The Department for Work and Pensions will draft in hundreds of extra staff to vet cases and correct underpayments of disability benefits in a move that is projected to cost the Treasury £1.67bn by 2025.
In an update on its efforts to fix payments of Employment and Support Allowance, introduced under the last Labour government in 2008, the department said it had increased its review team from 10 staff in December last year to more than 400 now.
Minister for disabled people, health and work Sarah Newton said the team would be boosted to more than 800 staff by the end of next month, with the aim of completing the “vast majority” of around 320,000 case reviews by April next year.
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The department said it had been “aware” of some individual errors in cases that related to recipients of Incapacity Benefit and Severe Disablement Allowance who had been migrated to one type of ESA as far back as 2013, but did not fully realise the potential scale of the issue until a 2016 analysis.
A particular problem area for the underpayments were people who had their benefits claims converted to the strand of ESA that is based on National Insurance contributions. DWP said that in some cases those benefits recipients may not have been assessed for income-related support between January 2011 and October 2014 meaning that they missed out on additional funding.
Originally the department argued that it only needed to make arrears payments for underpayment cases as far back as 2014, but concerns raised by the National Audit Office and a court case brought by the Child Poverty Action Group prompted a decision to pay all arrears earlier this year.
According to the DWP update, around 105,000 of the cases due to be reviewed are expected to result in the identification of underpayments to be corrected.
The department said its central estimate was that £870m in backdated payments would be required, with the updated benefit levels resulting in a total extra cost of £1.67bn by 2024-25.
Its upper cost estimate was £1.18bn in historic underpayments plus a further £1.07bn in higher payments to current recipients up to 2024-2025, giving a total of £2.25bn.
Minister Sarah Newton told MPs the department had already paid around £120m in arrears and had now completed all cases where an individual was terminally ill.
“The announcement in July, to pay cases back to the point of conversion requires us to review an additional 250,000 cases, of which we estimate around 75,000 could be due arrears,” she said.
“We will undertake this work through the course of 2019. 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.”
Newton added that there were currently around 2.3m working-age people on ESA and that the government expected to spend £54bn on benefits to support disabled people and those with health-related conditions in the current financial year.
Frank Field, who chairs the Work and Pensions Select Committee, said that while it was “welcome news” that the DWP was making progress towards addressing the ESA underpayments, the final bill could be “much higher” than the current estimates.
“The government must learn lessons from this appalling failure as it faces the much bigger challenge of moving people onto Universal Credit,” he said.
DWP said that as of last month 18,000 arrears payments had been made, and that the average payment had been £7,000.