ESA Underpayments

Sarah Newton 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.

[Sir Desmond Swayne (New Forest West) (Con)]

The hon. Member for Battersea (Marsha De Cordova) has spoken of a culture of indifference, but the bill for disability benefits this year will be £5.4 billion higher than it was in 2010. Is there an exponential increase in the number of disabled people between whom payments are being spread ever more thinly?

[Sarah Newton]

We are absolutely determined to ensure that everyone with a health condition or a disability is supported so that they can lead as full and as independent a life as possible. That includes supporting people with a health condition or a disability who want to work into work. I am delighted that we have seen 600,000 more people with disabilities in work in the last four years. Of course, we want to ensure that those who are unable to work also get the support that they need.

[Neil Gray (Airdrie and Shotts) (SNP)]

This is the latest in a long line of concessions forced on the UK Government by campaigners and the courts. In this case, I pay tribute to the efforts of the Child Poverty Action Group for achieving this victory for more than 70,000 disabled people in the face of the DWP’s “culture of indifference”, as described by the cross-party Public Accounts Committee. More than 70,000 disabled people have been denied money that they were due and knock-on support for between four and seven years. They were denied between £5,000 and £20,000, and support for the costs of prescriptions, dentistry and school meals.

Will the Minister advise the House on when this money will be paid out and whether it will be followed by compensation? Has the Department done any work to check whether its mistakes have had any other adverse consequences for those who have lost out, such as increased debt or mental health problems? In the light of the errors on ESA, PIP and universal credit, will the Department carry out a cross-departmental, cross-party review of its social security system to create one that is built on fairness, dignity and respect, as is happening in Scotland, rather than one that is subject to frequent legal challenge?

[Sarah Newton]

May I remind the hon. Gentleman that this action was due to the work of the Department itself? Because it is so important to us to make sure that people are not underpaid, it was our own work that led us to find this error and, as soon as we did, to put in place the actions to ensure that it was corrected.

On the hon. Gentleman’s point about the date on which we pay back the benefit, as I said in my statement, all the legal advice that we were given was around section 27. However, having listened to concerns raised by a range of stakeholders, we went back to look at that analysis. We really wanted to make sure that we were doing the right thing by our claimants, and that is when we came forward with the decision that we made yesterday.

In terms of the Department’s routine work, of course we welcome the fact that we have two very well-supported Select Committees. Only yesterday, I spoke to the Chairmen of the Public Accounts Committee and the Work and Pensions Committee. I always read with great interest and care any reports that they do. As I said to both Chairmen yesterday, we will seriously consider all their recommendations and report back to them, as they requested, in October.

[Maggie Throup (Erewash) (Con)]

May I wish my hon. Friend a very happy birthday? I commend her for finding this issue, moving it on, and getting a solution to it. Does she recognise the important role that so many employers are playing in signing up to the Disability Confident scheme and recognising that people with disabilities are an important part of our workforce for the future?

[Sarah Newton]

I thank my hon. Friend for making such an important point. We must always recognise the really positive contribution that people with health conditions and disabilities make across the whole of society, including at work. I commend her for accepting the community challenge. I commend all Members across the House who will go out into their communities this summer and encourage more employers to provide work experience, internships and employment for the huge talent pool of disabled people that we have in our country.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Can my hon. Friend confirm that once a claimant has been identified and contacted about their under-payment, they will have access to a free phone line so that they can pursue their claim, and will be paid within 12 weeks?

[Sarah Newton]

Yes, I can make that commitment. We have already started to contact people and we are already making payments. Once we have contacted someone, we will make the freephone telephone number available to them, and we will pay them as soon as possible, but certainly within 12 weeks.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I welcome the fact that the Minister took action to make sure that the wrong was righted for those people who would otherwise not have had this payment from 2011 to 2014. I congratulate her on that. However, the real concern is that there were warnings from 2013 onwards, both from her staff in the Department and from agencies dealing with these people. She says that the Department found this out, but it took a long time to act. Many people have still lost out on passported benefits, some easy to calculate, like free school meals. Will she, in the light of the recommendations in our report, look closely at the impact of the passported benefits that were lost and consider a compensation scheme?

[Sarah Newton]

I thank the Chairman of the Public Accounts Committee. Of course, the whole Department will take her report very seriously. The Secretary of State herself wanted to be here today, but she is making a very important speech elsewhere. That is the only reason she is not here herself to really underline the importance of what we are doing in the Department.

The hon. Lady raises a very good point about what more we can do to support frontline staff in the DWP who spot something wrong or feel uncomfortable with something that is happening—perhaps an unintended consequence—and to escalate their concerns so that they are heard by managers and those right at the top of the organisation. As a result of the work that the Secretary of State has been doing since she has been at the Department, with our new permanent secretary, new structures have been put in place to ensure that that escalation of concerns is appropriately considered across operations, policy and legal, and that appropriate action is taken. I believe that that action will prevent this from happening again.

[Kevin Foster (Torbay) (Con)]

I welcome the Minister’s answers and the fact that £40 million has been paid out so far. She rightly highlighted the fact that claimants will get a free phone number to contact. Obviously, people listening may have concerns about what their own position might be. Will she update me as to whether she will be working with local advice agencies, such as Citizens Advice, and ensuring that they have information so, if people contact them, they too will be able to give out advice?

[Sarah Newton]

My hon. Friend makes such an important point. I work very closely with a range of stakeholders, including the absolutely outstanding citizens advice bureaux. We will ensure, as we do in all the work we do, that they are fully updated so that they can give their customers good advice. I say to everyone in the House and to everyone listening that if people are struggling to make ends meet or are uncertain about what benefits they might be entitled to, they should go to Jobcentre Plus. There they will be greeted by compassionate, well-informed members of staff who will want to help them.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

As a former shadow Minister with responsibility for disability rights—a very long time ago—I have a keen interest in this, and, as chairman of the Westminster Commission on Autism, a contemporary one. In my time, I have seen a lot of mistakes in this kind of area. The secret is to come to the House, to apologise fulsomely and to put it right. The numbers she mentioned mean a lot of people in every constituency. Will she ensure that she does something fast to compensate them, and to help Members of Parliament, who with Windrush and this issue have an even greater workload in helping their constituents?

[Sarah Newton]

I thank the hon. Gentleman for his question and for his vital contribution. His work on autism, along with colleagues across the House, is really important. I always welcome opportunities to meet the cross-party group and I seriously consider all its reports. As soon as we identified the problem and how to sort it out, we were very open, coming to the House and updating it regularly, so that we can sort the problem out as soon as possible and provide Members with the information they need. I am first and foremost a constituency MP and I hold my weekly advice surgeries, so I know MPs’ vital role in supporting people through the benefits journey in our country.

[Tom Pursglove (Corby) (Con)]

My hon. Friend is a diligent Minister and I welcome the steps that she has taken to ensure that this is put right, but will she confirm for the House that internal learning has taken place and that future processes will be improved as a result?

[Sarah Newton]

Yes, I can give that assurance. The permanent secretary has been scrutinised and questioned by the Public Accounts Committee. He has made all sorts of commitments to improve the internal processes of the DWP, and, as I outlined in a previous answer, those processes are up and running. This summer I will visit the operating centre that is undertaking this administrative exercise, and I will be reinforcing to the staff on the frontline not only the importance of their work but how important it is to speak up and speak out if they experience any problems. I will be listening.

[Stephen Lloyd (Eastbourne) (LD)]

I thank the shadow disability Minister for bringing the urgent question to the House. The Minister will know that the fact that at least £390 million is owed to tens of thousands of sick and disabled people—the most vulnerable people—is a shocking revelation. I have two questions. First, will the Minister give an estimate of how long it will take for the people affected to receive the money that they are owed? Secondly, with respect, apparently the DWP learned about this 12 months ago but it is only the media that has brought it out into the open. How does the Minister respond to that?

[Sarah Newton]

It was not the media that brought this out into the open; there was a written ministerial statement to this House. We have been acting at speed to make sure that we identify people we have underpaid, and we have already started to make payments. In the original statement, we said that we hoped to complete the exercise within the year, which takes us up to next spring. We are absolutely working as fast as we can to make these payments.

[Diana Johnson (Kingston upon Hull North) (Lab)]

The Minister has again been brought to the Chamber by an urgent question, not to make a statement herself. I want to mention that the 100th anniversary is coming up of when George Lansbury and the Poplar councillors went to prison because they refused to cut benefits for the poor and the disabled. Does the Minister feel ashamed that she has had to come here today to explain the culture of indifference in her Department, and what is she personally going to do about it so that the poor and the disadvantaged in our communities do not suffer any more under this Government?

[Sarah Newton]

I gently remind the hon. Lady that we made a written statement yesterday—the third statement we have made—and that we have been open with the House and will continue to be open with the House because this is a matter of such importance to us. I also respectfully point out that she should look at the facts. Each year, we are spending more money supporting disabled people and people with health conditions, and the benefits that support them increase each year. They are not subject to cuts; the rates are increasing each year.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

The all-party group on disability has heard that 28% of those in poverty are disabled, while a further 20% of people in poverty live in a household with a disabled person. Shamefully, nearly half of the poverty in the UK is therefore associated with disability. Does the Minister agree that significant errors of this gravity perpetuate this poverty, and that there must be compensation for the most vulnerable who have been affected?

[Sarah Newton]

Let me absolutely clear: I do not want anyone in our country to be living in poverty. Nobody on the Conservative Benches wants to see anyone living in poverty, which is why we have put so much effort since 2010 into lifting people out of poverty, including people with disabilities. We have been increasing benefits each and every year, and we will continue to do so. We are also increasing the amount of support for disabled people and those with health conditions who tell us they would very much like to work.

[Jim Shannon (Strangford) (DUP)]

I, too, thank the shadow Minister for bringing this urgent question to the House, and the Minister for a very comprehensive response and for righting the wrong. Well done, Minister. With some 70,000-plus people who have transferred to ESA from another benefit not being paid the full amount of ESA, does the Minister have any idea at this stage of the number of those in Northern Ireland who have been underpaid, and who is looking after the Northern Ireland applicants who are seeking reimbursements?

[Sarah Newton]

Every person who deserves their payment will be treated fairly and equally—I absolutely assure the hon. Gentleman of that—but I will write to him with specific details about people in Northern Ireland.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

The DWP—not the staff—is quick to point out and to recover overpayments, but it takes rather longer to correct underpayments. That has taken six years in this case, and underpayments are at the highest estimated level to date. What actions will the Government take to put that right and, more importantly, to make sure that it does not happen again?

[Sarah Newton]

I have repeatedly said that we are very sorry that this happened in the first place, and that we are doing everything possible to rectify the system—not just in this particular case, but to learn across all our benefits. Of course we take underpayments very seriously, and we have a well-resourced team that is taking up that issue.

[Alison Thewliss (Glasgow Central) (SNP)]

The arrears being paid to people may be quite considerable in some cases. Will the Minister confirm to the House that these will be disregarded for their current benefit entitlement, because people should not lose out now for mistakes that the Department made previously?

[Sarah Newton]

The hon. Lady raises a very important point. I am more than happy to put it beyond any doubt for people who are receiving payments for these underpayments that those payments will be disregarded for the purposes of other benefits.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Rather than waiting for this failing Department to contact my constituents about any underpayments, how can MPs make proactive inquiries on their behalf? Is the Minister aware that despite the MPs’ helpline for universal credit, some DWP offices are hiding behind general data protection regulation and saying that they cannot deal with verbal inquiries? Will she ensure that the MPs’ helpline does what it says on the tin?

[Sarah Newton]

The hon. Gentleman makes an important point, and as a constituency MP I understand the important role that we all have to play. I will ensure that he is able to raise constituency cases effectively and swiftly, and if he experiences any specific problems, he should please contact me so that I can rectify them.