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180,000 ESA claimants could be owed an average £5,000

Some 180,000 ESA claimants could be owed an average £5,000 each after they were underpaid, and will be eligible for higher payments in future, the Department for Work and Pensions admitted today.

The error relates to people who may have been entitled to income-related Employment and Support Allowance (ESA), but were instead only awarded contribution-based ESA, and therefore may have missed out on premium payments. Some £970 million is thought to be owed in "historic underpayments".

What went wrong?

ESA was introduced in October 2008 for people who have limited capability to work because they have a disability or are ill. 

Between January 2011 and October 2014, some people receiving incapacity benefit and severe disablement allowance were moved to ESA. 

The ESA they were moved to depended on their situation: 

  • Contribution-based which depends on national insurance contributions.
  • Income-related which is a means-tested benefit. Income-related ESA can be paid on its own or as a top-up to contribution-based ESA.

But in some cases, it wasn't considered whether the claimant may also have been entitled to income-related ESA as well as contribution-based ESA. This means they may have missed out on extra payments, such as the enhanced disability premium. 

The DWP is currently in the process of reviewing 570,000 ESA cases which could be affected, and expects to have checked 320,000 by the end of the 2018/19 financial year. 

Based on its latest data, it estimates 180,000 people could be owed money. A DWP report published today says: "On average, the Department estimates that affected individuals could be due around £5,000 in arrears. However, the actual amount payable will vary among individuals and depend on their circumstances."

The DWP also estimates that once the errors have been corrected, it will have to make additional payments on an ongoing basis worth £60 million in 2018/19 and £130 million in 2019/20, then declining over time to £90 million by 2024/25.

I think I'm affected – what should I do?

The good news is you don't actually have to do anything.

The DWP is identifying eligible claimants and will contact you with further information if you're affected. 

If you're owed money it will either be paid into your bank account, or if you don't have an account, via your benefits' usual payment method.

The DWP is aiming to have repaid any money owed by the end of 2019. 

What does the DWP say? 

A 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 £120 million 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."