The Department for Work and Pensions says it can't refund £150m in benefits underpayments due to a tribunal ruling. Yet they've got round rulings in the past...
Pic: The cock-up happened while Ian Duncan Smith headed the DWP.
The Department for Work and Pensions has been given a humiliating slap-down by the spending watchdog today, after it revealed the department underpaid an estimated 70,000 people who transferred to Employment and Support Allowance (ESA) from other benefits.
The problem emerged when people who may have been entitled to income-related ESA were instead only awarded the lower contribution-based ESA – and therefore missed out on extra payments. That includes thousands of severely disabled people.
The National Audit Office estimate the average underpayment is likely to be around £5,000, but some people will be owed significantly more. That means a whopping great late-payment bill from the DWP.
But there’s a catch: the repayments will only be made for errors after 21st October 2014 – the date of a legal tribunal ruling on the issue.
That means some of the poorest people will miss out on up to £150m in total (there is, as we’ll explain, a way around this).
The National Audit Office report states:
“The Department has committed to correcting its error and paying arrears by April 2019. It has redeployed staff to review around 300,000 cases, at a cost of around £14 million, to identify people affected and pay arrears where due.
“Eligible claimants will only be paid arrears as far back as 21 October 2014, the date of a legal tribunal ruling. The Department estimates that there may be approximately £100 million to £150 million of underpayments accrued before 21 October 2014, which it cannot pay, in addition to the £340 million it will pay for the period after 21 October 2014.
“It took several years for the Department to realise the significance of the error…”
When people are sanctioned by the DWP for turning up a few minutes late for an interview, you’d think there would be repercussions for the department.
A DWP spokesperson 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.”
Yet they are ducking the issue here: the thousands who will miss out, because of the date when this error was over-ruled in a tribunal.
When the DWP were overruled in 2013 over their workfare scheme – i.e. unpaid labour for jobseekers – they were very quick to respond.
In fact, they introduced emergency legislation to overturn the court ruling.
As the Guardian reported at the time:
“The Department for Work and Pensions has introduced emergency legislation to reverse the outcome of a court of appeal decision and “protect the national economy” from a £130m payout to jobseekers deemed to have been unlawfully punished.
“The retroactive legislation [pushed through in a week]…will effectively strike down a decision by three senior judges and deny benefit claimants an average payout of between £530 and £570 each.
“Last month the court of appeal ruled that science graduate Cait Reilly and fellow complainant and unemployed lorry driver Jamieson Wilson had been unlawfully made to work unpaid for organisations including Poundland because the DWP had not given jobseekers enough legal information about what they were being made to do.”
Funny how when the tables are turned – when the DWP underpaid benefit claimants – they are not so quick to respond.
When challenged on the £150m in underpayments which will not be repaid, the DWP spokesperson told Left Foot Forward:
“We are legally restricted to calculating repayments from 2014. There is a statutory rule which governs the position with regard to payment of arrears when a court or tribunal establishes the meaning of a legislative provision.
“DWP is not allowed to pay arrears in most cases before the date of that court or tribunal ruling. The rule was most recently confirmed by Parliament in section 27 of the Social Security Act 1998, which received Royal Assent on 21 May 1998.”
So that’s all right then…
PS – the DWP had us waiting for hours for a brief response, replying way after our deadline. Shame there’s no kind of sanction for that, isn’t it?
Josiah Mortimer is Editor of Left Foot Forward. Follow him on Twitter.
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One Response to “How the government is avoiding paying out millions in underpaid benefits”
Patrick
after 14 weeks I was turned down on because they sent a letter to a shared postal address (over 200 people accessed thse mail on any given day) in 2013. they have now said i am entitled to claim the income-based ESA but because they had all my info. but i hadn’t completed a form i’m 15 k down I now get it because they sent me the form when this all started.
Despite the fact that the courts rulled that with ESA there is ‘no legal requirement to make separate claims for the two elements of ESA (contribution-based and income-related) because ESA is a single benefit’