Employment and Support Allowance (ESA) was introduced in 2008. In 2011 the Department began reassessing people claiming pre-existing incapacity benefits to see whether they were eligible for ESA. The previous benefits included Incapacity Benefit, Severe Disablement Allowance and Income Support.
In 2013, the Department was made aware of individual cases which were transferred in error to contributory ESA, rather than to income-related ESA, and therefore which may have had an unidentified entitlement to additional premia, such as the enhanced disability premium. These premia are only payable to those on income-related benefits. From 2014 additional guidance was put in place to ensure all claims transitioning from that point forward were more fully assessed for both contributory and income-related benefits, and therefore the relevant premia paid.
At the time officials did not identify the need to explore the potential impact of the earlier error. This was reconsidered in the light of analysis following the preliminary Fraud and Error statistics published in May 2016. In February 2017, ministers were first informed of the results of this analysis and a sampling exercise began in preparation for a full repayment process. The Department has already started contacting individuals to establish if there has been an underpayment of premia. A small number of claims have already been corrected and the appropriate arrears have been paid.
As a result of the sampling exercise, the Department estimates that around 75,000 claimants may have been underpaid. This amounts to about 5% of those people who transferred over from incapacity benefits, or around 3% of the current ESA caseload.
We realise how important it is to get this matter fixed. The Department has established a special team to begin contacting all individuals whom we believe may be affected. There is therefore no need for individuals to independently contact the department on this matter. Once an individual is contacted and subject to establishing the relevant information, we expect to make a decision on each case and repay the appropriate arrears within 12 weeks. The Department expects to complete the review and correct cases during the course of 2018/19.
This relates to a specific group that transferred to contributory ESA between 2011 and 2014, for which applicable underpayments will now be corrected and paid. Arrears are payable to those who qualify from 21 October 2014 following an Upper Tier Tribunal ruling in the case of LH v SSWP on that date. Under Section 27 of the Social Security Act 1998, when a tribunal establishes the meaning of a legislative provision, payments of arrears which pre-date the tribunal ruling are barred.
The Department is reviewing its processes to ensure any lessons are learnt and that this error is avoided in the future.
This statement has also been made in the House of Lords