Carer’s Allowance Overpayments

Anna Dixon Excerpts

Tuesday 14th April 2026 Westminster Hall

[Sir Roger Gale (in the Chair)]

I will call Anna Dixon to move the motion and then I will call the Minister to respond. I remind other Members that they may make a speech only with prior permission from the Member in charge of the debate, the Minister and the Chair, although no such requests have been made. As is the convention for 30-minute debates, there will not be an opportunity for the Member in charge to wind up the debate.

[Anna Dixon (Shipley) (Lab)]

I beg to move,

That this House has considered the matter of Carer’s Allowance overpayments.

It is a pleasure to serve under your chairmanship, Sir Roger. I thank Members for joining me here in Westminster Hall. I have committed my career to securing better care and support for older people and their family carers, and I continue that work here in Parliament as chair of the all-party parliamentary group on carers.

This year marks a significant milestone for carers: it has been 50 years since carer’s allowance was first introduced. It was known originally as the invalid care allowance, and it was the first benefit to recognise the financial sacrifices of unpaid carers. It has made a huge difference, providing vital financial support to those who give 35 hours or more per week in unpaid care. I am proud that it was a Labour Government that introduced carer’s allowance back in 1976, and I am just as proud that this Labour Government and Chancellor increased the earnings threshold from £151 to £196 per week—the largest increase since the benefit was introduced—and again this month to £204 per week, as promised. The world has changed a lot since Harold Wilson was Prime Minister, but some things remain the same, and Labour is still putting its money where its mouth is and standing up for carers.

Supporting carers should be a moral mission of any Government. There are 5.8 million unpaid carers in the UK, and the economic value of their contribution is some £184 billion per year, which is more than the entire NHS budget in England. However, despite the value that carers bring to our society, we often fail to value them. According to Carers UK, 1.2 million unpaid carers in the UK live in poverty, and around half of carers cut back on essentials in 2025.

There is a multitude of reasons for carer poverty. Many carers give up paid work, but many juggle paid work and unpaid care, often reducing their hours, harming their careers and impoverishing themselves. It is for all those reasons that the carer’s allowance overpayment scandal is hard to stomach.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for bringing this subject forward. Does she not agree that the amount of money the Government have saved from the unpaid labour of carers is astronomical, and that unless the Department can prove that there was a deliberate overclaim, discretion must be available? These people, whose lives are dedicated to the care of others, do not need the stress of paying a penalty for a mistake and thereby being treated as a criminal.

[Anna Dixon]

I absolutely agree with the hon. Gentleman that the impact of the overpayments on carers is terrible, and I am going to share the story of someone who was affected. I am sure others have heard similar shocking stories. As many as one in five unpaid carers who claim carer’s allowance and work part time were hit with overpayments. Thousands of carers have been left with huge debts and the fear of financial ruin.

Helen cares for her son Robin. He was born with a heart condition, respiratory vulnerabilities, developmental delay, mobility issues and Down’s syndrome. Helen gave up work as a teacher to support Robin and she relied on carer’s allowance. She also received some royalties for online resources that she had created as an education provider. She was paid those every six months, but the Department for Work and Pensions considered them as monthly earnings. It stopped her carer’s allowance and informed her that she had incurred overpayments going back over four years. She was charged more than £2,000 and told to pay back £50 a week. In her words,

“there was no care of how we would live or survive. It took me three very long years to repay the debt. It hung over like a great shadow, the letters, the fear of what could come. We were devastated by the department’s actions. Carers just don’t have bank balances that can stretch and withstand such pressures…you are so vulnerable…it shouldn’t be this difficult”.

As I have said, Helen’s is not an isolated case; thousands of carers are in this position, not as a result of failure on their part to report to and notify the DWP, but owing to a failure of Government. This scandal is a stain on the record of the British state.

I therefore commend this Labour Government for asking Liz Sayce to conduct an independent review of carer’s allowance overpayments. She made it clear that overpayments were caused

“not by widespread individual error by carers in reporting their earnings but by systemic issues preventing them from fulfilling their responsibility to report.”

I welcome the fact that the Government have accepted the vast majority of her recommendations and set aside £75 million to implement them.

Among other things, the review called on the Government to reform the earnings averaging processes and guidance, as well as that for allowable expenses, so that there is clarity, transparency and predictability, and it called for a thorough reassessment of cases to right the wrongs and deliver redress. It called for creative short-term solutions to address the cliff-edge crisis, while the DWP works on a longer-term plan. That is vital. If someone earns one penny over the earnings limit, they have to pay back the whole weekly carer’s allowance. The Sayce review found that although the earnings limit cliff edge does not itself cause overpayments, it dramatically increases their scale and impact, negatively affecting people’s health, finances, wellbeing and opportunities to work. Will the Minister update us on progress on the introduction of a taper system?

Liz Sayce recommended a whole range of other reforms, from upgrading computer systems to using more empathetic language, improving the join-up between types of benefits and simplifying the system. I thank her and her team for completing this crucial task. I urge the Minister to implement the recommendations with urgency and to set out the timeline for doing so.

Turning to those affected, I welcome yesterday’s announcement that the Government have launched an audit of more than 200,000 carer’s allowance cases affected by unclear Government guidance that was in place between 2015 and 2025. The cases will be reviewed, and debts potentially reduced, cancelled or refunded for some 25,000 unpaid carers. That is excellent news and I am sure the Minister will say more. However, I believe that there are several categories of people who have been adversely affected whose cases remain outstanding. The DWP appears to be accepting responsibility only for those affected by the unlawful guidance on average earnings and not for the lack of clear guidance on expenses deductions.

Will the Minister ensure, as the audit begins, that the DWP fully addresses all aspects of maladministration? First, there should be consideration of cases in which the DWP held information regarding expenses but did not act on it or make corrections for many years. Secondly, I urge him to ensure that cases in which data has been “lost” by the DWP are dealt with as Liz Sayce recommended, and treated as cases of official error unless the DWP can prove otherwise. Thirdly, in the cases of those affected by the failure to adjust universal credit correctly, Sayce recommended that the DWP should pay UC arrears. I would be grateful if the Minister addressed whether the audit will include reviews for those missing groups.

[Rushanara Ali (Bethnal Green and Stepney) (Lab)]

I congratulate my hon. Friend on securing this important debate. She rightly highlights the important contribution that carers make to our country and the savings of £184 billion a year. The carer’s allowance scandal that this Government have had to deal with, which has taken place over a number of years, has parallels with the Post Office scandal in the way that individuals have been treated. Does she agree that the Department for Work and Pensions, which rejected a recommendation by the Work and Pensions Committee to undertake a regular audit of its progress on carers, should do that, so that we can see the progress the Department is making?

[Anna Dixon]

I am a member of the Public Accounts Committee, and we have requested that the DWP reports every six months on its progress on implementing the Sayce review. As a member of that Committee, I will certainly be keeping a close eye on progress.

My final point is about the culture in the DWP. I have had the opportunity to challenge its senior officials in the Public Accounts Committee, and I was shocked by the culture on display, which clearly regarded the victims of Government incompetence as benefit fraudsters. It disturbs me that that culture has been prevalent for so long and that, despite knowing about carer’s allowance overpayments for many years, the Department did little or nothing. As a Committee, we are clear that the lack of integrated and concerted leadership from the Department exacerbated the crisis. I ask the Minister for reassurance that he is confident that the senior team at DWP understand the nature of the harm done to carers, are fully committed to putting this right and do not adopt a defensive culture.

On the 50th anniversary of carer’s allowance, I call on this Labour Government to right the wrongs caused by the state, which have parallels with the Post Office Horizon scandal, as my hon. Friend the Member for Bethnal Green and Stepney (Rushanara Ali) said, and to put right the scandal of carer’s allowance overpayments so that our carers are paid what they deserve and not punished for the dedication and care they provide.

[The Minister for Social Security and Disability (Sir Stephen Timms)]

I am delighted to serve under your chairmanship this morning, Sir Roger. I congratulate my hon. Friend the Member for Shipley (Anna Dixon) on securing this extremely timely debate, which is a welcome opportunity to set out some of the work that the Government have been doing in response to the concerns that she has raised. She is a very strong advocate for unpaid carers; she was before entering Parliament, as she said, and she is now as chair of the all-party parliamentary group on carers. I echo her remarks about the significance of this year, which is the 50th anniversary of the introduction of carer’s allowance by Harold Wilson’s Government. It is right to mark and celebrate that.

My hon. Friend has spoken previously of how her mother cared for her grandmother for nearly 30 years. I think all of us can grasp how important and valuable the heroic scale of the contribution made by unpaid carers is, and my hon. Friend the Member for Bethnal Green and Stepney (Rushanara Ali) is right to draw our attention to the economic value of that contribution. The contributions of unpaid carers are vital to the family members, friends and neighbours they look after, but also to our communities, our country and our economy.

We inherited a dreadful situation in which some very busy, hard-pressed carers, already struggling under a huge weight of caring responsibilities, found themselves with large, unexpected debts due to alleged overpayments of carer’s allowance. My hon. Friend the Member for Shipley gave a particularly clear example of the problem that arose, and I will comment on it a moment.

The Work and Pensions Committee, among others, including the Public Accounts Committee, looked at this problem when I was the Chair, and I am pleased to now be a part of a Government who are able and willing to do something about it. We made a very early move after we were elected—I think that it was in the first Budget after the general election—to increase the weekly carer’s allowance earnings limit, as my hon. Friend said, to match 16 hours of work at national living wage levels.

As my hon. Friend said, that change from April 2025 resulted in the largest ever increase in the limit. It means that more than 60,000 additional people will be able to receive carer’s allowance between 2025-26 and 2029-30, but it is also important to note, particularly in the context we are discussing, that the chance of inadvertently slipping above the earnings limit is greatly reduced, because the limit will keep track with increases in the national living wage in the future. As my hon. Friend said, the earnings limit rose again to £204 per week from the beginning of this month.

People had a real problem in the past when the national living wage was increased, because their earnings that had been below the earnings limit went above it, and there was nothing to alert them to that; they had to monitor it themselves. Quite a lot of people were tipped inadvertently above the earnings limit, leading to an overpayment of carer’s allowance. I am very confident that the change we have made to keep the earnings limit in line with the national living wage will be a big step forward in reducing the incidence of overpayments in the future.

[Anna Dixon]

I had understood that we were also looking into opportunities to alert carers of potentially having breached the earnings limit. Is there anything in place to help communicate information from His Majesty’s Revenue and Customs or the DWP to carers?

[Sir Stephen Timms]

My hon. Friend makes a very good point. I will come on to that, because there is some progress in that area.

As my hon. Friend said, having made the change to the earnings limit, we commissioned the independent review led by Liz Sayce, the former chief executive of Disability Rights UK and a well-respected and widely recognised expert in disability benefits. Her review was published in November and, in my view, she did a brilliant job. She really got to grips with what had gone wrong, and I echo my hon. Friend’s thanks to her. The report found that many carers had faced unexpected debts because of errors in the way that the DWP had applied averaging rules on fluctuating earnings. The guidance used by DWP staff since 2015 had not properly reflected the law, which permits averaging over a period when assessing whether earnings are above or below the earnings limit.

The case that my hon. Friend mentioned of somebody who was receiving income once every six months is a clear example of the problem. I do not know what the figures were in that case, but it may well be that if Helen’s earnings had been averaged over six months instead of being taken into account in one month, they would have been below the limit. That is exactly the sort of instance that we will examine in the reassessment exercise, which I will say more about in a moment.

We accepted 38 of Liz Sayce’s 40 recommendations in full or in part, and we have already made progress on more than half of them. I will set out those recommendations and what we have done in response, and I will pick up on a couple of my hon. Friend’s questions. The review recommended putting right historical overpayments caused by flawed guidance on the averaging of earnings. I am pleased to say that new and correct guidance has now been in place since the start of September 2025, but it was wrong from 2015 for 10 years.

We are now delivering the reassessment exercise that Liz Sayce recommended: reclassifying affected overpayments as “not recoverable”, refunding carers where appropriate, and applying a fair approach where records are no longer held by the Department. The reassessment exercise began yesterday, so this debate is particularly well timed, and I am grateful to my hon. Friend for having secured it.

As my hon. Friend said, the Government have set aside £75 million of funding for refunds under the exercise in the financial years 2026-27 to 2028-29. That is a three-year period; we are hoping we can complete the exercise in two, but just to be sure, we have allowed three years to ensure we can complete it properly. We are expecting to review more than 200,000 cases, so it is a major undertaking. As she said, we estimate that we will be reducing, cancelling or refunding debts for perhaps some 25,000 carers in the course of the exercise.