Government faces £1.67bn bill for underpaying disabled benefits

The Government is facing a benefits bill of more than £1.5 billion after underpaying tens of thousands of disabled claimants, newly released documents show.

An estimated 180,000 people are due arrears payments totalling £970 million after under-receiving Employment and Support Allowance (ESA), Department for Work and Pensions (DWP) papers have shown.

And the cost of paying them extra after their claims have been corrected is estimated to add another £700 million over the next seven years, taking the total additional bill to £1.67 billion, an internal analysis released on Wednesday shows.

It noted: "The Department estimates it will pay £970 million in historic underpayments largely over the financial years 2018/19 and 2019/20.

"In addition, it will pay higher awards to active claimants after their claim is corrected."

The payout results from a decision by Work and Pensions Secretary Esther McVey to ditch a policy of refusing to reimburse missed payments dating back before October 2014.

The DWP analysis estimates that the average back payment to each claimant owed money will be £5,000, although the average paid back so far is £7,000.

In a written statement to MPs, DWP minister Sarah Newton said it was looking into 570,000 cases in total, with the majority of the first 320,000 announced in December expected to be finished by April.

A second wave of 250,000, announced in July, will be worked on through 2019.

Some £120 million has already been paid out, the document shows.

She said: "We now have a team of over 400 staff working through these cases, with a further 400 due to join the team through October and November, and will be assigning more staff to review the additional 250,000 cases.

"This will enable us to complete this important activity at pace."

Marsha de Cordova, shadow minister for disabled people, said: "Disabled people have been short-changed and denied the social security they were entitled to.

"This mess is another example of how the Conservatives have created a hostile environment for sick and disabled people.

"The Government must ensure that disabled people who have been so unfairly treated are properly compensated.

"A Government that forces disabled people into debt and even makes some destitute is a disgrace."