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Over 118,000 Disabled people denied compensation from DWP after benefits error cut payments

13 January 2022

Over 118,000 Disabled people ”are facing injustice” by the DWP after being denied the right to compensation following its “blunder over benefit payments”, the Parliamentary and Health Service Ombudsman (PHSO) has said today.

The PHSO is calling on the Government to urgently rectify the injustice, something which it is so far refusing to do.

The call comes after an investigation of a complaint made by Ms U, who is recovering from heart bypass surgery and managing multiple health problems including an autoimmune disease, severe mental health problems and hypertension.  

For five years she received only around half the amount the Government says is the minimum requirement for a person with severe disability needs.

She could not afford to heat her property or buy the food she needed to stay healthy. Her mental and physical health declined drastically - her hair fell out, she lost weight and her mental health deteriorated.

The error also prevented Ms U from getting other benefits she was eligible for, including free medical prescriptions to manage her many health issues, funding to buy a washing machine and urgently needed dental care. She was at risk of hypothermia and her arthritis got worse because she lost out on £700 in Warm Home discounts.

Ms U, along with thousands of other eligible people, had only received payments based on her national insurance contributions when she should also have received payments based on her income.

Following the compulsory migration of incapacity benefit claimants to ESA from January 2011, many were underpaid due to the DWP only assessing entitlement to contributory ESA and not income-related ESA.

In July 2018 - after an investigation by the National Audit Office, an inquiry led by the Public Accounts Committee and legal action from the Child Poverty Action Group - the DWP finally agreed to pay full arrears of benefit to all those who missed out.

The DWP has since corrected the ESA error and set about paying arrears to those affected. But it still will not allow them to claim compensation for the life-changing impact this error may have had.

Ombudsman Rob Behrens is calling on the DWP to remedy this injustice:

“Ms U’s case is deeply distressing and a stark reminder of why accountability and independent Ombudsman schemes matter. It is human to make mistakes but not acting to right wrongs is a matter of policy choice. In this case, that choice has been made by the very organisation that is responsible for supporting those most in need.

“That those affected are unable to claim compensation for this error is poor public policy in practice, and the situation is made worse given that they have already waited years to receive the benefits to which they are entitled.

“We don’t know how many more Ms Us there are out there. That is why I urge the DWP to allow people affected to claim for compensation in recognition of its error and the potentially devastating impact it has had on people’s lives.”

Despite its refusal to comply, DWP’s own policy states that people should be offered compensation if they suffer injustice and hardship because of administrative errors.

The Ombudsman urges anyone affected by this issue to contact an advice agency to seek help and support.

DR UK Policy Officer Dan White said:

“This error is coming off the back of the much-vaunted national disability strategy where a new dawn of inclusion, understanding and support was promised across all areas including from the DWP itself as it was quoted as saying:

 “The Department is committed to enabling disabled people to live independently”

 "Well these continual errors are giving the disabled community the impression that the paper is not in reality worth what it was printed on.

 "Without the benefits they are rightly allowed, there will be no independent living only disability homelessness and further, unavoidable heartbreak and deeper poverty.

 "The DWP must compensate these individuals, without hesitation.”

Fazilet Hadi DR UK’s Head of Policy added:

 "We support the Ombudsman's call for people to receive compensation. People affected had severe disabilities and were forced to live on inadequate levels of benefit. Even receiving all your benefit is hard to live on. The DWP error caused massive distress that any other service provider would have paid compensation for.”

 The full PHSO report and a case summary are available from ombudsman.org.uk.

See also our news story DR UK says disabled people should not pay for the DWP mistakes on ESA.