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Underpayment of Benefits: Compensation

Volume 706: debated on Thursday 13 January 2022

(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on the historic underpayment of benefits to 118,000 benefit claimants and the Government’s plans for compensation.

I would like to start by extending an apology to Ms U for the experiences that have been highlighted in the Parliamentary and Health Service Ombudsman’s report. The Department will, of course, formally apologise and make additional payments now that that the PHSO report has been published.

I should remind the House that the employment support allowance was introduced in 2008, and from March 2011 the Department began reassessing people in incapacity benefits for eligibility for ESA, which saw some claimants underpaid. The Department’s priority was that all people get the financial support to which they are entitled. It undertook a special exercise to review all cases that were potentially affected and paid arrears where due. We realised how important it was to get this matter fixed and ensure that people get the benefits that they are owed as quickly as possible. We therefore set up a dedicated team, with up to 1,200 staff at the peak of the workload. This has enabled us to complete this important work at pace.

I remind the House that the exercise to correct past ESA payments and pay arrears, following conversion from the previous incapacity benefits, was completed last year, and the then Minister for Disabled People, Health and Work, my hon. Friend the Member for North Swindon (Justin Tomlinson), made a statement to the House in July 2021. All cases have been considered and reviews completed, where the information has been provided, and arrears due were paid. As of 1 June 2021, we have reviewed approximately 600,000 cases and made 118,000 arrears payments to those who are eligible, totalling £613 million. The Department published an update on the exercise last Thursday on, which sets out further detail on the progress that it has made on processing the cases.[Official Report, 18 January 2022, Vol. 707, c. 4MC.]

May I start by paying tribute to the Greenwich Welfare Rights Service and to my hon. Friend the Member for Eltham (Clive Efford)? It is a reminder of the value and the vital importance of welfare rights advisers, who do so much for our constituents despite grappling with swingeing cuts under the last 10 years of Conservative Government.

The report came about because a vulnerable person with significant long-term health needs, recovering from a heart bypass, was forced to endure years of hardship, trying to live on less than 50% of what she was entitled to, for a sustained period because of mistakes made by the Department for Work and Pensions when it migrated 100,000 claimants from incapacity benefit to contribution-based employment and support allowance between 2011 and 2014. The ombudsman’s report today not only vindicates Greenwich Welfare Rights and hon. Members who pursued the case, but is damning for the Government.

The DWP’s incompetence and failure to provide compensation has been judged as maladministration. Does the Minister accept that, as a consequence of the Department’s incompetence, more than 100,000 people were unable to access passported benefits and extra support such as free prescriptions, despite being highly vulnerable and often having long-term health needs?

The ombudsman rules that refusal to offer recompense for that was inconsistent with the Department’s own principles of remedy. With respect, and although I welcome the apology, it is no good Ministers’ putting their fingers in their ears and pretending that there is not a bigger problem here. This stands as—in the words of this report—“an unremedied injustice”, impacting on some of the most vulnerable people in society.

Will Ministers remedy that injustice via compensation for those affected, as the ombudsman and the Department’s own principles recommend, or will the Minister deny compensation to 118,000 disabled people and people with long-term health conditions who lost out through no fault of their own? Frankly, when disabled people face a cost-of-living crisis with rising heating bills, when 600,000 disabled people are struggling with a universal credit cut, and when disabled people face their support being cut this April because inflation is heading to 6%, does this sorry saga of maladministration not prove once again that disabled people are worse off under this Government?

I agree absolutely with the right hon. Gentleman’s comments about welfare advisers. They play a vital role, whether in Greenwich or in Macclesfield, where we have the Disability Information Bureau, and provide the extra support that people in very vulnerable circumstances often need. He highlighted the situation involving Ms U; as I said in my apology, it was very concerning, and those compensation payments will be paid, as I have reassured him.

On the point about broader compensation, of course we only received the report this morning—it has only just been published—so we will consider it and review its recommendations, as is entirely right. We would also say that if people believe they should have further compensation and want to contact us at DWP, they can contact us through the various helplines that have been set up. There is a team working specifically on this broad issue, and if they prefer, they can go through the complaints process, so those avenues are available to those individuals. In these situations we are typically not compelled to come forward with compensation payments, but we will consider the wider points and the views put forward by the report.

I know from the individual constituent cases I have dealt with how distressing it is when people’s benefits are underpaid. One issue here is dealing with compensation payments, but the other is taking the steps to ensure something like this does not happen again. Can my hon. Friend assure me that those steps, if they have not been taken already, are in the process of being taken?

Lessons really have been learned from this situation, and if underpayments are made, that can have a real impact on people’s lives. Lessons will be learned from this. While it is not my departmental responsibility, I will take this away and work closely with the Minister for Disabled People, Health and Work and the Secretary of State, who is not able to be here today, to see what further lessons we can learn as a result of this report. As I have said, we must formally reply to the report as well.

Under this Tory Government, we have had the Women Against State Pension Inequality Campaign scandal, the universal credit cuts, pensioners now losing £500 a year and a cost-of-living crisis that they are doing nothing about. They really do not care. It is outrageous that it has taken the ombudsman to determine that compensation is due to the 118,000 claimants underpaid for up to seven years. Of course people should be paid compensation for having been forced to live in poverty, so what are the timescales for providing justice to those claimants?

In August 2021, there were still 76,000 cases open for review. What is that number now? What are the Government doing to assess the extra top-ups that were due, such as enhanced disability, severe disability, carer and pension premiums, that have not yet been considered for all the 118,000 underpaid claimants? Scope estimates that at present 42% of families on disability benefits live in poverty. What are the Government’s plans to rectify that? Pension credits are consistently underclaimed; when will they make that an automatic entitlement, and when will there ever be a level playing field between the DWP’s responsibilities and the way it treats claimants?

The hon. Gentleman has made a number of points. Arrears have already been paid to the 118,000, but the team are still in place, so when people are deceased and the surviving parties feel, on the basis of the report, that they could be eligible to receive such arrears, they can do so. I have already explained how those who feel they should receive further compensation can find out more about the process of investigating that. I agree with the hon. Gentleman that we need to do more to increase people’s awareness of the pension credits that are available. He also mentioned people with vulnerabilities. We want to help those people, which is why we established the household support fund and made additional funds available in Scotland as well.

During the period of the inquiry the benefits system was incredibly complicated, involving many mutually exclusive benefits. I well remember talking on the helplines to civil servants who did not know which elements were mutually exclusive and which were not. Will my hon. Friend bear in mind the need to ensure that the system is straightforward, that people can understand it, and that people are paid the compensation and the benefits they are due? We are talking about the most vulnerable members of society.

My hon. Friend has made some good points. I know that he has a proven track record in this area, given his campaigning work both locally and nationally. The benefits system is indeed complicated. Universal credit has helped to simplify it by putting benefits into a single bundle, but as the new Minister on the welfare delivery block, I am aware that the system is still complex even under the universal credit banner. I shall be working hard to ensure that we can communicate clearly with some of those most vulnerable people in explaining what benefits are available; and, as I have said, we will review the report and see what further lessons can be learnt.

Order. May I just say to Members who were not present at the outset that they should not expect to be called, and ask them please not to try to take advantage? I call the Chair of the Work and Pensions Committee, Stephen Timms.

I welcome this important report, and I thank you, Mr Speaker, for granting the urgent question.

What is the position relating to the payment of interest in cases such as this? The ombudsman found that these failings had had a severe effect on Ms U’s existing mental and physical health problems, and no doubt the same is true for quite a number of the other 118,000 people affected. Will the Department work out, proactively, who should be receiving compensation? One of the ombudsman’s recommendations is that the Department should report to the Select Committee on its progress in considering his report and the decisions that it makes on how to remedy its own failings. Will the Department accept the recommendation and report to the Committee, and if so, when can we expect that to happen?

Obviously the primary responsibility is to respond to the report, and we will do that, but I—and, no doubt, the Secretary of State—will note the right hon. Member’s point, and will make appropriate responses to his Committee. I have mentioned the 118,000 people who have received the arrears, and, as I said earlier to the Opposition spokesman, the right hon. Member for Leicester South (Jonathan Ashworth)—I am sorry, I should have said “the shadow Secretary of State”: I do not want to understate his importance—there are mechanisms for those who feel they have grounds for further compensation to get in touch with the Department and explore that further.

The benefits system is crucially important to my constituents. The Resolution Foundation has praised it, and has praised universal credit for its resilience during the pandemic. Will the Minister commit himself to maintaining that resilience for the benefit of everyone in the country?

My hon. Friend has made a good point. There are people who criticise universal credit, but, as I said earlier, it is a simplifying mechanism. It proved to be very resilient in response to the pandemic, and it helped millions of people at a crucial time. We have learnt lessons in that regard, but, as we have said before and as I have reiterated today, there are wider lessons that we also need to learn, and we will do so.

I wish to pay tribute to Greenwich Borough Council’s welfare rights unit for identifying this error and for the tenacity with which it pursued it on behalf of my constituent. This will affect the 118,000 other people who have also been wronged. My constituent suffers from paranoid schizophrenia, arthritis, hypertension and Graves’ disease. This decision left her to survive on far less than she was entitled to between 23 May 2012 and 11 August 2017, amounting to £80 a week. The DWP, having made this error, compounded the problem by refusing to allow her to complain to the independent case examiner and by failing to tell her about her right to go to the ombudsman.

The ombudsman has now recommended that, within one month of the final report, the DWP should write to my constituent to apologise for the impact of maladministration on her life, make a payment of £7,500 to compensate her for the impact and apply the appropriate rate of interest to the benefit arrears payment of £19,832.55. Will the Minister give me an undertaking that the DWP will comply with the ombudsman’s recommendations on behalf of my constituent?

As I said right at the beginning, the hon. Gentleman has represented his constituent’s case well, as I would expect. We apologise unreservedly for the situation in which his constituent, Ms U, found herself. We will pay the compensation and the interest, as set out in the report. That will happen, and I very much hope we can get the apology over to her well before the month set out by the ombudsman. I will gladly discuss this further with the hon. Gentleman after this urgent question.

The Parliamentary and Health Service Ombudsman said in its judgment:

“It is human to make mistakes but not acting to right wrongs is a matter of policy choice.”

In this case the choice has been made by the very organisation that is responsible for supporting those most in need. Will the Minister please outline how many people in my Vauxhall constituency were impacted by underpayments? This decision has had a devastating impact by causing financial hardship for some of the most vulnerable people. They need that compensation now, so can he confirm that it will happen?

I understand the hon. Lady’s point. I genuinely do not know how many were in the Vauxhall constituency, as we do not have that level of data. As I set out, there are mechanisms that her constituents who might have concerns can follow up. We will formally respond to the report, as I set out.

Such incidents are obviously very regrettable, so having robust IT systems and finding ways to design out the human element that might have caused these mistakes is clearly very important. Can the Minister assure me that every possible effort will be made to ensure such incidents do not happen again?

We all make mistakes, and this was clearly a big one. All I can say is that we will learn the lessons. We made an active response when we found out the scale of the problem. We did the review, and then we put 1,200 staff into this exercise to rectify the situation. We did not take it lightly. We responded actively to the situation once we found the error.

I think all hon. Members here know this is not the first time the ombudsman has found maladministration in relation to the Department for Work and Pensions. Before Christmas I wrote to the Minister about two of my constituents who seem to have been given incorrect advice by benefit advisers in relation to being on remand and being released without charge. They are suffering financial hardship as a result. I listened to what he said about reading the report and taking its recommendations, but what is the DWP doing when these issues are highlighted to it by MPs and rights agencies to ensure we deal with them at an early stage?

I am relatively new in post—I have been here about three or four months—and all I can say is that I take a very active interest in the correspondence from MPs across the House. I hope people are aware of that. I will gladly separately follow up either in writing or in a meeting about the particular points that the hon. Member makes. We need to learn lessons. Our postbags are invaluable sources of information that sometimes are not really seen by officials or civil servants in the same light. It is an invaluable source of information to help me do my job. I will gladly follow up.

The problems highlighted by the ombudsman’s report were not only predictable, but in some respects were predicted. Welfare rights workers are brilliant at what they do on behalf of our constituents, but they are often swamped by the demand, but would they be necessary at all if the Department was doing its work properly, efficiently, in a timely fashion and getting its determinations right for our constituents in the first place? Can the Minister outline how many people in my constituency of Gateshead were affected by this ministerial and departmental maladministration? If he cannot do so now, will he do so in writing in short order?

I would like to, but unfortunately we do not have that data at that individual level. [Interruption.] As I was about to go on to say, let me see what is available, and I can follow up. What I will say is that an error has been made here—I accept that—but we all know that many, many people who work in the Department for Work and Pensions do a fantastic job and are committed to serving people who are very vulnerable. Through this error, I would not want to cast a view across all DWP civil servants; they do a remarkable job. I accept that we made an error in this situation, and I will follow up on the points the hon. Member makes.

The Government and this Department have a track record of having to be dragged to the ombudsman or dragged to court to make the most basic human decisions. In Scotland, we put dignity and respect at the heart of everything we do with regards to social security. Does the Minister not agree that that would be a much better approach than having to be dragged to court or the ombudsman to make decisions that should have been made in the first place?

I understand the point the hon. Member makes. There are obviously competing challenges here. We are here today worrying about the concerns of some very vulnerable people, but we also need to look at the taxpayers’ demands, too, and there are challenges, as the Scottish Government will discover as they start to take on more benefits. We work closely with the Scottish Government in their desire to take on more responsibility for welfare provision, and all I would say is that things are not always straightforward; there are very challenging circumstances, as Members on the Opposition Benches who have been in these offices will know. I accept the challenge, but we are working together with the Scottish Government to give support here. We will learn the lessons from this case and move forward.

May I just say that it is very disappointing that this had to be an urgent question today, rather than a statement from the Government? It is also very disappointing that the Minister does not have the basic information that most constituency MPs will want to know, which is how many of our constituents have been affected by the maladministration of his Department. Can he reassure me that he will employ the same energy his Department uses to pursue those who receive overpayments to ensure that those people who should get compensation and payments for benefits that they did not receive will do so?

Yes. We are a very large operational Department that takes care of the needs of millions of people. It is disappointing to me when we make errors. I work as hard as I can day in, day out to ensure we do not make errors. Sometimes we do and they are genuine and then we need to rectify them speedily. Sometimes they are fraudulent situations, and when we have a figure of £8.4 billion for fraud, partly because of the increase in welfare payments around coronavirus, we have to go through procedures, because some people, sadly and disappointingly, are trying to rip off the taxpayer and take money away from people who deserve it. There is a difficult balance. I understand the point that the right hon. Lady makes and I can assure her I am working hard on those points.

It is not the first time that there has been a finding of maladministration at the DWP; there was a similar judgment on the pensions of 1950s-born women. That does prompt questions about the DWP’s competence.

On this specific issue, I was going to ask the Minister how many people in the Denton and Reddish constituency are affected, but he does not have that data, which I find astounding, quite frankly. That is basic data that Members of Parliament need. Why is the onus on individuals to come forward to the DWP? Why is he not being proactive in going out to the individuals who are affected? That seems like common sense to me.

We were very active in engaging in with the 118,000 people to make sure that their arrears were paid. As I said, if people still believe that arrears are owed or that they should receive further compensation, they can get in touch with the available helplines. We will, as I said, consider and review the report, which we received—as it was published—only today.

The Minister will know that the UK was found to be in breach of the human rights of people with disabilities by the United Nations special rapporteur on extreme poverty and human rights. He will know that some 7 million people live in food insecurity and food poverty in Britain. In Wales, we earn only 70% of the UK average, so thousands of vulnerable people in Swansea have been hit by this. Will he ensure not just that those people are paid, but that payments are made to charities for disabilities, and that we look again at universal credit uplift and perhaps a universal basic income so that the poorest do not continually fall through the net during the cost-of-living crisis?

I think I have highlighted what we are going to do in response to this particular situation. The hon. Gentleman makes some other points about what we are doing on food security and for those vulnerable people. As he knows, we have created an additional support fund—in England, it is called the household support fund—of £500 million across the UK. A chunk of that money—around £21 million, from memory; it is over £20 million anyway—has gone to Wales, and the Welsh Government are using it to help vulnerable people. We recognise that there are people who need further support.

On universal basic income, people who have tried that out—ask the Finnish Government—said that it is not the way forward; it is untargeted and does not provide a work incentive. I do not think it is the way forward. Of course, we can always improve our welfare approaches, but that is not the approach that would help.

The Minister has said that we are talking about some of the most vulnerable people, so does he not think it shameful that 42% of families relying on disability benefits are still living in poverty? Can he tell us what long-term strategy his Government have to address that and lift those families out of poverty? Will he make sure that the DWP will permanently continue virtual and telephone health assessments to help remove some of the barriers for disabled people who need the support? Often, that is the most stressful part of the entire process of claiming support.

More needs to be done to make those processes simpler. Again, this specific area is not part of my portfolio or brief, but we have made significant progress in getting disabled people into work, and we want to move that forward with the disability strategy and a clear action plan. I know that my colleague the Minister for Disabled People will actively drive that forward across the nations, and will work very closely on that with the Scottish Government as well.

I thank the Minister for his replies. There is no doubt that the inaccuracy of benefit payments will have a detrimental impact on individuals and their families throughout the United Kingdom of Great Britain and Northern Ireland. Many of those 118,000 people are vulnerable and face the injustice of arrears. Those moneys belong to those people. Will the Minister confirm a timescale in which those affected are likely to receive their compensation? How many of the people to whom unpaid money is due are from Northern Ireland? What amount of money is due for Northern Ireland? I would appreciate an answer today, but if the Minister does not have the figures, I am very happy to wait for a written response.

The exercise to pay the arrears to the 118,000 people is complete. As of 1 June 2021, we have reviewed 600,000 cases. The 118,000 arrears payments were made to those who were eligible, and a total of £613 million has been paid. I will follow up on the hon. Gentleman’s other points.