Underpayment of Benefits: Compensation

Tuesday 18th January 2022 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Thursday 13 January.

“I would like to start by extending an apology to Ms U for the experiences that have been highlighted in the Parliamentary and Health Service Ombudsman’s report. The department will, of course, formally apologise and make additional payments now that the PHSO report has been published.

I should remind the House that the employment support allowance was introduced in 2008, and from March 2011 the department began reassessing people on incapacity benefits for eligibility for ESA, which saw some claimants underpaid. The department’s priority was that all people get the financial support to which they are entitled. It undertook a special exercise to review all cases that were potentially affected and paid arrears where due. We realised how important it was to get this matter fixed and ensure that people get the benefits that they are owed as quickly as possible. We therefore set up a dedicated team, with up to 1,200 staff at the peak of the workload. This has enabled us to complete this important work at pace.

I remind the House that the exercise to correct past ESA payments and pay arrears, following conversion from the previous incapacity benefits, was completed last year, and the then Minister for Disabled People, Health and Work, my honourable friend the Member for North Swindon (Justin Tomlinson), made a Statement to the House in July 2021. All cases have been considered and reviews completed, where the information has been provided, and arrears due were paid. As of 1 June 2021, we have reviewed approximately 600,000 cases and made 118,000 arrears payments to those who are eligible, totalling £613 million. The department published an update on the exercise last Thursday on GOV.UK, which sets out further detail on the progress that it has made on processing the cases.”

15:12

[Baroness Sherlock (Lab)]

My Lords, a vulnerable person with multiple health needs recovering from a heart bypass was left for years living on half the money she was entitled to when the DWP moved her on to ESA, which also stopped her getting free prescriptions and other passported benefits. The ombudsman looked into her case and reported that Ms U, as she is known, could not afford to eat properly or heat her home, and that:

“Her mental and physical health declined drastically”.


Over 118,000 other people were similarly affected. The DWP eventually paid arrears but is refusing to pay compensation. The ombudsman recommended it paid compensation

“in recognition of its error and the potentially devastating impact it has had on people’s lives.”

When this matter was debated in the Commons last week, the Minister in the other place said that the Government had published the previous Thursday an update of these cases on GOV.UK. I have searched GOV.UK, as has the Library, and have found no such documentation, so I am dependent on the Minister to answer these two questions. First, can she say whether the DWP has now complied fully with the ombudsman’s recommendation to pay Ms U £7,500 in compensation and interest on her £19,832 of arrears? Secondly, will the Government also follow the ombudsman’s recommendation to provide remedies to the others who have suffered injustice or hardship as a result of the same maladministration?

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

I will go back to the department and check the first point that the noble Baroness raised. This situation is appalling and awful, and I apologise to all those affected on behalf of the Government and the department. I can confirm that Ms U has had a £7,500 compensation payment and a further payment of interest on the benefit arrears payment of £19,832. There is little more that I can say about her, other than that we have complied completely with the PHSO’s point.

On others affected—and I understand the depth of feeling on this—the department has a discretionary scheme that allows special payments to be made to customers to address any hardship or injustice caused by DWP maladministration. Consistent with other large-scale LEAP exercises, special payments under the DWP discretionary scheme will not routinely be made. There is no legal requirement to make special payments as the scheme is discretionary. However, as the Minister for Welfare Delivery said in the other place on Thursday, if anybody believes that they are a special case, they are quite free to make representation to the department.

[Baroness Janke (LD)]

My Lords, as has already been said, this woman has suffered appallingly through maladministration. The Minister did not really address the point about compensation, which the ombudsman’s report specifically asked the DWP to reconsider. Would she look at that again and perhaps come back to us on it? The report also points out that the DWP has put aside its own guidance in the remedy it is offering—so it does seem that the DWP needs to look at this report again.

The noble Baroness, Lady Sherlock, mentioned the very many others affected by these circumstances. Mention was made in the other place of the DWP not having had time to consider this report fully. Will the Minister take back the points we have made here and address in particular the point about compensation, and will she come back to us with a considered response from the DWP to the recommendations in the ombudsman’s report?

[Baroness Stedman-Scott (Con)]

I really thought that I had confirmed the situation about Ms U. She has had an unreserved apology. We made a £7,500 compensation payment. We paid the benefit arrears of £19,832.55 and gave money for interest. I think that I have been very clear about that. On the issue of compensation to others, again, it is a discretionary scheme, but I re-emphasise that if anybody believes that they have a special case, they can make representation. I think that clears the way.

[Lord Cormack (Con)]

My Lords, should it not be axiomatic that where somebody suffers as a result of maladministration there is automatically compensation? This is not a criticism of my noble friend, who is the most kind-hearted of people, but we must have compensation if maladministration is the cause of suffering.

[Baroness Stedman-Scott (Con)]

I thank my noble friend for that intervention. I have shared with the whole House the legal position on compensation when it is a LEAP scheme. The PHSO has let the department know what he thinks should happen. I have told noble Lords what the legal position is, and I know that the department needs to respond to the PHSO. When it does that, I am sure that the whole House will be made aware.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, of equal distress to people is the issue of overpayments in the benefits system, which is allied to the issue of underpayments. What measures will the Minister take, along with ministerial colleagues in the DWP, to restore confidence in the benefit overpayment recovery waiver system—a write-off system that would help people so that they are not forced to pay back money they do not have?

[Baroness Stedman-Scott (Con)]

The noble Baroness makes a very fair point about overpayments. When letters arrive in the post saying, “You owe me X and you’ve got to pay it back”, they do cause distress. I do not argue with that point at all. We have a team that deals with customer interface. It is trying to make the system better all the time. I will go back and speak to the official responsible for that particular sphere of our work and, if it is acceptable to the noble Baroness, I will write to her to see what comes of that discussion.

[Baroness Drake (Lab)]

My Lords, I refer to the Minister’s comment about payment of compensation to others being discretionary with a quote from the ombudsman:

“If Ms U’s decisions were typical, DWP will have declined to make others special payments on wrongly applied grounds, will have told them they could not complain to its Independent Case Examiner and will not have told them about the Ombudsman. That means that likely routes for such evidence were closed off.”


In the face of that clear statement from the ombudsman, how can the Government continue to refuse to commit to paying compensation to all other victims of the same maladministration?

[Baroness Stedman-Scott (Con)]

I can only tell the House the position of the department. I understand completely the situation and the depth of feeling about compensation for others, and I have to leave that to the Minister for Welfare Delivery and others in the department to consider, although there is no need to. As I say, if people feel that they are a special case and have experienced the same things as Ms U, we would want them to make their case.

[Baroness Fookes (Con)]

My Lords, when something terrible happens, the cry goes up: “This must never be allowed to happen again.” Is the department making investigations to see how the error occurred in the first place and how it can be avoided in the future?

[Baroness Stedman-Scott (Con)]

When things like this do happen, they are awful and nobody is proud of them, but I am very pleased to say to my noble friend that the team responsible is looking at what happened and putting in place processes that will ensure that, God forbid, this never happens again.

[Lord Davies of Brixton (Lab)]

My Lords, I take this opportunity to remind the Minister, the noble Baroness and the House of the underpayment of pension to widows and widowers. This is representative of some systematic problems within the department. Will the Minister be reporting to the House on the issue?

[Baroness Stedman-Scott (Con)]

I am not aware of the facts of the underpayment of the widows’ and widowers’ pension, but as I always try to answer in full, I will go back to the department, find out if there is any correlation and write to the noble Lord.