DWP expected to pay out £1bn to fix underpayment issues for claimants of disability benefits ‘Underpayments will have a dramatic effect on someone. They may not have enough to pay the bills and they will be struggling’

The Government is expected to pay out another £40m to fix underpayment issues for disability benefits, taking the bill to nearly £1bn, MPs have said.

The total cost includes what is owed to claimants plus the expense of the Department for Work and Pensions (DWP) hiring an extra 400 staff members to fix the system, according to figures released by the Work and Pensions Committee. There are 1,200 employees in total working on the issue.

Chairman Frank Field condemned the DWP for the “serially botched operation” that led to the underpayment as well as the huge expense of “fixing its own catastrophic incompetence”.

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Systematic errors

Claimants with disabilities lost out on £340m worth of support due to systematic errors when disability benefits, including Incapacity Benefit and Income Support, were combined into the single Employment and Support Allowance (ESA) payment from 2011. Some people lost out on the premiums – extra amounts of money to help with living costs – they were previously getting when they moved to the new system.

The DWP admitted in February that it had identified 30,000 extra cases affected by underpayment, despite initially claiming to have corrected the issue.

Some claimants would not have known they were not getting the correct entitlement unless it was pointed out by a benefits adviser.

Gary Martin, an adviser with more than 20 years of experience, told i he had helped people affected by the ESA underpayment issues. He managed to secure a repayment of £6,000 for one person who had been underpaid for years after moving to ESA from Incapacity Benefit.

“Underpayments will have a dramatic effect on someone. They may not have enough to pay the bills and they will be struggling,” said Mr Martin.

“Cuts to staffing at the DWP over the decades has led to this. The underpayment would be known by local authorities but they are facing cuts, too.

“The cost of dealing with resolving the arrears is worth millions – money that would be better spent elsewhere,” he added.

‘Disastrous turn’

‘Imagine what that money could have done instead for families across the country who are struggling to feed their children and heat their homes’ Frank Field, MP

Mr Field, the independent MP for Birkenhead, was furious at the DWP over the new figures and issued a damning rebuke.

“ESA has taken another disastrous turn. Having made it through the awful, painful, error-ridden assessment process run by the private contractors who can so rarely hit a target, through the miserable and lengthy reconsideration and appeal process that is so costly to taxpayers and claimants alike, tens and perhaps hundreds of thousands of disabled people still lost out on money they were owed.

“Now DWP has been forced to admit that just the admin of fixing its own catastrophic incompetence is going to add another £40 million to the cost of this serially botched operation,” he said.

“Imagine what that money could have done instead for families across the country who are struggling to feed their children and heat their homes.”

Mr Field suggested the DWP had not learned its lesson after the ESA fiasco.

“You might think that this shameful, damaging waste would at least focus minds at DWP on making sure this never, ever happened again,” he said.

“But we are already starting to hear about people whose incomes have been slashed because they’ve been wrongly advised to claim Universal Credit, and there’s no way back. If Ministers want to avoid another billion pound scandal, they need to get a grip on this – and fast.”

£920m in underpayments

Senior civil servant and permanent secretary for the DWP Peter Schoefield confirmed the latest expected cost for administering payments to 310,000 underpaid claimants would be £21 million in 2018/19 and £19 million in 2019/20.

In a letter to Mr Field, he confirmed 400 extra staff were recruited in 2018/19 “directly to support the ESA underpayment exercise”.

The DWP estimates it will pay £920 million in past underpayments over the financial years 2017/18, to 2019/20, a decrease from the £970 million forecast that informed Autumn Budget 2018.

James Taylor, head of policy at disability equality charity Scope, told i disabled people had been “short-changed by bureaucratic errors in the welfare system” for nearly a decade.

“Efforts to clean up the mess have been beset by delays and failings, but we’re pleased to see the Government has recognised the scale of the problem and are taking action.

“ESA is a financial lifeline for many disabled people to live independently and be part of their community,” he said, adding that the DWP needed to make sure those who had missed out on their full entitlement were payed back promptly “with the minimum amount of stress and anxiety”.

A DWP spokeswoman said: “It is only right that we prioritise ensuring all claimants affected by past ESA underpayments get the money they are owed, and we have paid over £300 million so far.

“We have allocated the staffing and resources needed to complete this as soon as possible, without impacting any of our other customer activity and support.”