Unpaid carers have been issued with demands to repay thousands of pounds for allegedly breaking benefit rules even though officials knew the decisions were based on unlawful and discredited policy guidance.About 1,400 carers are understood to have been sent letters by the Department for Work and Pensions (DWP) in January asking them to repay sums relating to breaches of carer’s allowance earnings rules that had been scrapped four months previously.Campaigners have demanded to know why the DWP went ahead with issuing the overpayments – causing distress and hardship to carers – rather than waiting and reassessing the decisions under the new guidance.It is thought some carers may have already repaid the sums, or agreed monthly repayment schedules.Most will have also received a £50 civil penalty imposed for negligence.

In theory, an overpayment of more than £5,000 would bring a carer into scope for prosecution on fraud grounds.Many of the cases are likely to be cancelled or reduced over the next two years as part of a wider DWP reassessment of tens of thousands of potentially unsafe carer’s allowance overpayment decisions dating back over six years.The reassessment was announced by ministers in November after a highly critical independent review by disability rights expert Liz Sayce into the DWP’s handling of carer’s allowance over the past decade.“At a time when wider reforms to the system were approaching, these cases could have been considered under the new guidance rather than progressed under the previous guidance that had already been recognised as problematic,” said Helen Walker, the chief executive of Carer’s UK.She added: “The extreme distress caused by overpayments for some carers could have been avoided by simply assessing under new guidance.

”The blunder will put further pressure on senior DWP officials, who have come under increasing criticism in recent weeks.MPs declared they had little confidence in the DWP hierarchy’s commitment to reform, while Sayce herself warned earlier this month of “forces of resistance” within the DWP who were opposed to change.Sayce’s review concluded “flawed” internal DWP guidance had for years unlawfully punished carers who had averaged their earnings over periods of three or 12 months to enable them to stay within carer’s allowance weekly earnings limits.As a result, thousands of carers who worked in zero-hours jobs, or did term time-only work in schools – were wrongly punished, landing them with large and unexpected overpayment debts and plunging many into emotional despair.Carer’s allowance earnings limits were at the heart of an award-winning Guardian investigation, which found hundreds of thousands of unpaid carers were hit with overpayment demands in recent years after inadvertently earning more than the allowed weekly wage threshold.

Although many carers had earned just a few pence over the weekly limit, overpayments were inflated by harsh “cliff edge” benefit rules whereby any breach of the weekly earnings limit resulted in the loss of the entire benefit.This meant a £1 breach over 52 weeks would result in a demand not for £52 but £4,332.The DWP’s longstanding failure to check all the electronic alerts it received informing it of potential overpayments meant carers were oblivious to their mounting debts, which were allowed to build for months and often years.Carers typically ended up owing between £1,500 and £5,000 but in some cases as much as £20,000.The Sayce review concluded the responsibility for most overpayments lay with “systemic” issues at the DWP and emphasised carers should not be held responsible for falling foul of what it said were complex and confusing benefit rules.

It is understood the stockpile of overpayments cases sent out in January had been set aside by officials between January and September last year amid growing internal doubts over the robustness of guidance on earnings averaging.The DWP had lost a series of benefits tribunal cases where judges had questioned the legality of its averaging guidance and it was also clear that the Sayce review would examine the guidance.The DWP quietly changed the guidance in September, and ministers formally accepted the old guidance was flawed in November.But rather than re-assess the stockpiled cases, officials pressed ahead with payment demands.Averaging has always been allowed under benefits law and it is unclear why the DWP changed its guidance six years ago.

Although in 2019 it promised MPs it would make it easier for carers to average earnings, within months it had tightened the guidance make it almost impossible for them to do so.A DWP spokesperson said: “We inherited a system that let carers down and are taking decisive action by accepting the vast majority of the Sayce review’s recommendations.“These cases relate to decisions that were made prior to publication of the review and ministers accepting the recommendations of the Sayce review.“They have been processed in line with the guidance that was in place at the time the overpayment decision was made.Any that fall within the parameters of the review will be reconsidered as part of the reassessment exercise.

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