Underpayment of Benefits: Compensation

(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 gov.uk, 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.