An extra £1.67 billion is to be paid to tens of thousands of disabled benefit claimants after years of underpayments, the Government has revealed.
The Department for Work and Pensions (DWP) was criticised for its handling of Employment and Support Allowance (ESA) after revealing an estimated 180,000 recipients are due arrears payments totalling £970 million.
The cost of paying them at a higher rate after their claims have been corrected is estimated to add another £700 million over the next seven years, a DWP analysis released on Wednesday showed.
The arrears payments, which mainly cover a period between 2011 and 2014, are expected to average £5,000 and be paid by the end of 2020.
Labour’s Marsha de Cordova, shadow minister for disabled people, said recipients “have been short-changed and denied the social security they were entitled to”.
She said: “This mess is another example of how the Conservatives have created a hostile environment for sick and disabled people.
“The Government must ensure that disabled people who have been so unfairly treated are properly compensated.
“A Government that forces disabled people into debt and even makes some destitute is a disgrace.”
Some 1.5 million people were transferred from older incapacity benefits to ESA between 2011 and 2014.
Underpayments resulted from the DWP’s failure to assess whether they qualified for income-related ESA rather than just the less generous contribution-based ESA.
In July, Work and Pensions Secretary Esther McVey ditched a policy of refusing to reimburse missed payments dating back before October 2014.
The DWP had already accepted that it wrongly underpaid disabled people switching from Incapacity Benefit to ESA and had begun the process of reimbursing claims after October 2014.
In a written statement to MPs on Wednesday, DWP minister Sarah Newton said £120 million had already been paid out to this first group after 320,000 cases were analysed, with an average payment of £7,000.
She added that they have “to date completed all cases where an individual is terminally ill and responded to the review, thereby ensuring they receive due priority”.
A second wave of 250,000 cases, announced in July, will be worked on through 2019, she added, saying: “We now have a team of over 400 staff working through these cases, with a further 400 due to join the team through October and November, and will be assigning more staff to review the additional 250,000 cases.
“This will enable us to complete this important activity at pace.”
A DWP spokeswoman added: “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.”
But the SNP’s Mhairi Black added that the Government needed to “get a grip” on social security, saying: “It is frankly disgraceful that a staggering 180,000 disabled, sick and terminally ill people have been left without the financial support they desperately need – as a result of a £1.5 billion UK Government blunder that has cost people an average of £5,000 each in lost income.
“These payments must be made as soon as possible, and those affected must be given the support they need.
“It is simply not good enough that people in crisis situations have been left without money to put food on the table and keep a roof over their heads due to Tory mistakes.”