Bluebear
As I remember it your father's ESA is Contribution Based.
This being the case, then any lump sum will not be taken into account, the £16,000 limit only applies to Income Related ESA, only regular pension income is taken into account for ESA(CB).
DLA is not take into account for either ESA(CB) or ESA(IR).
Gordon
Nothing on this board constitutes legal advice - always consult a professional about specific problems