180,000 to get refunds in £1.5bn benefits blunder
NEARLY 200,000 sick and disabled people will get backdated benefit payments averaging £5,000 each, after the Government admitted it underpaid them.
The existence of errors in the Employment and Support Allowance system has been known since last year, but papers issued by the Department for Work and Pensions reveal the scale of the problem which is expected to cost more than £1.5 billion to correct.
The mistake arose when assessors wrongly calculated people’s income while moving them from incapacity benefit and severe disability allowance, on to ESA.
Backdated
Most of the errors occurred between 2011 and 2014 and some people have already received backdated payments of more than £10,000.
The ESA was initiated in 2008. A lower rate is paid to claimants who can work with the right support, and a higher rate is awarded to people deemed so ill they cannot be expected to work.
The DWP document said: “We estimate that around 180,000 people could be owed arrears payments, with around 105,000 estimated to be repaid during 2018/19 and 75,000 during 2019/20.”
As well as the £970 million unpaid in past years, there is an extra £700 million to pay ongoing claims at the right level.
Around 18,000 arrears payments have already been made totalling £120 million.
The scale of the errors fuels warnings that millions of people could lose out when the Government moves them onto the new universal credit working age benefit system.
Labour MP Frank Field, who chairs the Work and Pensions Select Committee, said: “It is welcome news that the Government is finally making progress towards repaying people who have missed out on ESA.
“Its best estimate is that it owes claimants £970 million – but the final bill could be even higher.
“The Government must learn lessons from this appalling failure, as it faces the much bigger challenge of moving people onto universal credit.”
The DWP pledged: “Anyone affected by this historic error will receive all of the money they are entitled to.”
The payout follows the decision by current Work and Pensions Secretary Esther McVey to ditch the Government’s previous policy of refusing to reimburse missed payments which pre-dated October 2014.
The DWP analysis estimates that the average back-payment to each claimant owed money will be £5,000, although the average paid back so far is £7,000.
Minister for Disabled People, Sarah Newton said the DWP was studying a total of 570,000 cases. Most of the first 320,000 cases revealed last year should be completed by April, with a second wave of 250,000 then to be worked through.