Official Statistics

October 2019: ESA underpayments: Forecast numbers affected, forecast expenditure and progress on checking

Published 17 October 2019

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This publication is available at https://www.gov.uk/government/statistics/esa-underpayments-progress-on-checking-october-2019/october-2019-esa-underpayments-forecast-numbers-affected-forecast-expenditure-and-progress-on-checking

The latest release of these statistics can be found in the ESA underpayments collection.

Policy background and introduction

1. Employment and Support Allowance (ESA) was introduced in October 2008 for people who have limited capability to work because they are disabled or ill. From March 2011 the Department for Work and Pensions (DWP) began reassessing people on incapacity benefits (for example, Incapacity Benefit and Severe Disablement Allowance) for eligibility for ESA.

2. More than 2 million claimants were receiving incapacity benefits before reassessment began and we have now reassessed around 1.5 million people, nearly all of those who required a reassessment.

3. The department is correcting some past underpayments of ESA, which arose while reassessing incapacity benefit claims.

What you need to know

4. There are 2 main types of ESA:

  • contributory, which is based on National Insurance contributions
  • income-related, which is a means-tested benefit – income-related ESA can be paid on its own or as a top-up to contributory ESA

5. Extra payments, called premiums, are available only to qualifying customers who are eligible for income-related benefits. These include the Enhanced Disability, Severe Disability, Carer, and Pensioner Premiums.

6. Largely between January 2011 and October 2014 some people receiving Incapacity Benefit and Severe Disablement Allowance had their claims converted to contributory ESA. However, the possibility of whether they may also have been entitled to income-related ESA was not considered for all cases. This means they may have missed out on the payment of premiums, such as the Enhanced Disability Premium.

7. The department announced it would be undertaking an exercise to review cases to check entitlement for income-related ESA in December 2017, with work on the exercise commencing that month.

Purpose of publication

8. This analytical release follows previous publications on ESA underpayments in October 2018, February 2019, May 2019 and July 2019. This publication provides an update of the number of cases estimated to be affected by underpayments of ESA on conversion from other incapacity benefits, and the forecast costs of repaying these cases, that the department has prepared in anticipation of Autumn Budget 2019.

9. It also presents an update, from the department’s management information, of the progress on checking potentially affected cases as at 13 October 2019. It includes progress for the exercise as a whole and separately for deceased cases in a number of areas:

  • the number of cases which have started the reassessment journey
  • number of cases contacted to date
  • number of cases completed to date
  • number of cases found not to be due arrears payments to date
  • number of cases found to be due arrears payments to date
  • the total amount of historical arrears the department has paid out in correcting these cases
  • average arrears payment to date

How many are affected and how much money is payable

10. The department’s latest estimate of the number of people who will be due arrears and its expenditure forecasts are based on management information from the checking exercise, dating from 19 September 2019, together with scans of the potentially affected cases from the department’s administrative data systems.

11. The department now estimates that around 120,000 arrears payments will have been made by the end of the exercise, a decrease from our previous estimate of 210,000. The change in the forecast number of cases affected comes largely from Phase 2 cases, which came into scope following the Secretary of State’s announcement in July 2018 to pay all cases back to the point of conversion. Latest forecasts also suggest the department will pay £610[footnote 1] million for past underpayments over the financial years 2017 to 2018 to 2019 to 2020, a decrease from the £920 million forecast that informed Spring Statement 2019. The decrease in expenditure arises in nearly even proportions from the original Phase 1 cases identified as potentially affected and Phase 2 cases.

Reasons for these decreases in number of arrears payments due and expenditure include:

1. Actual levels of entitlement are lower than forecast

Across both phases, outturn from the exercise indicates that there are lower average arrears payments than forecast, smaller than expected changes to the value of ongoing awards and a smaller number of cases owed arrears. Phase 1 was expected to account for the bulk of expenditure and consequently relatively small changes to arrears and numbers of entitled cases in this phase have had a large effect on overall expenditure. The Department has maintained a thorough process for reviewing cases throughout the exercise to ensure those who have been affected are identified and paid the arrears they are due.

2. Actual Phase 2 data available for forecasting expenditure in Phase 2

These forecasts are now calculated on the basis of outcomes from assessing cases rather than assumptions[footnote 2].

While claimants in the Support Group are automatically entitled to the Enhanced Disability Premium if they are entitled to income-related ESA, claimants in the WRAG are not entitled to any premia unless they also receive qualifying benefits, such as Personal Independence Payment (PIP), at required rates.

12. Claimants with an ongoing entitlement may see their award increase as a result of this exercise. The total cost of revised awards is now forecast to be lower than previously expected with expenditure of around £40 million in 2018 to 2019, £100 million in 2019 to 2020, and then declining over time to £80 million in 2024 to 2025 as claimants leave the benefit. This is due to the lower than expected number of cases found in error and smaller changes to awards.

13. Table 1 shows the department’s lower, central and upper estimates of the amount of extra benefit that has been paid or will be payable in each year, including both arrears payments and higher awards to active claimants.

Table 1: Total extra amount of Employment and Support Allowance (ESA) payable

£ millions 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025
Lower estimates 20 430 260 100 90 80 80 70
Central estimates 20 430 290 100 90 90 80 80
Upper estimates 20 430 330 110 100 90 90 80

Notes for table 1.

  1. Estimates are rounded to the nearest £10 million.

  2. Totals may not sum due to rounding.

  3. The central estimate is the department’s best estimate of the likely level of costs. The lower and upper cases illustrate the department’s estimate of the likely minimum and maximum amounts. The actual amount will depend on the number of people affected and the amount of arrears owed in each case.

  4. Figures for 2017 to 2018 and 2018 to 2019 show no variation across the lower, central and upper estimates as they are comprised of actual arrears paid and known numbers of cases still active upon correction and therefore also owed higher awards. Figures for 2019 to 2020 comprise a mixture of actual arrears paid, estimated higher awards and forecast arrears.

  5. The £430 million forecast in 2018 to 2019 comprises £400 million in arrears payments, and an estimated £40 million in higher awards payments made to active claimants after their claims were corrected.

  6. The £290 million central estimate in 2019 to 2020 comprises £190 million in arrears payments, plus £100 million in higher award payments to active claimants after their claims are corrected.

  7. Forecasts of higher awards to be paid on corrected claims have been adjusted to account for inflation. Historic arrears accounted for are the benefit rates applicable to each year of underpayment.

Source for table 1: DWP analysis of management information from the ESA underpayment checking exercise at 19 September 2019, together with scans of the potentially affected cases from the department’s administrative data systems.

14. On average, the department estimates that affected individuals could be due around £5,000[footnote 3] in arrears[footnote 4]. However, the actual amount payable will vary among individuals and depend on their circumstances, including specific entitlements to premia, the period over which they were entitled and any transitional protection that may have been in payment on conversion to ESA because the previous incapacity benefit award was higher than the new ESA award.

Progress on checking cases

15. Table 2 below summarises the department’s management information from the whole of the ESA underpayments checking exercise at 13 October 2019 compared to the last update from 14 July 2019. The table includes work across both the original Phase 1 cases identified as potentially affected and the Phase 2 cases which came into scope following the Secretary of State’s announcement in July 2018 to pay all cases back to the point of conversion.

16. Since the last publication, focus in the exercise has been on processing deceased cases and cases in Phase 2. Since 14 July 2019:

  • all 570,000 cases in Phases 1 and 2 of the exercise have started the reassessment journey, leaving just the 30,000 cases converted from previous incapacity benefits into the Support Group from 2015 onwards to be started
  • around 140,000 additional cases have completed the reassessment journey, bringing processing of the potentially affected group to around 85% complete[footnote 5]

Table 2: Progress on checking cases potentially affected by underpayments of ESA on conversion from previous incapacity benefits

Out of the 600,000 cases to be checked: 13 October 2019 14 July 2019
Number of cases that have started the reassessment journey (see note 6) 570,000 520,000
Number of cases the department has contacted to gather data to review their claims (see note 7) 490,000 460,000
Number of cases that have completed the reassessment journey (see note 8) 510,000 371,000
Number of cases completed the reassessment journey without payment of arrears (see note 9) 410,000 282,000
Number of cases qualifying for arrears payments 100,000 88,000
Total amount of historical arrears paid to date £552 million £528 million
Average arrears payment to date £6,000 £6,000

17. Around 50,000 of the 600,000 cases to be checked are where the claimant is deceased. Table 3 shows that out of this group, the number of cases that have started the reassessment journey has increased by around 30,000 so that all of these cases have now started the checking process and around 65% of this group have completed the reassessment journey.

Cases where the claimant is deceased take longer to process due to difficulties in identifying and contacting the next of kin and obtaining information on which to assess entitlement. Where we have been unable to identify the appropriate representative or next of kin we are working with the General Register Office for England and Wales and National Records of Scotland to gather information in relation to who registered the death, to help us obtain the relevant information needed.

Table 3: Progress on checking deceased cases potentially affected by underpayments of ESA on conversion from previous incapacity benefits

Out of the around 50,000 deceased cases to be checked: 13 October 2019 14 July 2019
Number of cases that have started the reassessment journey (see note 6) 50,000 20,000
Number of next of kin the department has contacted to gather data to review deceased cases (see note 7) 10,000 <5,000
Number of cases that have completed the reassessment journey (see note 8) 32,000 10,000
Number of cases completed the reassessment journey without payment of arrears (see note 9) 30,000 9,000
Number of cases qualifying for arrears payments 1,000 1,000
Total amount of historical arrears paid to date £7 million £5 million
Average arrears payment to date £5,000 £5,000

Notes to tables 2 and 3.

  1. Data is reported without detailed verification.

  2. The figures date from 13 October 2019. They are changing rapidly as around 1,100 staff continue to work on the exercise to check potentially affected cases.

  3. The number of cases started the reassessment journey or contacted is rounded to the nearest 10,000; the number of cases completed is rounded to the nearest 1,000; the total amount of historical arrears paid is rounded to the nearest £1 million and the average arrears payment is rounded to the nearest £1,000.

  4. Figures may not sum due to rounding.

  5. Table 2 shows progress on checking both deceased and non-deceased cases.

  6. Starting the reassessment journey includes checking information held on various departmental administrative systems to identify which cases needed to be contacted or contacting cases with a high risk of underpayment without conducting prior checks.

  7. Around 70,000 cases, including approximately 25,000 cases where the claimant has died, have been identified as not entitled during checks of DWP administrative systems prior to making contact, and consequently have not been contacted. Further cases are awaiting customer contact following initial checks.

  8. Completing the reassessment journey includes cases identified on DWP administrative systems as not entitled or who have identified themselves as not entitled prior to assessment, or who have not responded to multiple attempts to contact by phone or post over an 8-week period and also cases which have been through the full journey to assessment. Cases who have not responded are able to respond in future.

  9. Completing the reassessment journey without payment of arrears includes cases identified on DWP administrative systems as not entitled, or who have identified themselves as not entitled prior to assessment, or who have not responded to multiple attempts to contact by phone or post over an 8-week period as well as cases found not to be entitled at assessment. Cases who have not responded are able to respond in future.

  10. The average arrears payment to date reflects the larger number of Phase 1 cases identified as owed arrears to date. Phase 1 cases are expected to have arrears spanning longer periods than those in later phases of the checking exercise.

  11. Cases completed the reassessment journey include a small number of cases that were reviewed before the decision to pay cases to the date of their conversion, rather than 21 October 2014, and are in the process of being revisited to assess entitlement in the earlier period.

Source for table 3: DWP management information from the ESA underpayment checking exercise at 13 October 2019.

Statement of Compliance with the Code of Practice for Statistics

The Code of Practice for Statistics (the Code) is built around 3 main concepts, or pillars: Trustworthiness, Quality and Value. The following explains how we have applied the pillars of the Code in a proportionate way.

Trustworthiness – is about having confidence in the people and organisations that publish statistics

Professional analysts have independently produced the forecast numbers affected and forecast expenditure from management information from the ESA underpayment checking exercise at 19 September 2019, together with scans of the potentially affected cases from the department’s administrative data systems.

Progress on the ESA Underpayments checking exercise is based upon DWP management information, supplied via a data capture tool built to allow consistent and efficient recording of case review progress in the ESA Underpayments checking exercise.

Quality – is about using data and methods that produce assured statistics

The rigorous production of the forecast figures ensures they are our best central estimates of numbers affected and associated expenditure based on the information available. Figures have been independently quality-assured and validated against other ESA administrative datasets and modelling, where possible. The provision of upper and lower expenditure estimates indicates some of the uncertainty around the figures.

The data presented on checking progress is from the data capture tool developed to accurately record progress and levels of arrears payments. Drop down menus and built-in validation checks assist in reliable data recording. Data recording checks are carried out by operational staff. Small samples of figures have been cross-checked across jobcentres. The department’s analysts have challenged some figures and definitions to ensure accurate representations of the activity undertaken.

Value – is about publishing statistics that support society’s needs for information

This release updates estimates of numbers of people affected and forecast expenditure currently in the public domain and latest figures have been prepared in anticipation of Autumn Budget 2019.

This release provides a progress update on the checking exercise following on from the last release on 14 July 2019, together with context for those figures.

In addition, it aims to reduce the administrative burden of answering Parliamentary Questions, Freedom of Information requests and ad hoc queries to ensure timely responses to public queries.

To support financial planning and management of departmental business, figures have been seen in advance by Ministers and officials, as pre-release access restrictions do not apply for management information.

The department intends to release a future update on progress on checking cases on the 16 of January 2020.

Where to find out more

Contact information

The department will be contacting all those identified as potentially impacted to get the information we need to look again at ESA claims. We have already contacted a large number of customers and aim to contact everyone affected by December 2019.

  1. Forecast expenditure is rounded to the nearest £10 million ↩

  2. Estimates for cases in phase 2 of the exercise were previously based on assumptions as there had been no sample testing of this group ↩

  3. Despite average arrears in both phases of the exercise having decreased, the overall average forecast arrears payment has increased due to a larger fall in the number of arrears due in Phase 2 where arrears payments tend to be lower due to the shorter periods for which arrears are owed ↩

  4. Average forecast arrears payment is rounded to the nearest £1,000 ↩

  5. Completion rates rounded to the nearest 5% ↩

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