A report has found that a “major error” by the Department for Work and Pensions led to 70,000 disabled people missing out on benefits worth up to £20,000 each.
As a result, Esther McVey’s DWP expects to pay out £340 million in arrears by April next year.
Claimants could still be left as much as £150 million short because the department does not plan to make up for underpayments dating from before October 2014, found the House of Commons Public Accounts Committee (PAC).
Those who are affected will still not be reimbursed for benefits such as NHS prescriptions, dentist’s treatment and free school meals which they missed out on because of the DWP’s mistake.
Committee chairwoman Meg Hillier described the DWP’s response to the problem with employment and support allowance (ESA) as “blinkered and wholly inept”, and said it revealed “weaknesses at the highest levels of management”.
The committee gave the department until October this year to report back on action it is taking to ensure mistakes are not repeated.
And it said the DWP should provide a figure for the total amount claimants have missed out on, along with an explanation of how it will provide “appropriate remedies”.
“There is clearly much more to be done to right this wrong,” said the committee.
Those affected were people whose ability to work is affected by disability or illness, who were transferred from the old incapacity benefit on to ESA from 2011 onwards.
Some 70,000 ended up being underpaid for years, losing an average of £5,000, found the report.
Campaigners said the move could increase the number of claimants receiving payments from 70,000 to 250,000, with some in line for an additional £10,000.
The DWP has said fixing this issue is a main priority though. A spokesperson said: “We take the issue of underpayments very seriously and have actively taken steps to put this right as quickly as possible, to ensure people get the support they are entitled to.
“We have 400 staff working on this and have already started making payments – over £40 million so far.
“The department has done further work on this issue, and as a result today has announced we will be paying people arrears back to the date of conversion to ESA.”