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House of Lords Hansard
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Employment and Support Allowance
18 October 2018
Volume 793

Statement

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My Lords, with the leave of the House, I shall repeat in the form of a Statement an Answer given to an Urgent Question in another place by my right honourable friend the Minister for Disabled People, Health and Work. The Statement is as follows:

“The department is correcting some historic underpayments of ESA, which arose while migrating people from incapacity benefit to employment and support allowance. We realise how important it is to get this matter fixed. Clearly the mistakes should not have happened, and we know it is vital that it is sorted as quickly as possible.

For the initial stage of the exercise, we expect to review around 320,000 cases, of which around 105,000 cases are likely to be due arrears. We now have a team of over 400 staff working through these cases and have paid around £120 million of arrears. We expect to complete the vast majority of this part of the exercise by April 2019, and we have to date completed all cases where an individual is terminally ill and has responded to the review, thereby ensuring they receive due priority. The additional cases will be undertaken throughout the course of 2019.

The announcement in July about paying 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. We will undertake this work throughout the course of 2019, and an additional 400 members of staff will be joining the team throughout this month and November. We will assign further staff throughout the review of the 250,000 cases. This will enable us to complete this very important activity at pace.

The department has prioritised checking claims from individuals whom we know, from our systems, to be terminally ill; to date we have completed all cases from the initial 320,000. Where an individual is terminally ill and has responded to the review, we want to make sure that they get that money as soon as possible, so we are now contacting cases identified as most likely to have been underpaid according to our system. Some of those cases will undoubtedly be the most complex.

Yesterday, the department published an ad hoc statistical publication, setting out further detail on the progress we have made in processing cases and revised estimates of the impacts of this exercise, including details of the number of claimants due arrears and the amounts likely to be paid. Also yesterday, I updated the frequently asked questions guide and deposited it in the Library, and I will continue to update this House”.

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My Lords, I thank the Minister for repeating that Answer. This week we learned that 180,000 sick and disabled people have been underpaid vital social security. The problem goes back to 2011 when the Government began migrating people on to ESA from incapacity benefit, but did it wrongly. In many cases, they migrated them across to contribution-based benefit when they would have been entitled to income-based benefit, which means that they could have got other payments, such as severe disability payment premiums and the like.

Initially Ministers said that they were allowed to pay claimants back money only until 2014, until CPAG went to court—at which point, they changed their minds. At the time of that migration an independent expert working for the DWP, Professor Malcolm Harrington, urged Ministers not to proceed until he was certain that the system was robust. But they did. Last July, the Public Accounts Committee published a scathing report about this error, in which it suggested that some people had lost out by as much as £20,000. It described the DWP as being defensive and unwilling to listen to warnings, which is very worrying. Claimants are now getting money, but in some cases it seems they have no idea how the sums were arrived at. The DWP now estimates that it is going to pay £1 billion as a result of this very serious error.

Will the Minister tell us, first, what steps are being taken to ensure that all claimants will be compensated for the lost value of passported benefits such as free school meals, NHS prescriptions or dentistry treatment? Secondly, what compensation will be paid to claimants on top of the arrears? Many of those will have found themselves forced into rent arrears, some into destitution. All of this costs money. How much compensation will they get for it? Thirdly, the DWP has identified those whom it knows to be terminally ill. How is it going to go about maintaining that, to include people who become terminally ill while the review carries on until the end of next year? What systems are in place to identify those people and prioritise their cases? Finally, and most importantly, what lessons has the DWP learned from this to ensure that it listens to the many warnings about universal credit migration and does not make the same mistakes?

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My Lords, first, I will respond to the noble Baroness by referencing passported benefits, which are of course the responsibility of each government department. It would be impractical for the DWP to undertake an exercise to uncover who might have been entitled to those other passported benefits. However, we are talking to other departments to make them aware of the issue. In terms of compensation, it is important to make it very clear that no one saw a cash reduction when they were transferred to ESA. This is about extra money that they might have been entitled to. Also, it is really important to explain that we are learning lessons from this. The key lesson is that it is a mistake to try to prepopulate information without being in touch with claimants. It is very important for us to make sure, when we are changing benefits or introducing new benefits, that we do so in a way that involves working with claimants so that, rather trying to be clever with a seamless process, we actually engage. That is what we are doing now, with what will be 800 people working with claimants to get this right.

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My Lords, this announcement is a stark warning that a botched transition, which very sadly took place under the coalition, can leave vulnerable people thousands of pounds out of pocket for years to come. As the noble Baroness, Lady Sherlock, has just said, in the move to universal credit, we must take more care. What lessons are the Government learning from this mistake for the big changes to come and what new safeguards are they putting in place? In particular, will the Government amend the proposed Universal Credit (Transitional Provisions) (Managed Migration) Amendment Regulations 2018 so that claimants are transferred automatically from legacy benefits such as income-related employment and support allowance to universal credit?

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First, I want to make it clear that we are constantly looking at how we can make our procedures more robust. In fact, our Permanent Secretary is in discussion with the Public Accounts Committee about how we can do this. The key lesson that we have very much taken on board in developing our processes and our thoughts on managed migration is—as I have just said, and I will repeat it—that it is important that we engage properly with the claimants and that we do not have a system that is entirely automatic without the opportunity to understand up-to-date data, information and circumstances with regard to each and every claimant. That is to ensure that claimants do not lose out on benefits to which they are entitled, unlike the legacy benefits, which about 700,000 people are not receiving. That is about £2.4 billion because there is not sufficient contact.

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My Lords, will the Minister say a little more about the reasons for these underpayments? Is it fundamentally a systemic problem, or simply a collection of ad hoc errors?

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It is right to explain—indeed I did explain this in July—that the reality is that a mistake was made that should never have been made. No mistakes are acceptable when it comes to people who genuinely need this important support. What we did back in 2013 was respond to individual cases. Clearly, the department was not aware that there was a much bigger problem. We worked to legal advice at the time, and we took the view that the law prevented us from paying arrears beyond the date of the LH judgment in October 2014. An Upper Tribunal in Scotland endorsed that approach. The department is, however, now in a position to extend the payments back to the date of the original conversion from incapacity benefit to ESA. The department expects to pay back around £970 million in arrears between now and 2020.

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My Lords, the Minister has been quite contrite about what has happened, and I think the whole House will welcome that. Can we briefly return to the question of passported benefits? I understand how difficult this is, but the regulations on passporting have become better known since they originally came in. Will my noble friend look again at that and make it more of an automatic process rather than relying on the good offices of other government departments? But I have to say that I am extremely impressed by the way in which the Minister and her department have approached this.

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I thank my noble friend for his question. I agree that it is not sufficient for the medium and long term just to say that we are talking to other departments. We are looking to see how, when we move to universal credit, we can ensure through managed migration that nobody loses out and that, where possible, all the benefits that can be passported are passported. However, we have to accept that we are dealing with a really complex system and with millions of people. It is right to put this in the context of ESA: we are dealing with 2.3 million working-age people and, up to now, we have spent £54 billion on benefits for these people with disability and health conditions. That is over 6% of all government spending. We have to do this in a way that is sensible and practical and as careful as possible. That is why we are also now employing 400 people in addition to the 400 we have already in order to sort out this particular mistake.

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My Lords, perhaps I might ask about communications. Will all the JCP offices be able to tell people that they do not have to take any action themselves to get compensation for what has happened? Sometimes people have asked JCP officers whether they need to fill in the form and have been told that they do. Obviously, there is a bit of mis- information flying round. Will the department keep JCP office staff up to date with how they should carry on?

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The noble Baroness is right to raise this point. The core communication hub is at Oldham and it is working hard to send out letters with phone numbers to absolutely everybody, so that people can be in touch by phone. We are constantly training our work coaches in all job centres to make it absolutely clear that this is something we are prioritising and have to sort out. It is up to us to do it; it is not for claimants or others to have to make that move. We are in touch with people who think they might be within this group and we urge them to be in touch with us on the numbers we are sending them by letter.

House adjourned at 4.28 pm.