Five thousand people died before they could be reimbursed for a government error that left chronically ill and disabled benefit claimants thousands of pounds out of pocket, it has emerged.

Approximately 70,000 claimants were originally estimated to have been underpaid about £340m between 2011 and 2014, after being transferred from older benefits on to the employment and support allowance (ESA) during a government overhaul of incapacity benefits.

Figures released on Thursday, which showed 5,000 ill and disabled people died before receiving the money they were owed, were described as a “national scandal” by Marsha de Cordova, the Labour MP and disability rights campaigner.

The government has been conducting a review of cases potentially affected by the error, which arose when some people who were receiving incapacity benefit and severe disablement allowance had their claims converted to contributory ESA.

However, 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. The review has been looking through 600,000 potential cases of those who missed out. Some 122,000 people have now been repaid £5,000 each on average, according to the new figures.

The ESA failure was overseen by the then Conservative former secretary of state for work and pensions, Iain Duncan Smith, who was in post for all but the last few months of the period covered by a damning public accounts committee (PAC) report. The current housing minister, Esther McVey, was a DWP minister between 2013 and 2015.

Evan Odell, a researcher at Disability Rights UK, said: “That 5,000 disabled people were denied the proper support to live independently before they died is scandalous, as is the 112,000 people who had had to wait years for these errors to be corrected.

“To make matters worse, the problems with the employment and support allowance system that have led to hundreds of millions of pounds of arrears payments are still present. Seventy-five per cent of ESA applicants who appeal DWP decisions to the social security tribunal win; this case is merely one more piece of evidence showing how ESA is not fit for purpose.”

Marsha de Cordova MP said: “It is a national scandal that a decade of delay has meant that 5,000 ill and disabled people have died before receiving the money that they were owed as a result of ESA underpayments.

“The government must now speedily complete the remaining reassessments for the thousands of people still waiting so that everyone who has lost out receives payment as quickly as possible.

“The Conservatives have consistently failed sick and disabled people. The continued delay in righting this wrong is disgraceful.”

The department said it has finished processing 97percent of potentially affected cases and so far around one percent of these have resulted in an arrears payment in respect of a claimant who has passed away.

A DWP spokesperson said: “We have worked hard to ensure that anyone affected by this issue receives the benefits they are entitled to, and in the minority of cases where a claimant has sadly died we have paid their next of kin.”

In 2018, a cross-party group of MPs criticised the DWP’s “culture of indifference” after it took six years to correct the error .

The cost of fixing the error, which the PAC report said stemmed from a string of avoidable management failures, was expected to cost the DWP at least £340m in back payments to claimants and £14m in administrative costs.

The figures showing that 5,000 of those affected date from 12 January 2020. The DWP expects them to change as staff continue to work on the exercise to check potentially affected cases.