City MP leads grilling of DWP over huge ESA error

Department of Work and Pensions mistakenly underpaid £1.7 billion to vulnerable people

Portsmouth South’s Stephen Morgan today jointly lead the Public Accounts Committee’s hearing on the DWP’s error-strewn administration of Employment Support Allowance payments.

Since 2011, the Department for Work & Pensions has underpaid an estimated 70,000 people who transferred to Employment and Support Allowance (ESA) from other benefits, according to a National Audit Office investigation. The Department estimates it will need to pay a total of between £570 million to £830 million more ESA than it previously expected by the end of the 2022-23 financial year.

The error related to people who may have been entitled to income-related ESA but were instead only awarded contribution-based ESA, and therefore may have missed out on premium payments.

Employment and Support Allowance (ESA) is a benefit paid by the Department for Work and Pensions (DWP) to people who have limited capability to work because they are disabled or ill.

The average underpayment is likely to be around £5,000 but some people will be owed significantly more. A review of a sample of 1,000 cases suggests that 45,000 claimants entitled to the enhanced disability premium only may be owed around £2,500 and that around 20,000 claimants who are entitled to the severe disability premium may be owed around £11,500 each. A small number could be owed around £20,000. 

Stephen Morgan MP, said:

‘It was helpful to join colleagues in leading this really important session for taxpayers and vulnerable people across the UK.

The DWP made a big mistake, then they made it worse by taking four years before even starting to put things right, despite warnings from frontline staff. If the department is to avoid a repeat of these hugely costly errors, we must find out what exactly went wrong and why.

What is especially concerning about this case is the fact that countless people on the poverty line who were denied the financial support they’re entitled to under the law still haven’t been properly reimbursed, I welcome the opportunity to press officials on their behalf.’

Amyas Morse, 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.

The Department has now committed to fixing this error by April 2019, but not everyone will be repaid all the money they have missed out on.’