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Employment and Support Allowance

This Written Statement is a fifth update to the House on progress in reviewing and, where necessary, correcting past Employment and Support Allowance (ESA) underpayments and paying arrears following conversion from previous incapacity benefits.

Since my last update to the House in October 2018 we have made significant progress. Due to the complex nature of these cases they take considerably longer than the average ESA case to complete. To ensure we make rapid and accurate progress we have therefore increased the number of staff working on putting these cases right from around 400 to approximately 1,200. This additional resource has led to a substantial increase in the number of cases that we have reviewed, corrected and paid arrears where due.

We have made good progress and by 11 February had:

• started 310,000 claimants on the reassessment journey;
• paid arrears of over £328 million to 58,000 people; and,
• completed action on 207,000 cases ¹.

Based on the progress made since October we believe we are on track to complete work on the majority of the original 320,000 cases by April 2019 (Phase 1). Unfortunately, some cases where the claimant sadly died prior to the exercise starting, are taking a significant period of time to resolve due to difficulties in identifying the next of kin or executors. There are around 20,000 deceased cases included in Phase 1 that require review. While we continue to progress this work, we expect that the Department will need until the end of 2019 to complete these cases.

Following our announcement in July 2018 that we will review and pay cases back to the date they were converted from incapacity benefits to ESA, we are reviewing a further 250,000 cases (Phase 2), as set out in October. Activity in respect of this group is due to start shortly, and we aim to complete Phase 2 by the end of this year.

The cases included in this exercise were largely converted between 2011 and 2014. Revised operational guidance was put in place in October 2014 after individual cases that had been incorrectly converted came to light. As part of our commitment to correct all cases affected by this error, we decided to undertake additional testing of cases converted in 2015. This testing has shown that the error rate did not improve as quickly as expected and we therefore believe that it is prudent to review around a further 30,000 cases, that were converted from 2015 onwards. This reflects our commitment to ensure all those who may have been affected are identified and paid the arrears they are due.

The Department is publishing an updated ad hoc statistical publication today setting out further detail on the progress it has made in processing cases, including an updated estimate on forecast expenditure and the numbers affected. This will be published on Gov.uk.

These updated forecasts will feed into the Spring Statement 2019. The Department now estimates that around 600,000 cases require review and that by the end of the exercise around 210,000 arrears payments will have been made. The increase, compared to our previous estimate of 180,000, is based on assumptions made using evidence we have gathered from the checking exercise to date. The data shows an increase in the proportion of cases in error among some groups of claimants. In addition, based on sample testing we have also included an assumption of the proportion of errors likely to be identified in the further 30,000 cases that have been added to the exercise.

An updated Frequently Asked Question guide will also be deposited in the House library for further information.

¹Some of these cases which were originally completed prior to our announcement in July 2018 that we will review and pay cases back to the date they were converted from incapacity benefits to ESA, will require further action.