Three Hundred Thousand ESA Claims To Be Reviewed After Latest DWP Error

Tens of thousands of severely disabled and ill claimants are set to receive backdated payments of up to £20,000 after being wrongly underpaid for years by social security officials, the government spending watchdog has revealed.

An estimated 70,000 claimants were underpaid about £340m between 2011 and 2014 after being transferred from older benefits on to employment and support allowance (ESA) during a government overhaul of incapacity benefits, the National Audit Office (NAO) said.

The error occurred when officials at the Department for Work and Pensions (DWP) failed to follow their own legal guidelines governing the transfer process, meaning that in many cases they failed to properly check claimants’ full entitlements.

Meg Hillier, the chair of the Commons public accounts committee, said: “The government’s shoddy administration of ESA has resulted in vulnerable people being deprived of thousands of pounds they were legally entitled to. The NAO’s report shows the DWP was unacceptably slow to act on early signs something was wrong.”

The DWP “failed to get a grip” on the problem for several years despite being alerted to it by staff as early as 2013, the NAO said. Even when it recognised its error as systemic in 2014 it ignored the issue of repayments for a further 18 months.

Although in May 2016 the DWP’s fraud and error team identified an ongoing and significant issue with underpayments, officials prevaricated for a further year before accepting the department had a legal duty to identify and repay affected claimants.

An estimated 45,000 claimants are owed about £2,500, a further 20,000 stand to receive £11,500, with a small number owed as much as £20,000. The size of the repayments varies depending on an individual’s entitlements and the length of their claim.

The DWP has promised to make repayments by April 2019. They will be backdated to 21 October 2014, the date of a court ruling confirming the error. An estimated £150m of underpayments relating to the period before the court ruling cannot legally be paid, the DWP says.

It is the second time in recent months that the DWP has agreed to repay disability benefits. In January it began moves to backdate payments to 164,000 personal independence payment recipients after the high court found that a rule change blocking enhanced payments for people with mental health conditions was discriminatory.

The administrative cost of correcting the latest error is estimated at £14m. The DWP plans to hire 250 more staff as it sifts through an estimated 300,000 ESA assessments to identify affected claimants. Fixing the problem will add about £700m to the ESA bill by April 2023 as ongoing claims are uprated.

Frank Field, chair of the work and pensions committee, said: “This is a damning report. The department is quick to act in cases of overpayment, quick to sanction claimants for any breach of its rules – but when the shoe is on the other foot, has shown it will take years to recognise and get to grips with its own mistakes.”

A DWP spokesperson said: “We’re well under way with our plan to identify and repay people affected by this issue, and payments have already started. We’re committed to ensuring people get what they are entitled to receive as quickly as possible. Everyone who could be affected will be contacted directly by the department.”

There are two forms of ESA: income-related ESA and contribution-based ESA. The DWP error related to claimants who were placed on the latter form of the benefit only, when they may also have been entitled to the former. As a result they may have missed out on premium payments.

ESA is a form of unemployment benefit paid to people with limited capability to work because of disability or illness. About 2.4 million Britons receive ESA, and in 2016-17 the total expenditure was £15bn.

Amyas Morse, the head of the National Audit Office, said: “The facts of this case are that tens of thousands of people, most of whom have severely limiting disabilities and illnesses, have been underpaid by thousands of pounds each, while the department for several years failed to get a proper grip on the problem.”

Ken Butler, a welfare benefits adviser at Disability Rights UK, said: “The National Audit Office report makes for sorry reading. It shows a shambolic catalogue of mistakes which have had a massive impact on tens of thousands of disabled people who qualified for benefits they were denied.”

Genevieve Edwards, the director of external affairs at the MS Society, said the failure was inexcusable. “Around a quarter of all people with MS access ESA as they can no longer work due to ill health. Many have told us the support they receive isn’t enough to pay for the basics and so any underpayment would obviously have a huge impact on their lives.”