Systemic Failures Led to Punitive Sanctions on Carers
The UK government has been forced to set aside £75 million to address a systemic crisis within the Carer's Allowance system, following a damning independent review published this week. The investigation revealed that a combination of outdated technology, unclear guidance, and a failure of leadership led to hundreds of thousands of unpaid carers being hit with devastating overpayment demands.
A Year-Long Scandal Uncovered
The crisis came to light after a year-long Guardian investigation exposed how carers, who provide at least 35 hours of weekly care to loved ones, were being penalised for minor and often unintentional breaches of complex earnings rules. The independent review, led by disability rights expert Liz Sayce, concluded that most cases did not involve "wilful rule-breaking".
Welfare Secretary Pat McFadden acknowledged the severity of the situation, promising to fix what he described as a "mess" left by previous administrations. The Department for Work and Pensions (DWP) has now committed to reassessing 145,000 cases where overpayments occurred.
The Flawed System and Its Human Cost
The core of the problem lies in the Carer's Allowance's "cliff edge" earnings rule. Carers are entitled to £83.30 a week provided their earnings from part-time work do not exceed £196. If they earn even one penny more, they must repay the entire week's allowance.
This meant a carer exceeding the threshold by 1p for a year faced a bill of £4,331.60, plus a £50 civil penalty. The review highlighted that guidance issued to DWP staff in 2020 exacerbated the issue. This guidance failed to properly account for carers with fluctuating earnings, such as those on zero-hours contracts, penalising them even if their average earnings were within the limit.
The guidance was flawed, confusing, and out of step with social security law, the review stated, adding it was introduced without being properly tested or legally checked. One carer, a part-time NHS worker, was forced to repay £300 after receiving a one-off £200 Covid bonus, leaving them £100 out of pocket.
The £75m Fix and What Happens Next
The funding, detailed in Rachel Reeves's budget, will be allocated over three years: £20m in 2026-27, £35m in 2027-28, and £20m in 2028-29. The majority of this money is expected to cover the administrative cost of the massive task of reassessing the 145,000 overpayment cases. A smaller portion will be used to either write off debts or reimburse carers who have already paid.
While this is a significant step, the government has stopped short of issuing a formal apology or offering compensation. Helen Walker, chief executive of Carers UK, called the funding a "vital step towards addressing the injustices carers have faced for far too long." She added that her organisation would be scrutinising how much of the funding will directly benefit carers versus being used for new system processes.
New, corrected guidance was introduced in September this year, aiming to prevent a repeat of this crisis. However, for the thousands of families affected, the government's response will be judged on how effectively it rectifies the profound financial and emotional distress caused by years of systemic failure.
