Latest Public Sector News

22.03.18

Error means DWP ESA payments could be paying out £830m more than expected by 2022-23

An error in payments from the Department for Work and Pensions (DWP) means that it will need to pay between £570m to £830m more than expected by the end of 2022-23, according to the National Audit Office (NAO).

Since 2011, the department has underpaid an estimated 70,000 people who transferred to the Employment and Support Allowance (ESA) from other benefits.

The error related to people who may have been entitled to income-related ESA but only received contribution-based ESA, and therefore may have missed out on premium payments.

The average underpayment is estimated to be around £5,000, but some people will be owed significantly more.

Around 20,000 claimants are expected to be owed £11,500 each, and a small number could be owed as much as £20,000.

Arrears will only be paid as far back as 21 October 2014, the date of a legal tribunal ruling.

However, the department estimates that there could be £100m to £150m of underpayments accrued before that date, in addition to the £340m it will pay for the period since then.

It has made a commitment to correcting its error and paying arrears by April 2019, and has redeployed staff to review around 300,000 cases, at a cost of £14m, to identify those affected and pay arrears due.

The error was reportedly due to the department’s process for converting people’s benefits to ESA not reflecting its own legislation, which from 2010 obliged the department to assess people’s entitled to both income-related and contribution-based ESA - in practice this was not always done.

The significance of the error was not recognised for several years, when staff were preparing the 2013-14 fraud and error statistics in 2014, although individual cases were picked up as early as 2013.

Later in 2014 the department issued guidance designed to prevent further errors, but did not take steps to assess existing cases.

Last year two departmental internal reviews concluded that a stronger grans of the legal obligations and risks would have led to more informed discussions in 2014 and recommended that decisions involving legal risks should be made by appropriately senior managers.

They also found that the department’s finance staff could have been notified more quickly so that they could understand the implications of the department’s financial reporting and budgeting.

Amyas Morse, head of the National Audit Office, said: “The facts of this case are that tens of thousands of people, most of whom have severely limiting disabilities and illnesses, have been underpaid by thousands of pounds each, while the department for several years failed to get a proper grip on the problem.

“The Department has now committed to fixing this error by April 2019, but not everyone will be repaid all the money they have missed out on.”

The DWP has already reviewed 4,000 cases to date, 1,500 of which were found to have received incorrect payments.

The first payments were made last year, and over £9m has been paid back to date.

A spokesperson for the department said: “We’re well underway with our plan to identify and repay people affected by this issue, and payments have already started.

“We’re committed to ensuring people get what they are entitled to receive as quickly as possible. Everyone who could be affected will be contacted directly by the department.”

Top image: Gregory Lee

Have you got a story to tell? Would you like to become a PSE columnist? If so, click here.

Comments

There are no comments. Why not be the first?

Add your comment

 

related

public sector executive tv

more videos >

last word

Prevention: Investing for the future

Prevention: Investing for the future

Rob Whiteman, CEO at the Chartered Institute of Public Finance (CIPFA), discusses the benefits of long-term preventative investment. Rising demand, reducing resource – this has been the r more > more last word articles >

public sector focus

View all News

comment

Peter Kyle MP: It’s time to say thank you this Public Service Day

21/06/2019Peter Kyle MP: It’s time to say thank you this Public Service Day

Taking time to say thank you is one of the hidden pillars of a society. Bei... more >
How community-led initiatives can help save the housing shortage

19/06/2019How community-led initiatives can help save the housing shortage

Tom Chance, director at the National Community Land Trust Network, argues t... more >

interviews

Artificial intelligence: the devil is in the data

17/12/2018Artificial intelligence: the devil is in the data

It’s no secret that the public sector and its service providers need ... more >

the raven's daily blog

Utilising data to best deliver meaningful public services

14/11/2019Utilising data to best deliver meaningful public services

Public Sector Executive’s Matt Roberts explains how living in a modern, interconnected world, as we do, means public sector organisations cannot afford to ignore the rol... more >
read more blog posts from 'the raven' >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this feeling of imminent change than the article James Palmer, mayor of Cambridgeshire and Peterborough, has penned for us on p28. In it, he highlights... read more >