A review has been launched into the issue of carer overpayments which the Government acknowledged has pushed some people to “breaking point”.

The issue of people being penalised for going over their earnings limit for Carer’s Allowance even by as little as a few pence per week has previously been branded a “scandal” by a charity.

Historic overpayments have led to many carers – who must earn £151 a week or less to qualify for the allowance – unwittingly racking up unmanageable levels of debt and some quitting their jobs as a result.

The Government should also take this opportunity to review and reform the archaic and unfair Carer’s Allowance system as a whole. Created in the 1970s, it’s just not fit for purpose today

Carers UK said some people have been left owing “hundreds, thousands and sometimes tens of thousands of pounds” to the Department for Work and Pensions, after not realising they had gone over the earnings limit and not fulfilling their duty to inform the department as a result.

On Wednesday, the department announced an independent review into overpayments, which will focus on how and why these sums were accrued.

It will also consider what the department termed operational changes to minimise the risk of overpayment in future and look at how people with overpayments can best be supported.

The review will be led by Liz Sayce, the former Disability Rights UK chief executive.

The Carers Trust welcomed the review but called for a commitment to write off debts and for a wider review and reform of the “archaic and unfair” Carer’s Allowance system overall.

The charity’s chief executive, Kirsty McHugh, said: “A review of Carer’s Allowance overpayments is hugely welcome. Too many people have had their lives ruined by being pursued for huge sums of money simply because they made an honest mistake.

“These fines need to be written off and the systems allowing them to build up must be overhauled.

“The Government should also take this opportunity to review and reform the archaic and unfair Carer’s Allowance system as a whole. Created in the 1970s, it’s just not fit for purpose today.

“It is the lowest benefit of its kind at an insultingly low £81.90 a week, its strict eligibility criteria prevent people balancing caring with work, and it locks young adult carers in full-time education out of support. It urgently needs to be updated to reflect the needs of carers today.”

Carers UK also welcomed the review but echoed calls for wider reform and urged an end to the current “cliff edge” in support.

Its chief executive, Helen Walker, said: “As well as raising the earnings limit to 21 hours at National Living Wage and removing the ‘cliff edge’ in the earnings limit, we need to also see wider reform and a review of Carer’s Allowance, to ensure it better supports unpaid carers.”

Work and Pensions Secretary Liz Kendall said many family carers had been “pushed to breaking point looking after the people they love”, as she committed to learning lessons to “put this right”.

Ms Sayce said she is determined her work will “get to the bottom of how overpayments have occurred and how to prevent people who devote such time and care to others facing these difficulties in future”.