Debbie Abrahams, chair of the Commons work and pensions select committee, said MPs are actively considering opening a fresh investigation over what she called a 'torrent of missteps' by the DWP in its response to the scandal. The government has formally accepted its earnings averaging rules were faulty and incompatible with social security law. Ministers will on Monday launch an audit of more than 200,000 historical carer’s allowance benefit cases. An estimated 25,000 carers issued with unlawful overpayments since 2015 are likely to see their repayment debts cancelled or reduced as a result. The two-year, £75m reassessment exercise will focus only on cases where carers were unlawfully prevented from averaging their annual earnings to avoid earnings penalties.
Liz Sayce's 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. 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. The so-called 'cliff edge' had a 'severe' impact on carers, and acted as a disincentive to take on paid work, according to an independent review led by former charity boss Liz Sayce last November. Ministers accepted 38 out of 40 recommendations in the report, which found that between 2015 and summer 2025, Carer’s Allowance guidance was 'ill-defined', while 'systemic flaws' prevented many from properly reporting their earnings.
I was really distressed by that blog, as I am sure many people were. Because what you were hoping for from senior people at that point was to really share with colleagues across the department the seriousness of this – what has been learned, what is going to be put right. Not attempt to minimise or again place a responsibility back on the carers, as if it was their fault.
Hundreds of unpaid carers continued to be hit with repayment bills even after DWP officials knew the overpayments were based on unlawful internal guidance on averaging earnings. In September 2025, the DWP quietly changed its guidance on averaging earnings. About 22,500 carer’s allowance claimants were issued with overpayments in the three months after an independent review was published. A stockpile of overpayments identified in 2025 was 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 DWP in September.
One unpaid carer was notified by the DWP in March 2025 of several overpayments since 2020 relating to monthly breaches of benefit earnings rules, even though her annual average earnings were within allowed limits. In December 2025, the DWP issued the carer with a demand to repay more than £6,000, calculated using the old guidance, including a £50 civil penalty. The carer is appealing against the decision.
I think there are some senior people who are serious about making the changes that are needed. [But] I felt that sometimes there was almost a kind of effort to minimise what had gone wrong.
Liz Sayce, head of an official inquiry into carer’s allowance, has criticised 'forces of resistance' inside the DWP that undermined ministerial attempts to fix longstanding problems with the benefit. Sayce said rather than owning the problems, some at the DWP had tried to 'minimise' the extent of the department’s failures and sought to deflect blame for the crisis. Sayce told MPs on the work and pensions select committee on Wednesday she had been surprised by how for years the DWP had repeatedly ignored the problems, despite an internal whistleblower identifying serious shortcomings with the benefit. Sayce said she had been distressed by Guardian reports of an internal DWP blogpost, written by a DWP director general, Neil Couling, just days after her report was published, in which he insisted – at odds with the review’s conclusions and government policy – that carers were ultimately to blame for the debts they incurred. Sayce said senior leaders had to own the problems, explain what had gone wrong and understand why it had to 'shift the culture' and ensure reforms were pushed through.
The government has admitted its existing 'business as usual' overpayment recovery policies will be maintained while a full overhaul of the benefit is completed. The Government said about half of the promised changes have already been made, with further reforms under way to modernise the benefit and prevent similar problems in future. Officials said that DWP has all the information it needs to carry out the reassessment in most cases, and that carers do not need to contact the department themselves.
The senior team needs to be on that case. It needs to be a bit more systematic than just good intent.
However, it remains 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. The specific changes made as part of the 'half of the promised changes' already implemented by the government have not been detailed. The timeline for the full overhaul of the carer's allowance benefit and when 'business as usual' overpayment recovery policies will be discontinued is also unknown, as is how the DWP will ensure that 'forces of resistance' within the department do not undermine implementation.