Background to the report

Employment and Support Allowance (ESA) is a benefit that the Department for Work & Pensions pays to people who have limited capability to work because they are disabled or ill. In 2011 the Department started transferring those assessed as eligible onto ESA from older-style benefits such as Incapacity Benefit, Severe Disablement Allowance and Income Support.

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This investigation covers a single, major cause of underpayment error in ESA. This error relates to people whose existing benefit claim was converted to ESA and who were entitled to income-related ESA but were only awarded contribution-based ESA. This caused people to miss out on premium payments. We conducted this investigation because the incorrect payments referred to in this report are a major single source of error that the Department has not addressed over several years.

Content and scope of the report

This investigation:

  • explains ESA;
  • assesses the scale of the issue, including: the nature of the error; the amount of underpayment; who is affected; and the Department’s plans for paying arrears; and
  • outlines the Department’s management of the issue, including: how and when the issue was discovered; and how information was acted upon.

The NAO did not assess other aspects of ESA, nor did we examine wider issues relating to fraud and error, or claimants’ entitlements to other benefits, as part of this investigation

Report conclusions

We consider that the events set out in this report emphasise how important it is that the Department continues to improve its approach to identifying and tackling fraud and error. In particular, it should use data and intelligence to investigate the root causes and take prompt action, on both underpayments and overpayments.

The facts of this case are that tens of thousands of people, most of whom have severely limiting disabilities and illnesses, have been underpaid by thousands of pounds each, while the Department for several years failed to get a proper grip on the problem. The Department has now committed to fixing this error by April 2019, but not everyone will be repaid all the money they have missed out on.”


Amyas Morse, head of the National Audit Office


Publication details

Press release

View press release (21 Mar 2018)

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