Underpaid disability claimants to receive up to £20,000 due to DWP miscalculation

The Government has been ordered to cough up between £570m and £830m to cover overdue disability benefits payments, which were mistakenly underpaid when previous benefits schemes were changed over to the Employment and Support Allowance (ESA) in 2011.

This estimation also covers payment adjustments up until 2023.

A National Audit Office (NAO) report states that the Department for Work and Pensions (DWP) has underpaid around 70,000 people who transferred to ESA from a range of other previous benefits such as Income Support, Severe Disablement Allowance and Incapacity Support.

It is estimated that the Government will have to pay out between £2,500 and £20,000 per person.

DWP failed to get ‘a proper grip on the problem’

The DWP has come under fire for the amount of time it's taken to get to the root of the ESA underpayments, which the DWP has known about since 2015.

NAO chief, Sir Amyas Morse 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.”

According to the report, the average underpayment is likely to be around £5,000, with the DWP owing an estimated total of £340 million in underpaid benefits.

It also states that the DWP is committed to 'correcting its error and paying arrears by April 2019'. Over 400 staff, mostly experienced ESA processors, have now been tasked with reviewing around 300,000 cases to identify the people affected and to pay arrears where due.

It’s been estimated that roughly £680 million extra will be needed, because in addition to the £340m in arrears payments, people affected will receive higher amounts of ESA after their claim is corrected.

This is the second time in as many months that the DWP has been forced to backpay disability benefits. In January 2018,164,000 personal independence payments (PIP) were in the process of being back-paid after the High Court decided that changes previously made to the disability benefit system “blatantly discriminated” against those with mental health issues.

Underpayments delay is a ‘sorry episode’

The length of time it has taken the DWP to deal with the ESA Benefits issue has come in for criticism by MPs.

Frank Field, chair of the Work and Pensions Committee, called it a 'damning report' and said: "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."

Meg Hillier, chair of the Commons public accounts committee, was also deeply critical. She said: “The National Audit Office’s report shows the Department of Work and Pensions was unacceptably slow to act on early signs something was wrong.

“The committee said in 2015 that the department needed to do far more to tackle the neglected issue of underpayments. This sorry episode demonstrates why it is so important.”

Disabilities charities have also been up in arms. Mark Atkinson, chief executive at Scope, said: “This report is a searing indictment of a system that is short-changing disabled people.

“On top of poor administration, the fitness for work test itself isn’t fit for purpose. Appeals against poor decisions have a staggering 69 per cent success rate. It’s vital disabled people get the financial support they need to live independently.

“A complete overhaul of the fitness for work test is long overdue.”

A DWP spokesperson has responded by saying: “We’re well underway 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.”