The government’s “wholly inept” handling of benefits led to 70,000 vulnerable people losing out on payments – some by as much as £20,000.

In a damning report published on Wednesday, MPs on Parliament’s Public Accounts Committee accused the Department for Work and Pensions (DWP) of underpaying tens of thousands of Employment and Support (ESA) claimants by an average of £5,000.

More than 20,000 of those deemed “most in need” are owed around £11,500, the report said, while others have lost out on as much as £20,000.

“Thousands of people have not received money essential for living costs because of government’s blinkered and wholly inept handling of ESA,” committee chair Meg Hillier said.

“The department simply didn’t listen to what claimants, experts, support organisations and its own staff were saying.

“Indifference has no place in the delivery of vital public services,” the Labour MP added. “It must be rooted out wherever it is found.”

According to MPs, not only were the DWP’s plans for transferring benefits claimants to ESA – a new form of payment – “fundamentally flawed and implemented without basic checks”, but the department took six years to properly address underpayments.

Now, while claimants are receiving arrears from the department, this only covers some of the benefit they missed out on and does not include compensation for the loss of related benefits such as NHS prescriptions, dentist appointments and free school meals.

Hillier said the department, led by Esther McVey, must now explain the actions it is taking to improve its “management culture” and its ability to collect and act on information.

The committee has also called on the DWP to set new targets to reduce underpayments, with claimants estimated to miss out on £1.7bn in payments each year.

“Half-hearted Whitehall targets offer no comfort to people struggling to make ends meet because of government mistakes,” Hillier added.

A spokesperson for the DWP said that the department has recruited 400 extra staff to deal with underpayments and had already paid back more than £40m. 

“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,” they said.  

“We have continued to provide regular updates to both PAC and the House in regards to the progress of these repayments, and will continue to do so.”