The Department for Work and Pensions (DWP) is correcting historic underpayments of Employment and Support Allowance (ESA), which arose while reassessing incapacity benefit claims.
ESA was introduced in 2008 for people who have limited capability to work because they are disabled or ill. From March 2011 DWP began reassessing people on incapacity benefits for eligibility for ESA.
The DWP have found some mistaken calculations were made when people were moved from the incapacity benefit and severe disability allowance onto ESA.
DWP said that more than two million claimants were receiving incapacity benefits before reassessment began and now it has reassessed around 1.5m people, it is correcting some of the underpayments found.
The DWP estimates that around 180,000 people could be owed arrears payments, with around 105,000 estimated to be repaid during 2018/19 and 75,000 during 2019/20.
The department estimates it will pay £970m in historic underpayments largely over the financial years 2018/19 and 2019/20.
In addition, it will pay higher awards to active claimants after their claim is corrected. These amount to around £60m in 2018/19, £130m in 2019/20, and then decline over time to £90m in 2024/25 as claimants leave the benefit. However, DWP said actual costs could be higher or lower than these amounts.