by acknowledging its mistakes and now getting on with returning money to carers who were penalised for no fault of their own. This is an important first step in sorting out the myriad problems with this archaic benefit.”