ESA Underpayments

Marsha De Cordova Excerpts

Thursday 19th July 2018 Commons Chamber

[Marsha De Cordova (Battersea) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on the employment and support allowance underpayments.

[The Minister for Disabled People, Health and Work (Sarah Newton)]

In 2017, the Department for Work and Pensions identified an error that had resulted in some claimants being underpaid employment and support allowance between 2011 and 2014 while their claims were being converted from incapacity benefit, a legacy disability payment. The Department proactively informed the House of this problem in 2017 through a written statement before briefing partners and the media.

On 15 March, the Secretary of State tabled a statement setting out how the work to correct the underpayments was progressing. She explained that the Department would supply 400 staff for this exercise to ensure that we could identify as quickly as possible any cases where underpayments had occurred. Yesterday, she tabled a further statement to confirm that this work was under way. Staff are reviewing cases, contacting claimants and making payments. So far, we have paid out over £40 million in arrears.

As outlined in yesterday’s statement, the Department has analysed the relationship between official error and section 27 of the Social Security Act 1998 in regulating how and to what point in time arrears can be paid out. As a result of this analysis, we will now pay arrears to those affected back to the date of their conversion to ESA. Where we have already corrected cases by paying backdated arrears to 21 October 2014, we will review these cases again and pay any additional arrears due prior to that date. As planned, the Department will contact all those identified as potentially affected. Once an individual has been contacted and the relevant information gathered, they can expect to receive any backdated payments within 12 weeks. Once contacted, individuals will be provided with a dedicated free phone line on which to contact the Department to discuss their claim.

[Marsha De Cordova]

I want to thank you, Mr Speaker, for granting me this urgent question.

The ESA underpayments were a major error by the Department for Work and Pensions. Dating back to 2011, 70,000 ill and disabled people were underpaid thousands of pounds, after being wrongly migrated from incapacity benefit to the contributions-based ESA and thereby denied additional social security payments, such as the severe disability premium. This meant that people already neglected by the Government’s social security system were denied vital support and caused significant hardship.

The DWP was alerted to the error as early as 2013, but, in what the Public Accounts Committee report, published yesterday, described as a “culture of indifference” at the Department, the error was neglected, only to be taken up six years after it had occurred. The Government had claimed they were legally prevented from paying arrears to those underpaid prior to 2014, but in a significant climbdown yesterday, they seemingly pre-empted a legal challenge and committed to paying arrears from the date claimants were migrated to ESA.

Significant questions remain unanswered. How many people does the DWP estimate will be entitled to additional arrears payments? How soon does the DWP expect to be able to identify people affected by this announcement? Will the DWP pay compensation to those who got into debt as a result of the underpayments? When will these payments be completed? What measures has the DWP undertaken to ensure that similar mistakes do not happen again?

The review into the ESA underpayments is just one of six the DWP will be carrying out to identify ill and disabled people to whom it has wrongly denied social security support. Five of those reviews have been undertaken only to pre-empt legal judgments. The latest announcement is yet further evidence of a Department in chaos, and the chaos is chronic, with millions of disabled people affected by the DWP’s failures. That needs to be sorted and sorted now.

[Sarah Newton]

I will take each of the hon. Lady’s detailed points in turn, but I first want to disabuse the House and the hon. Lady of the characterisation of people working in the DWP that we hear week after week. It simply is not fair. Day in and day out, the staff of the DWP work very hard to support people with health conditions and disabilities. The amount of money that this Government—in coalition and now as a Conservative Government—spend supporting people with health conditions and disabilities has grown every single year since we took office in 2010. We are absolutely committed to ensuring that people get the support from us that they need.

I want to put this issue in context. I fully accept, and have accepted, that these mistakes should not have happened. We are acting at pace to resolve these issues as soon as possible. Yes, some individual cases were raised in 2013, but at that time the Department felt that they were individual cases. It was not that the Department was lacklustre in trying to deal with the issue, as the hon. Lady is trying to portray. In fact, it was the proactive work of the DWP—in ensuring that we look out for fraud and underpayment—that identified this problem, and Ministers in the Department have worked proactively to put the necessary resources in place to resolve the issue as soon as possible. One mistake is one too many, but in actual fact this issue has affected about 5% of the people who made the transfer from incapacity benefit to ESA, and 3% of everyone on ESA. We are sorting the situation out as soon as possible.

The hon. Lady specifically asked how many people are affected. Our initial assessment was that 70,000 people were affected. However, in the light of our decision to go right back to the point at which people transferred from IB to ESA, we are going to look at more claimants—even dormant accounts—to ensure that no one is left out of this exercise, and the number will therefore rise. I will be able to update the House, as I regularly do, once we have taken this action over the summer recess. At the moment, we estimate that we will end up spending around £390 million, but given our further announcement yesterday, I expect the number of people affected—and therefore the amount of money—to go up. People will be paid their full arrears. It is absolutely important to me, the Secretary of State and the whole Department that we rectify the situation as soon as possible.