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Esther McVey makes statement on ESA arrears: Public Accounts Committee responds

19 July 2018

Employment and Support Allowance statement - following the publication of the Public Accounts Committee report on ESA underpayments

More about the Public Accounts Committee report


On 15 March I provided the House with a statement setting out how the work my Department was undertaking to correct underpayments that occurred when converting Incapacity Benefit claims to Employment and Support Allowance (ESA) between 2011 and 2014 was progressing. I wanted to take this opportunity to provide the House with a further update.

In March I explained that my Department would resource this exercise with 400 staff to make sure we could review cases at pace. This work is now underway with staff reviewing cases, contacting claimants and correcting claims; so far we have paid out over £40 million in arrears.

The Department has analysed the relationship between “official error” and section 27 of the Social Security Act 1998 in regulating how and to what extent arrears can be paid. As a result of the conclusions of this analysis, we will now be paying arrears to those affected back to their date of conversion to ESA.

My Department will be contacting all those identified as potentially affected as planned. Once an individual is contacted, and the relevant information gathered, they can expect to receive appropriate payment within 12 weeks. I can also confirm that once contacted, individuals will be provided with a dedicated free phone number on which they can make contact with the Department.

Where we have already corrected cases and paid arrears from 21 October 2014 we will review the case again and pay any additional arrears that are due prior to that date.

I hope this will help Members to provide reassurance, to their constituents who think they may have been affected, that they will receive all the money they are entitled to.

Written statement - HCWS877

This statement has also been made in the House of Lords: HLWS846

Sarah Newton has said that payment will be made within 12 weeks but there are no indications that passported benefits will be paid for this period.

Public Accounts Committee Chair comments on Government response

Commenting on the Statement, Committee Chair Meg Hillier MP said:

"Today’s PAC report identified serious failings in DWP’s approach to administering Employment and Support Allowance—failings which led to some 70,000 claimants being underpaid for years.

"I was appalled by the Department’s apparent indifference to correcting its mistakes. Over several years the Department failed to act on information and intelligence from its own front line that the ESA transfer process was not working correctly.

"Even when the Department agreed that it would pay arrears, it only intended to pay claimants some of the benefit they missed out on.

"Today’s statement, coming so soon after publication of our report, indicates DWP finally intends to treat this problem with the seriousness it deserves. It has today committed to paying claimants arrears back to the date of their conversion to ESA.

"I welcome this announcement and look forward to seeing evidence of the Department’s progress in putting right this wrong. But there is work for DWP to do if claims are to be settled quickly.

"In particular, it must improve what has in some cases been an appalling standard of communication with claimants. The Department’s most senior civil servant told our committee that even he could not understand some of the letters sent out.

"This must be addressed quickly if DWP is to deliver on its promise and pay long-suffering claimants money to which they are rightly entitled."

Work and Pensions Committee comments on the Government’s response

Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said:

 “This is a most welcome change of heart by the Department, which has now accepted that its obligation to repay is much wider than it originally tried to claim. The numbers who may be eligible for back pay will increase—from 70,000 to up to a quarter of a million. The Committee will press DWP further to find out what it plans to do for the people who missed out on other benefits as a result of the wrongful denial of ESA, for which they should also now be compensated. 

“The parallels with Universal Credit are clear and troubling. The Department failed to listen to claimants, charities and even its own staff when they sounded the alarm. Their warnings fell on deaf ears, and tens of thousands of people lost out as a result. The Government must now learn the lessons from this catastrophic failure as it faces the challenges of migration onto Universal Credit.”