The DWP confirmed to the Public Accounts Committee (PAC) last week that they will pay the minimum amount they can legally get away with to claimants who were underpaid ESA as a result of DWP errors. This means that they will not backdate all the way to the date of the error in many cases and also will not pay any consequential losses, such as prescription charges claimants should have been exempt from.

In March of this year we reported that the DWP failed to award income-related ESA to around 70,000 claimants who were transferred from incapacity benefit to contribution-based ESA from 2011 onwards.

Affected claimants are owed between £2,500 and £20,000 each.

However, the DWP are insisting that they are only legally obliged to repay underpayments from 21 October 2014, when the upper tribunal first ruled that contribution-based and income-based ESA are a single benefit and that the DWP has a duty to assess claimants for eligibility to both types of ESA when a claim is made.

This means that underpayments from before this date all the way back to 2011 can simply be ignored by the DWP. Child Poverty Action Group are currently mounting a legal challenge to this decision by the DWP.

In evidence to the PAC, Peter Schofield, DWP Permanent Secretary, insisted that compensation would not be paid to claimants who had lost out:

“We don’t pay blanket compensation in situations where the courts have told us to interpret a piece of legislation in a particular way. We don’t do that . . . I have a responsibility, as accounting officer, and I have looked carefully at this in the context of “Managing public money”. The key point here is not to create precedents that put the taxpayer at risk.”

Schofield was then pressed by the Chair of the committee:

“Just to be clear, if you were paying prescription charges or something—the passported benefits—would people individually be able to get those refunded, if they can prove that they had to pay them?”

Schofield responded that prescription charges would not be refunded:

“We are not introducing a blanket compensation scheme . . . No. I have assessed this from the point of view of an accounting officer, and I don’t believe that is consistent with “Managing public money”.

Schofield also revealed that the DWP intend to have processed all repayments by next April and that “hopefully” they would begin processing repayments in June to the next-of-kin of claimants who have died.

The PAC also praised the welfare rights website Rightsnet for first highlighting the issue. The chair suggested that the welfare rights worker (Andrew Dutton from Derbyshire Welfare Rights Service) who spotted the problem and first wrote to the DWP about the underpayments, should be bought a pint.

You can read the PAC meeting minutes here.


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