• Letter from Peter Schofield CB, Permanent Secretary, Department for Work and Pensions, relating to  ESA Underpayments and the 2019-20 funding position, 6 March 2019
• Work and Pensions Committee

Costs of “protracted error” continue to mount

In February the Committee wrote again to the Department for an update on the costs of this protracted error, after DWP admitted that the number of staff in DWP working on the systemic errors had tripled from 400 to 1,200. It was also at that point that it was forced to admit that even after new guidance had been issued to staff in 2015 in an attempt to correct the problem, 30,000 extra cases had been identified where it was possible the same error resulting in underpayment had been made.

In the response published today, DWP reveals that of the 1200 staff assigned to fixing the huge administrative error, 400 are new, additional staff recruited specifically for this exercise. It shows that just running the exercise  – if it ends next year as forecast – will cost an additional £40 million. The total cost, including making up what is owed to claimants, is expected to near £1bn.

Chair’s comments

Commenting today, Rt Hon Frank Field MP, Chair of the Committee, said:

“ESA has taken another disastrous turn. Having made it through the awful, painful, error-ridden assessment process run by the private contractors who can so rarely hit a target, through the miserable and lengthy reconsideration and appeal process that is so costly to taxpayers and claimants alike, tens and perhaps hundreds of thousands of disabled people still lost out on money they were owed. Now DWP has been forced to admit that just the admin of fixing its own catastrophic incompetence is going to add another £40 million to the cost of this serially botched operation. Imagine what that money could have done instead for families across the country who are struggling to feed their children and heat their homes.

You might think that this shameful, damaging waste would at least focus minds at DWP on making sure this never, ever happened again. But we are already starting to hear about people whose incomes have been slashed because they’ve been wrongly advised to claim Universal Credit, and there’s no way back. If Ministers want to avoid another billion pound scandal, they need to get a grip on this – and fast.”

DWP resource allotment

In February, the Chair asked “how the Department has made these resources available – in particular, what work have you had to stop or deprioritise in order to deploy 1,200 staff to this exercise?”. The questions, including the request for an estimate of the total administrative cost – i.e. excluding the arrears themselves – of reviewing and correcting the underpayments came as DWP published figures showing it had:

• begun the process of reassigning 310,000 claimants’ ESA payments
• paid arrears of over £328 million to 58,000 people
• increased the number of staff working on the years of mistakes from 400 to 1,200
• revised the expected near £1bn cost of the process to March 2020 down slightly, from £970m to £920m.

The Permanent Secretary states in this latest letter that “we have not had to stop or deprioritise other customer activity in order to complete this review”. He does not, however, address the question of what other work DWP could have done if it had not had to hire 400 new staff, deploy 1200 total and spend £40m on this exercise.

Terrible failures in assessment process

In 2017 the Committee picked up on the original NAO report uncovering years of significant underpayment to vulnerable, disabled claimants of ESA, in the aftermath of the Committee’s work on the terrible failures in the assessment process for ESA and PIP benefits. In July 2018 the Chair commented on the huge leap in the number of cases of underpayment requiring investigation and possible correction, from 70k to a quarter of a million.

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