Disability Living Allowance (DLA) and Attendance Allowance (AA) are paid to people with extra needs arising from their disabilities. These benefits are administered by the Disability and Carers Service. Where people have reached state pension age and are receiving state pension or pension credit, normal practice is to combine the payment of AA or DLA with state pension and pension credit so that the customer receives one combined weekly payment of benefit. These combined payments are administered by The Pension Service.

The Department is responsible for administering more than 1.6 million such cases. It has recently been identified that over a period dating from 1996, there are just over 4,000 cases where our customers have been paid in error by both The Pension Service and the Disability and Carers Service. The total amount overpaid is estimated to be some £26 million. Steps have already been taken to prevent such duplicate payments occurring in the future.

It is clearly right that where duplicate payments are being made the position should be corrected. However, given that the customers involved are both elderly and disabled, I have decided not to seek recovery of past overpayments, some of which go back as far as 1996, in cases where the customer clearly did not know they were being overpaid.

I recognise that some people will need help in adjusting their finances to the reduced, albeit correct, level of benefit We believe that a very small number of the cases, around 50, involve people with a terminal illness and I judge it would not be appropriate to cause them and their families additional worry. In these cases, I propose to make ex-gratia payments to maintain the higher level of payment. Based on information held by the Department the estimated cost will be no more than £200,000 in a full year.

In all other cases I propose, at the same time as stopping the duplicate payment, to make in each case an ex-gratia payment of between £100 and £350, depending on the length of time they have been overpaid. Beyond that further ex-gratia payments will be considered on an individual basis in case of exceptional needs. The total cost of making the ex-gratia payments outlined above is estimated to be no more than £1.3 million.