Organisation we investigated: Department for Work and Pensions (DWP)
Date investigation closed: January 2022
Ms U complained to us after DWP migrated her to Employment and Support Allowance (ESA) in 2012 and failed to pay her the income-related component from 23 May 2012 to 11 August 2017. She also complained that DWP failed to compensate her for the life-changing impact this had on her.
Ms U said this meant she also missed out on related benefits such as free prescriptions, causing her extreme financial hardship and distress for five years. She also said it severely impacted her mental and physical health problems.
Employment and Support Allowance (ESA) is a benefit paid to people who have limited capability to work. In 2011, DWP began reassessing people who had been getting other benefits such as incapacity benefit and transferring those eligible to ESA.
DWP accepted that because of an error, it underpaid many of the people who were transferred. In these cases, it paid them ESA based only on their national insurance contributions when they should have received payments based on their income too.
DWP said its Legal Entitlements and Administrative Practices (LEAP) exercise would review assessment decisions where evidence about claimants’ financial circumstances had not been requested. It would identify such claimants, ask them to provide relevant information and if appropriate, pay them arrears of income-related ESA.
Ms U had been getting incapacity benefit and in May 2012 she was moved to ESA. She only received the national insurance contributions-related payments. In July 2017, her representative (a welfare rights adviser) prompted her to have her entitlement reassessed. In August, DWP did this and paid her £19,832.55 arrears of income-related ESA and premium payments (about £80 a week).
In November, Ms U’s representative complained to DWP that Ms U had been living in hardship. For a sustained period she been living on less than the state said she should have and this had put her in a very vulnerable situation.
Her representative said that Ms U had missed out on additional support, known as passported benefits, that receiving income-related ESA would have made available. He gave the example of medical prescriptions and said she needed medication in order to stay well and remain in the community, but she had had to pay for these herself. She also missed out on £700 worth of Warm Home Discount payments and other help such as paying for a washing machine. He asked DWP for compensation.
In February 2018, DWP told Ms U that compensation was not appropriate because her claim had already been reconsidered and arrears had been paid. The same month her representative asked DWP to reconsider the decision, which it declined.
In April, DWP staff wrote to the Minister for Disabled People exploring whether payments in addition to arrears should be paid to people affected by the error. They also provided options for what action should be taken and a recommendation that no payments, on top of arrears, should be made. The Minister agreed to the recommendation that for claimants identified via the LEAP exercise, compensation payments would not be considered.
In August 2020, DWP said that although Ms U was not part of the LEAP exercise and was paid arrears before it was carried out, the Minister’s decision to not make additional payments also applied to her.
What we found
We found that DWP’s decision to not make payments was inconsistent with its own Principles for Remedy guidance. This states that ‘individuals should not be disadvantaged as a result of maladministration’ and that ‘injustice and hardship resulting from maladministration should be addressed on a case-by-case basis’.
We also found that DWP should not have excluded Ms U from having the opportunity to claim compensation because she was not part of the LEAP exercise. This was irrelevant to Ms U’s case and ignored the impact the error had had on her life. We found that DWP’s failure to act in line with its own guidance was maladministration.
Ms U has complex health issues which were compounded as a result of her missing out on several supportive payments. As a result of DWP’s maladministration she was living in more vulnerable circumstances than she would have been had it not occurred.
We found that DWP’s maladministration had a very significant impact on Ms U’s living standards and quality of life. DWP’s actions have caused her an unremedied injustice.
Putting it right
We recommend to DWP that it:
- write to Ms U to apologise for the impact of the maladministration on her
- make a payment of £7,500 to compensate her for that impact
- apply an appropriate rate of interest to the benefit arrears payment of £19,832.55.
We also recommend that DWP:
- says what action it will take and when to remedy all those adversely affected by its error who were not included in its LEAP exercise
- reconsiders its decision to rule out compensating people included in the LEAP exercise in a way consistent with its own and our relevant guidance, including remedies for others who suffered injustice or hardship as a result of the same maladministration
- reports to the Work and Pensions Select Committee (copied to the Public Administration and Constitutional Affairs and Public Accounts Select Committees) on its progress and what decisions it makes about how to remedy its failings.