Tens of thousands of sick or disabled people will receive back dated payments from the Department for Work and Pensions (DWP) due to a large-scale mistake. 

The repayments are set to total more than £1.5bn and people who were affected by the error will receive an average of £5,000 each. 

The problem first became apparent in November last year, but it’s only now that the true scale of the blunder has been revealed. 

The underpayment of claimants happened when claimants of disability and incapacity benefits were moved onto Employment and Support Allowance (ESA).

In a newly published document, the DWP said that between January 2011 and October 2014 some people receiving Incapacity Benefit and Severe Disablement Allowance had their claims converted to contributory ESA. 

“However, the possibility of whether they may also have been entitled to income-related ESA was not considered for all cases. This means they may have missed out on the payment of premiums.”

These include enhanced disability, severe disability, carer, and pensioner premiums, which are dependent on eligibility. 

“We estimate 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 total cost of the mistake will now be £1.67billion by 2025, once ongoing higher payments are included.

It comes during intense pressure on the DWP over its Universal Credit roll-out. A delay in next year’s rollout will cost the Government £10m, according to reports. 

In a statement, a spokeswoman said: “Anyone affected by this historic error will receive all of the money they are entitled to. That is why we have created a dedicated team of over 400 staff to examine cases, and have paid back around £120m so far.

“We have worked with charities and other disability organisations to make sure that we are providing the right support to all affected claimants and are hiring and allocating more staff to do that.”