THE government will have to pay out between £2,500 and £20,000 to around 70,000 people after an investigation found benefits were miscalculated.

An investigation by the National Audit Office has found, since 2011, the Department for Work and Pensions has underpaid around 70,000 people who transferred to Employment and Support Allowance (ESA) from other benefits.

The error related to people who may have been entitled to income-related ESA but were instead only awarded contribution-based ESA, with the average underpayment likely to be around £5,000, with “a small number” owed as much as £20,000.

As a result the department will have to pay between £570 million and £830 million more in ESA than it had previously calculated by the end of the 2022-2023 financial year. It has said it will clear the arrears by April next year.

A report by the National Audit office said it took “several years” for the department to realise “the significance of the error”, having first identified issues in 2013 and failing to address further problems

Head of the National Audit Office Amyas Morse said: “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.”

Chairwoman of Parliament’s Committee of Public Accounts Meg Hillier said: “The government’s shoddy administration of ESA has resulted in vulnerable people being deprived of thousands of pounds they were legally entitled to.

“The National Audit Office’s report shows the Department of Work and Pensions was unacceptably slow to act on early signs something was wrong.

“The committee said in 2015 that the department needed to do far more to tackle the neglected issue of underpayments. This sorry episode demonstrates why it is so important.”

Arrears will only be paid as far back as October 21, 2014, following a legal ruling. The department estimated there could be up to £150 million of underpayments accrued before this date, which it is unable to pay.