Disabled offered compensation for delayed benefits: Damning report by all-party committee prompts swift action swift action. Rosie Waterhouse reports

IMPROVED compensation for disabled people who suffer excessive delays in receiving benefits has been announced by the Government, in a swift response to a damning report about the Benefits Agency by an all-party committee of MPs.

Yesterday's announcement by Peter Lilley, Secretary of State for Social Security, was dismissed by charities as a damage-limitation exercise that demonstrated the Government's embarrassment after one of the most critical reports of a government agency.

After an investigation into the operation of the disability living allowance and disability working allowance, introduced in April 1992, the social security select committee report, published yesterday, said the Benefits Agency was in 'complete administrative disarray', with staff swamped by applications after a pounds 3.7m advertising campaign.

The report particularly criticised delivery of the disability living allowance, saying it had been 'a nightmare' for many people and that in certain cases delays in payment were 'tantamount to maladministration'.

The report also revealed that some terminally ill people, including Aids sufferers, for whom claims were supposed to be processed quickly, had died before their claim was resolved. Mencap, the Royal Society for Mentally Handicapped Children and Adults, told the committee that claims from terminally ill people were being ignored.

Some applications have taken a year to process and a large number of disabled people and their families suffered unnecessary hardship, lost out on help to which they were entitled, and were deprived of other benefits.

More claims were received in three months than were expected in the first six months. By June 1992, there was a backlog of 400,000 claims. The report recommends that the additional staff complement at the agency is not reduced ahead of a full review of staffing requirements for the administration of the allowance. It also recommends that both the department and the agency ensures all claims involving terminal illness are dealt with inside 21 days.

Mr Lilley announced that compensation could be claimed from April 1993 after a delay of six months, instead of 12 months. The delay must be caused by official error and the arrears total more than pounds 50. People whose claims were delayed by more than eight months last year will receive pounds 10 a month.

Nicholas Scott, the minister for social security and disabled people, said: '. . . the delays . . . stemmed from the success of the benefit . . . we have to look and see what lessons can be learned from careful study of the report by the select committee.'

The National Association of Citizens Advice Bureaux said that for those who lost money last year, the compensation was 'a completely inadequate response which fails to address the causes of the delays'. A spokeswoman added: 'The CAB wants a compensation scheme which reflects the true extent of the hardship caused, together with government action to make resources available so that reliable mechanisms are put in place to ensure delays are not allowed to continue and the recommendations of the (select) committee are implemented.'