Unpaid carers, often family members looking after loved ones, form a vital part of the country’s care system. Yet many have been left facing large debts through no fault of their own. As the Labour government begins reviewing 200,000 benefit cases, the move signals a shift in policy aimed at restoring confidence in a system long seen as punitive and opaque.
Government Under Pressure Over Historical Carer’s Allowance Overpayments
The Department for Work and Pensions (DWP) is facing intense scrutiny following revelations that thousands of unpaid carers were plunged into debt due to administrative oversights in the Carer’s Allowance system. This benefit, worth £83.30 a week, is granted to individuals who care for someone at least 35 hours per week, provided their earnings do not exceed £196 per week.
A strict enforcement policy has meant that carers who exceeded this earnings threshold, sometimes by just a few pence, were forced to repay entire weeks of allowances. In many cases, overpayments were only discovered years later, often resulting in debts of several thousands of pounds. Some carers were reportedly threatened with prosecution if they did not repay the sums.
Reforms Begin With Reassessment of 200,000 Cases
In response to mounting criticism and the findings of the Sayce Review, the Labour government has ordered the DWP to reassess approximately 200,000 historical cases where claimants may have been overpaid. This move is part of a broader effort to correct what has been described as one of the most damaging systemic failures in the UK’s social welfare system.
According to the Guardian, Prof Sue Yeandle, formerly of the University of Sheffield’s Centre for Care, stated that the DWP’s past actions placed carers under “intolerable strain”, leaving a “terrible enduring legacy” that may require government compensation. “To rebuild trust, government and the DWP should issue an unreserved apology,” she added.
Katy Styles, campaigner for the We Care Campaign, echoed these sentiments, calling the failings a “constant battle to be believed by a department that holds immense power over people’s lives”. Styles called for a cultural reset within the DWP, questioning whether internal reform alone could ensure carers are protected from further harm.
Green Paper Outlines Broader Benefit Reforms
The reassessments come alongside proposals laid out in the government’s recently published Green Paper: Pathways to Work: Reforming Benefits and Support to Get Britain Working. Presented to Parliament in March 2025, the document highlights the government’s ambition to overhaul a welfare system that Labour describes as “broken” and “failing the very people it’s meant to support.”
The Green Paper criticises the binary nature of current assessments, which often force individuals to prove they are incapable of working in order to receive additional support. It also acknowledges that many recipients were abandoned after assessments, with no follow-up or effort to assist them into work. According to the document, over 4 million working-age adults currently claim at least one type of health or disability benefit, with Carer’s Allowance forming a significant part of this picture.
Importantly, the government confirmed that from April 2025, the Carer’s Allowance earnings limit will be pegged to 16 hours at National Living Wage, adjusted annually. This change aims to reduce overpayment risks caused by small earnings fluctuations. Labour has also committed to reviewing how PIP (Personal Independence Payment) and other benefits intersect with Carer’s Allowance, with further updates expected in the forthcoming White Paper.
The reassessment of 200,000 cases is being seen by advocacy groups as a first step towards justice for unpaid carers. While the road ahead involves complex policy decisions and legislative changes, Labour’s early intervention signals a marked departure from previous administrations. Campaigners remain cautious but hopeful that this moment could lead to more transparent and humane governance around carer support. The scale of the task is significant, but so too is the opportunity to rebuild a system that recognises and respects the unpaid workforce at the heart of Britain’s care economy.
