Tens of thousands of disabled people are set to receive backdated benefit payments averaging £5,000 following a government error. The Department for Work and Pensions (DWP) has revealed it will pay out more than £1.5bn after “shoddy administration” meant about 180,000 people did not receive benefits they were legally entitled to after being ‘migrated’ from Incapacity Benefit to Employment and Support Allowance (ESA).
The average underpayment for each person is estimated to be about £5,000, but some people will be owed significantly more, with approximately 20,000 having been underpaid around £11,500 and a small number owed as much as £20,000.
The error was first thought to have resulted in underpayment for 70,000 disabled people over seven years, but a government document published on Wednesday shows it is expected to have affected far more people, with the estimated back payments bill having risen from £340m to £970m.
The average underpayment for each person affected is estimated to be about £5,000, but some people will be owed significantly more, with approximately 20,000 people having been underpaid around £11,500 and a small number owed as much as £20,000.
Initially, the government said there would be up to £150m that may never be paid back because arrears would only be accounted for as far back as 21 October 2014, the date of a legal tribunal ruling – meaning some would never have been reimbursed. However, following legal action, ministers made a U-turn in July and subsequently announced it would pay back the thousands of disabled people in full.
In July, Esther McVey, the minster for work and pensions, made a ministerial statement: “The Department has analysed the relationship between ‘official error’ and section 27 of the Social Security Act 1998 in regulating how and to what extent arrears can be paid. As a result of the conclusions of this analysis, we will now be paying arrears to those affected back to their date of conversion to ESA.
“My department will be contacting all those identified as potentially affected as planned. Once an individual is contacted, and the relevant information gathered, they can expect to receive appropriate payment within 12 weeks.”
Marsha de Cordova, Labour’s shadow minister for disabled people, accused the Conservatives of creating a “hostile environment for sick and disabled people”.
She added: “Disabled people have been short-changed and denied the social security they were entitled to. The government must ensure that disabled people who have been so unfairly treated are properly compensated.”
McVey also confirmed that once contacted, claimants would be provided with a dedicated free phone number on which they can make contact with the department.
The government said it was in the process of reviewing about 570,000 ESA cases that could be affected, and that it expects to complete the process by the end of 2019.
A DWP spokesperson said: “Anyone affected by this historic error will receive all of the money they are entitled to. That is why we have created a dedicated team of over 400 staff to examine cases, and have paid back around £120m so far.
“We have worked with charities and other disability organisations to make sure that we are providing the right support to all affected claimants and are hiring and allocating more staff to do that.”
Responding at the time of the ruling, Carla Clarke, solicitor for Child Poverty Action Group, which launched the legal action, said: “Poor and inadequate DWP processes left up to 70,000 [now estimated at 180,000] disabled individuals without the support they should have received to help them with their additional costs.
“Justice required that the DWP error was corrected in its entirety for the people affected, many of whom are owed arrears from 2011. We are pleased that the DWP agreed that this was correct following our legal action.
“However, it shouldn’t be necessary to take a government department to court to achieve justice for people who have been failed by officials making avoidable errors.”
The government’s hostile environment and Personal Independence Payments
The government announced in January this year that every person receiving Personal Independence Payments (PIP) will have their claim reviewed. A total of 1.6 million of the main disability benefit claims will be reviewed, with around 220,000 people expected to receive more money.
The decision came after the DWP decided not to challenge a court ruling that said changes to PIP were unfair to people with mental health conditions. The review could cost £3.7bn by 2023.
The minister for disabled people, Sarah Newton, said the DWP was embarking on a “complex exercise and of considerable scale”.
She added: “Whilst we will be working at pace to complete this exercise, it is important that we get it right.”
The government should have got it right in the first place. It shouldn’t be necessary to take a government department to court to achieve justice for people who have been failed by officials.
Ministers made changes to PIP in 2017 which limited the amount of support people with mental health conditions could receive. As a result, people who were unable to travel independently on the grounds of psychological distress – as opposed to other conditions – were not entitled to the enhanced mobility rate of the benefit.
The government pressed ahead with these changes, despite criticism from an independent tribunal in 2016.
In 2017, an independent review of PIP was highly critical of the assessment system, after revealing 65% of those who appealed against rejected claims saw the decision overturned by judges.
Last December, a High Court judge ruled the alterations “blatantly discriminate” against people with psychiatric problems and were a breach of their human rights.
Work and Pensions Secretary Esther McVey subsequently announced that the government would not appeal against the judgement, despite not agreeing with ‘certain aspects of it.’
Disability income guarantee cut under Universal Credit
The first legal challenge against Universal Credit in June this year found that the government discriminated against two men with severe disabilities who were required to claim the new benefit after moving into new local authority area.
Prior to moving, both men were in receipt of the Severe Disability Premium (SDP) and Enhanced Disability Premium (EDP), which were specifically aimed at meeting the additional care needs of severely disabled people living alone with no carer, as part of their Employment and Support Allowance entitlement.
Recently released figures from the DWP suggest that 500,000 individuals are in receipt of the SDP. Both the SDP and EDP have been axed and are not available under Universal Credit. According to both the men, they were advised by DWP staff that their benefit entitlement would not change.
Despite repeated assurances from the government that “no one will experience a reduction in the benefit they are receiving at the point of migration to Universal Credit where circumstances remain the same” both claimants saw an immediate drop in their income of around £178 a month when they were moved onto Universal Credit.
When they asked for top up payments they were told that government policy was that no such payments would be paid until July 2019, when managed migration would begin.
The court ruled that the implementation of Universal Credit and the absence of any ‘top up’ payments for disabled people as compared to others constitutes discrimination contrary to the European Convention on Human Rights. Following months of litigation, McVey, Secretary of State for Work and Pensions, carried out a policy U-turn and committed the government to ensuring that no severely disabled person in receipt of the SDP will be made to move onto Universal Credit until transitional protection is in place and also committed to compensating those like the two disabled men who have lost out.
Despite this, following hand down of the judgment the Secretary of State for Work and Pensions has sought permission to appeal, maintaining that there was “nothing unlawful” with the way the disabled claimants were treated.
However, a subsequent court case resulted in agreement on compensation for the two men. TP will now receive £3,277 for past financial losses and £3,240 for the pain and distress he has been caused, as well as £173.50 a month to cover the shortfall in his benefits pending transitional protection coming into force.
AR will receive £2,108 for past financial losses and £2,680 for the anxiety and distress he was caused, as well as a monthly payment of £176 to make up the shortfall in his benefits.
The DWP had initially attempted to keep the terms of the agreement secret. However, the High Court ordered the department to disclose the details of the compensation settlement.
Marsha de Cordova, Labour’s shadow minister for disabled people, said: “This again demonstrates the government’s mistreatment of disabled people.
“These men were assured by the government that they wouldn’t lose out on universal credit but they were left thousands of pounds out of pocket, which severely impacted on their wellbeing.
“Esther McVey should now compensate all those who lost out, reverse cuts to transitional protection, and withdraw her appeal against the original finding of discrimination.
“The government must also stop the roll out of universal credit and fix its fundamental flaws.
“The next Labour government will transform our social security system, ensuring it is there to support disabled people to live independently and with dignity.”
Tessa Gregory, from the law firm Leigh Day, who represented the two men, known only as AR and TP, welcomed the financial settlements.
But she called on McVey to compensate all other claimants in similar positions, and to reconsider her decision to appeal the finding of discrimination.
She said AR and TP had called on McVey to “urgently” reconsider draft regulations which currently only compensate disabled people in their position with a flat rate payment of £80 a month.
Gregory said: “This plainly does not reflect the actual loss suffered by our clients and thousands like them and compounds the unlawful treatment to which they have been subjected.”
The DWP have refused to answer questions about the case, including how many disabled people it believed had so far lost out on EDP and SDP in the move to universal credit, and whether McVey would reconsider her decision to compensate others in the same position as AR and TP by only £80 a month.
A DWP spokesman confirmed: “The government is appealing the decision of the judicial review, but in the interim we have agreed to make payments to the lead claimants.”
Figures published by the DWP suggest that, in February this year, there were 4,000 SDP claimants and 14,000 EDP claimants (including 3,000 who received both EDP and SDP) who have been moved onto universal credit.
The DWP has previously said it will stop moving claimants of SDP onto universal credit until the introduction of transitional protection next year, while all those who have already lost out through such a move will receive some backdated payments.
But it has not offered them the full compensation agreed with AR and TP and there has been no mention so far of claimants who previously received EDP but not SDP before their move onto universal credit.
And the DWP has still not been able to explain how it justifies not providing equivalent levels of support to new disabled claimants of universal credit, who will receive lower payments than those transferred onto universal credit from legacy benefits such as income-related ESA.
DNS has been forced to complain to the Information Commissioner’s Office about DWP’s refusal to offer a detailed description of how the introduction of universal credit – and the loss of the premiums – will impact disabled people financially.
I did some joint work with Alex, who writes at Universal Credit Sufferer, after a third sector welfare advisor informed us that people claiming PIP were being told to claim legacy benefits – ESA or JSA if they are fit for work – by the DWP and that they were not allowed to sign onto Universal Credit.
Following several calls between us to the DWP press office, it was clear that staff were not at all clear about this situation. The response we eventually got was “We need to check with officials and come back to you tomorrow.” However, I didn’t get a follow-up call.
It seems that all new claims for Universal Credit will not be accepted if the person claiming is in receipt of the Personal Independence Payment (PIP) Daily Living Component. However, this move has not been widely publicised. Both Alex and I found that when we used Universal Credit’s online application portal, it will not accept a claim if you declare you are in receipt of Personal Independence Payment (PIP).
While it may be a reluctantly positive move on the part of the government to ensure that disabled people won’t be forced into claiming universal credit and therefore losing their disability premiums, this isn’t a long term solution. It nothing to address the loss of the premiums for new disabled claimants. Nor does it address the controversial and fatally flawed assessment and appeal processes that are unfit for purpose under any welfare circumstance.
But the road to tyranny is mostly paved by government that create hostile environments for some groups and ignore citizens’ accounts of the impacts of their actions on citizens.
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