The DWP has refused to follow a recommendation by the Parliamentary and Health Service Ombudsman (PHSO) to contact over 100,000 ESA claimants who are owed compensation totalling many millions for DWP errors. However, one claimant has been awarded £7,500 in compensation and we explain below how you can begin a claim if you were affected.
The issue relates to mistakes made by the DWP which began over a decade ago.
In 2011 the DWP began transferring claimants from incapacity benefit to employment and support allowance (ESA). However, in many thousands of cases the DWP only assessed claimants for contribution based ESA and failed to check whether they should also have been awarded income-based ESA.
Eventually, after many complaints and awards to claimants who had missed out, the DWP reluctantly launched a LEAP exercise to identify claimants who had been victims of their error.
This resulted in 118,000 claimants getting backdated awards of ESA, in many cases amounting to thousands of pounds. Others also got awards outside of the LEAP scheme.
However, these claimants were not told that they might also be entitled to special payments because they had missed out on other benefits or undergone hardship as a result of the DWP’s maladministration.
Indeed, the DWP specifically told claimants that they could not complain to the Independent Case Examiner and did not tell them about the Parliamentary and Health Service Ombudsman (PHSO).
However, one claimant – known as Ms U – had advice from a welfare rights worker. As a result, she did complain the PHSO after the DWP refused to pay her compensation in addition to £19, 832 in backdated ESA.
The PHSO found that Ms U had suffered considerable hardship and her health had suffered as a result of the DWP’s failures. She had also missed out on free prescriptions, warm home discount payments and other help such as paying for a washing machine.
The PHSO recommended that the DWP pay Ms U £7,500 as compensation and also pay interest on the back payment of ESA.
The DWP paid Ms U, but refused to follow another recommendation of the PHSO.
This was that they contact claimants both within the LEAP exercise and outside it who had been given ESA arrears due to their maladministration, look into their circumstances and award them any appropriate compensation.
Instead the DWP argued that: “should a claimant feel that they should receive compensation due to their individual circumstances, they can contact the Department and set out their reasons. All requests received will be considered on a case by case basis.”
The DWP know very well that almost none of the affected claimants will ever discover that they might be entitled to compensation and thus they will never know to ask for it.
In a recently released letter dated 10 May 2022, the PHSO said that they were “extremely disappointed” with the DWP’s decision not to follow their recommendations.
Unfortunately the PHSO has no power to force the DWP to do so.
We know that only a small proportion of Benefits and Work readers will have been affected by this issue.
But if you are one of them, we have a downloadable letter, complete with instructions, that you can use to begin the process of applying for compensation.
It comes with no guarantees that it will work, but waiting for the DWP to act seems to guarantee that you will not get a penny of what you may be owed.
If you are not personally affected but know someone who may be, please send them a link to this article.
And if you regularly post in a forum or belong to a group that might include affected people, again please give them a link to this page.
Who is affected
Affected claimants are those who were transferred from incapacity benefit to ESA, a process that began as far back as 2011, and who later received a lump sum payment of arrears because the DWP had failed to award you income-based ESA as well as contribution-based ESA.
Many claimants who received such a lump sum will have missed out on passporting to other benefits, such as free prescriptions and warm home discount payments.
What you can do
If you think you were affected you can write to the office which administers, or used to administer, your claim for ESA to ask for compensation.
We have created a simple, downloadable letter which you can use as the basis for your own.
We have kept this letter as simple as possible, with instructions for you in italics. If you know the dates of any award of back-dated ESA or the amounts that you may have missed out on then by all means add them. But, at this point, the most important thing is to begin your claim.
If you don’t receive a reply, do as the letter says and make a formal complaint as well as contacting your MP’s office and asking them to pursue the matter
Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.
This one is quite hard to get your head around – doesn’t it seem that benefit issues and National Insurance are needlessly complicated in order to confuse ordinary people? – but worth reading. John D Turner begins:
When Rachel Reeves talked earlier this year about extending the period for qualifying for Contribution Jobseeker’s Allowance, many (mostly genuinely concerned) knees jerked and the Daily Mail went into raptures. Every time this happens, I become more and more convinced that most of those reacting to such proposals know little or nothing about the reality of today’s Social Security system.
He then goes into the conditions required to qualify at the moment before commenting on Labour’s proposed change:
Labour is talking about extending the RTYs [relevant tax years] from two to five. And therein lies the rub. The number of people who currently meet the … conditions is steadily falling. Consequently, very few will be affected by this change and their numbers are dwindling any way. Many who would be affected will claim Income Based JSA instead (as they do now under the current rules).
As for the Daily Mail, well, if anyone is going to lose out from this change then it is their readers who are more than likely to have savings in excess of £16,000 so if they try to claim Income Based JSA they will be nilled out. They may continue to sign on (and be required to seek work etc) in order to receive NI Credits towards their State Pension. I lost track of how many in this group took umbrage at being expected to seek work. They were, after all, not benefiting from signing on. They got a bit testy when I pointed out (at today’s prices) they would either have to purchase Class 3 NI Credits, if they were not working or earn more than £153.00 per week (the current Primary Threshold) to obtain the equivalent benefit. Oh and they had to be available and actively seeking work just like everyone else signing on.
He concludes: I remain unconvinced that Rachel Reeves’ proposals in this area will strengthen the contributory principle in the minds of those of working age. It is a declining issue for many and, to my mind Labour, if it implemented this proposal would finally put it out of its misery and actually cause grief to the average Daily Mail reader, particularly those who think they will never need to claim Social Security. However, Labour’s proposal will, if implemented, reduce the amount of JSA paid out each year and unemployment as measured by the JSA claimant count, but probably not as measured by the Labour Force Survey.
There is much more to this article. If the thought of dealing with the subject puts you into paroxysms of fear, then you are not alone – and you probably need to read it. There are implications for pensions and, in today’s UK, you need to know what’s going on with your pension.
This is what ‘money’ looks like. Enjoy the sight because you’ll probably be seeing increasingly less of it in reality from now on.
I haven’t seen anything in the press lately – local or national – about the many changes to social security benefits (the Tories call them ‘welfare’, which seems a good reason for me not to) that will come into effect this year.
That’s a mistake. People need to know what will happen and when – otherwise some of the UK’s most vulnerable, who find it very hard to adapt when their circumstances change, will get into trouble.
So what follows is an attempt to provide a brief overview. It won’t cover everything but should hopefully function as a prompt for people to follow up.
Needless to say, the most vulnerable in society will be affected by these changes – many of them in a fundamental way.
Putting a cap on benefits
The Coalition government’s benefit cap will come into effect from April. The expected level is £500 per week for couples and lone parents – equivalent to £26,000 per year (net); and £350 per week for single adults.
Across the UK, 56,000 households will be affected by the benefits cap. Job Centres have already notified those who will be affected.
Money will be removed from benefits until they come down to the £26,000 cap – starting with Housing Benefit. Of course, anyone under 35 will already be receiving only the shared accommodation rate of HB.
Many benefits are included in the cap, but Council Tax Benefit and its successor, the Council Tax Reduction Scheme will not be. DLA claimants are exempt, and also Working Tax Credit recipients – but both these benefits are being replaced this year.
In my home county of Powys, it is believed that 23 households will be affected by the benefits cap. Nine are private; 14 are social sector tenancies. All have children and/or some form of disability.
The under-occupation penalty comes into effect, for people in social housing (not including pensioners) from April, and means those with one spare bedroom will lose 14 per cent of their housing benefit; those with two bedrooms going spare will lost 25 per cent of their HB.
In Powys we have 8,300 social landlord properties; 900 are under-occupied by one bedroom, 300 by two bedrooms. The total annual loss of housing benefit will be £800,000.
People will have to move home because of the bedroom tax. That will have an impact – not just on individuals, but on education, if a child has to move away from a school where they have friends to a new area. It’s not about downsizing to another property in the same village. You may be looking at a considerable move, out of the family circle, taking children from one school to another. The impact is likely to be significant.
From DLA to PIP
Disability Living Allowance will be replaced by the new Personal Independence Payment in a gradual process, starting in April. There are similarities – PIP maintains links to passported benefits where possible, and there are special rules for claimants who are terminally ill. The differences are that claimants must still have their problem nine months after they apply; and there will be planned interventions and an early reconsideration process.
It is currently believed that people receiving the low-rate care component of DLA are unlikely to receive PIP at all.
There is no PIP claim form available from the usual sources. Claims are to be made by telephone on an 0800 number, when claimants will be asked general questions – including their bank details. Then a form will be posted to the claimant. It will be individually-addressed and bar-coded with the claimant’s details.
For those with fluctuating conditions, the form will provide an opportunity to explain them.
Claimants can have help completing the form, and reports from health professionals such as occupational therapists and doctors may be added to it.
The form will go to a health professional working for the company Capita (in Wales; other parts of the UK have our old sparring partners Atos). They may decide a claimant’s entitlement straight away, but most will be asked to attend a face-to-face interview. It is possible that this company may carry out home visits if the need presents itself.
Attendance with a friend, relative, partner, health professional or similar is encouraged.
All evidence will be reviewed and a report will be sent to the Department for Work and Pensions to make a decision.
The health professional will not make any recommendations at all – a DWP case manager will review the evidence and make a decision.
If a claim is disallowed or reduced, they will phone on three separate dates, at three separate times, to explain the decision. There are concerns that claimants with particular issues such as mental health problems might not understand.
Finally, as part of an ongoing process, questions and replies about PIP will be posted on the Frequently Asked Questions (FAQ) page of the DWP’s PIP website.
From April 2013, new claims for PIP will be taking in the northeast and parts of northwest England; it won’t affect Wales until June.
From October 2013, claimants on fixed period awards that are coming up for renewal will be reassessed, along with young people coming up to age 16, and indefinite awards with a change of circumstances. Nobody else will be reassessed until October 2015.
Council Tax Reduction Scheme
The UK government is planning to save more than £500 million by issuing only 90 per cent of the cash to local authorities that it would normally provide for Council Tax Benefit. It is up to councils in England, and the Welsh, Scottish and Northern Irish Parliaments, to devise for themselves ways of making up the shortfall.
In Scotland, the Scottish Parliament is finding money within its own funds to plug the gap. Councils in England have come up with their own systems – some asking people who have never paid council tax before to contribute up to 40 per cent of the normal bill.
The Welsh Government has decided to introduce a nationwide format, in order to prevent ‘postcode lotteries’ where people in one area are worse-off than those who live across the street, but in another local authority’s jurisdiction.
The new scheme will be means-tested and the ceiling for the maximum entitlement will be decided by the administering authorities; in Wales it will be 90 per cent of the council tax bill. This means support for all claimant groups will be reduced, including those on passported benefits such as Employment and Support Allowance. If you are on ESA you will be expected to pay at least 10 per cent of your council tax from now on.
There is no requirement in Wales to protect pensioners. The second adult rebate will also be removed.
In England, pensioners will be protected, but this means the maximum entitlement comes down to 84 per cent of the council tax bill or less, meaning residents will have to pay at least 16 per cent. In some counties we already know people will be paying a minimum of 30 per cent.
In Powys, where the 10 per cent maximum applies, this means 10,400 residents will lose, on average, £86 per year. Of these, 7,800 people currently pay nothing, and this means they must find the extra money from whatever other resources are available to them, to pay their council tax. That’s just an average among people affected, by the way. On a Band D property, 10 per cent is £117. Also, in Powys, 74 households get the second adult rebate, averaging £205 per year.
This means the total amount of extra money being taken from households in Powys alone comes to £915,000 in the 2013-14 tax year. That’s nearly £1 million being taken out of the local economy via this change alone.
Councils need to inform all Council Tax Claimants of the change. “I don’t think the message has fully got through – either that the change to a support scheme is coming, or that the scheme in Wales will be different to England,” said Colin Wallbank of the Welsh Local Government Association.
“There will be an impact on community support activities including housing and social services, and the aggregate effect of this and other welfare changes will have an impact on poorer households.”
“There is a risk of increased claimant numbers, and this will put more pressure on local authority budgets.
“Local authorities must consult, and then adopt a scheme. The consultation is on the discretionary aspects, not the main scheme.”
Geoff Petty, chief financial officer of Powys County Council, added: “The funding we get is for the existing caseload and doesn’t accommodate that load increasing. I don’t see the economy improving much overall, and that could mean we are underfunded by up to £500,000.
“That means we are chasing people for very, very small sums of money. Equally, I have a responsibility to chase those sums. If you allow arrears to grow, a small problem becomes bigger. I would want to ensure that, where people do get into arrears, we can give rapid support.”
There will be an impact on family relationships because the Council Tax Reduction Scheme, taken together with the ‘bedroom tax’ on Housing Benefit and reductions in HB rates for people aged under 35, mean that people will be forced to move into properties together. “People are being forced into ‘pressure-cooker’ situations,” as Erika Helps of Rhondda Cynon Taff Citizens Advice Bureau put it.
There will be an impact on mental health and anxiety. Anyone on a reduced income will feel stress but the Council Tax Support Scheme especially adds to this. The question is not, “Will we have to pay?” It is, “How much will we have to pay?”
More than 30 benefits are being rolled into one – the Universal Credit – starting in October. Mainly, it will replace income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support, Child Tax Credits, Working Tax Credits and Housing Benefit.
The new benefit’s stated aim is to get people into a ‘working’ state of mind, rather than a ‘dependent on benefits’ ethos. Currently, according to the DWP there is a large risk of fraudulent claims. Since the total amount of fraud in the benefits system is 0.7 per cent, you may wish to take that comment with a pinch of salt.
Claimants will be asked to do everything reasonable to look for work, or – if they are already in part-time employment – to increase their hours of work. As part of their commitment, there are consequences of failing to meet responsibilities – sanctions. There are groups who are not expected to work, including those with limited capability; carers; and lone parents with a child aged less than one year.
There are child elements, limited capability for work elements, and a housing element. Anyone with capital of more than £16,000 will not be entitled to Universal Credit.
Claimants who work part-time will be encouraged to ask employers for more hours of work. It will be part of a new system called ‘Real Time’; currently an employer will send their PAYE statement off at the end of March, but now it will go monthly to HMRC. They will pass it on to the DWP to assess a claimant’s entitlement that month.
This means claims will go through three different computer systems, and much has been said about the difficulties posed to the government by such a plan.
There will be a taper – as earnings increase, the benefit will tail off.
Universal Credit will be paid monthly, in arrears. This will raise budgeting issues and will affect working families as well as non-workers. People on low incomes are, in fact, often very good at managing, but the change to monthly payments means a whole new pattern for paying bills and saving for one-off purchases.
The DWP has made it clear that, at the point of change, there will be no losers financially. There will be transitional protection, unless there is a change of circumstances. However it should be noted that many of the benefits that will become part of Universal Credit are affected by the Benefits Uprating Bill, currently going through Parliament. Below-inflation increases are effectively cuts in benefit and this means that many people will have less money, going into the new benefit, than they might have otherwise expected.
Universal Credit will be “Digital by Default” – available at all times on the Internet, so it doesn’t depend on call centre times; it will aim to be flexible and responsive – continually improved; informative; integrated – joining work and benefits systems; and accessible – designed to meet the needs of a wide range of users within the system.
There are several problems with these claims. The most obvious is: What happens to people who don’t have the Internet?
Access to broadband internet is still an issue in places, and capability to use the internet is just as much an issue. People who might have access to broadband may still need help going through the claiming process.
Some benefits will actually require people to make a re-claim. If people don’t make that re-claim in time, the money they lose won’t be paid back in arrears later.
The aim is that it will start coming into effect from October 2013, when the newly-unemployed will start claiming Universal Credit, and from then on there will be a gradual phasing-out of existing benefit claims.
In spring 2014 it will be expanded to include new claims from people in work and moving current claimants to Universal Credit.
By 2017, the DWP hopes the Universal Credit roll-out will be complete.
Around 7,000 Housing Benefit claimants will migrate to universal credit between 2014-17. They will then be administered by the DWP.
Financial Inclusion: There is concern that many claimants may not be able to budget to support themselves straight away. The DWP says it is looking at targeting those claimants and coaching them. Many don’t have a mainstream bank account and the DWP says it is working with the credit union nationally.
There will be something in place for exceptions – claimants who can’t cope.
And there may be a review of the frequency of payments, but for a limited period only.
Housing: The DWP has promised to test key elements of incorporating housing support into Universal Credit, while protecting the financial position of social landlords.
“We want a welfare system that encourages a return to work as soon as possible. For those in work, we want to encourage progress, with people increasing their earnings and becoming more financially independent. But there are claimants who cannot work and it is important we have a welfare system providing them with the support they need,” said a spokesman at the conference I attended.
The effect upon society
People in social housing are likely to face discrimination because of who they are.
Advice services such as the Citizens Advice Bureau will face a growth in inquiries. Already in 2012 the growth in ESA inquiries in Powys CAB was 119 per cent. Rhondda Cynon Taff CAB saw a 74 per cent increase in council tax benefit inquiries, a 41 per cent increase in housing benefit calls and a whopping 165 per cent growth in inquiries about rent arrears. These figures will ramp up significantly over the next 12 months and beyond.
The need for debt advice and money advice (financial capability skills including budgeting) will increase. Some people will need to be supported.
There will be increased pressure on other voluntary resources, including food banks. The number of these in the UK has more than doubled in the last year, and is likely to increase.
Direct payment of housing benefit will mean that, if a crisis occurs, the temptation will be to use the rent money – but this can lead to a cycle of debt, and then there is a risk of resorting to pay-day lenders.
People will not be able to borrow locally from friends and family, because they will also be feeling the pinch as these welfare cuts bite.
The cumulative impact on child poverty will be huge.
There will be a rise in rent and mortgage arrears.
Less income generally means there will be less money available. That will also affect people owning local businesses – benefit income is spent locally and High Street shops will receive less.
There’s a huge risk that more and more people will access ‘lenders without conscience’. Responsible lenders, such as credit unions, are fantastic places to put money, but the services provided are different, depending on the union. They will see more and more people coming to them. That will impact on their business model and the risks will be greater.
There will be a big impact on social landlords and the housing market – affordable housing will be less available and landlords less able or willing to rent to tenants on benefits.
Private sector rental may become less attractive to landlords if tenants aren’t paying the rent. This will lead to a growth in homelessness. Councils have statutory duties and may see an increasing burden.
Pressure on the appeal system means people waiting longer for the outcome of appeals.
Pressure on public sector resources. Local authorities will bear the brunt of this, at a time when they have received difficult financial settlements.
The fund for Discretionary Housing Payments is increasing. These payments may help people top-up to pay accommodation costs. Given the effects of the reforms, people will also be looking for these payments and in those circumstances, the budget won’t touch the sides of what’s needed.
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