£1.8 billion Still Owed to DWP

According to a report by the National Audit Office, the Department for Work and Pensions is continuing to make a mess over benefit overpayments.

While the DWP is still on track to meet its targets, the debt recovery of overpayments from £180m in ’05-’06 to £272m in ’07-’08, overpayments in ’07-’08 were £558m which means an overall debt increase of 7% from £1.67bn to £1.8bn.

The report found that while £3 is recovered  for every £1 spent on debt recovery, the DWP is restricted in what it can take from claimants under Social Security legislation and it also has major problem in tracing people who are no longer receiving benefits.

The National Audit Office also said that the DWP needed to make more efforts in encouraging people to inform them of a change of circumstances, utilising new technologies, such as texting as a means of gathering such information. the NAO also recommended that Income and Expenditure reports be analysed when negotiating payment plans for repayment, as well as better monitoring of debt collection practices.

NAO head Tim Burr said: “The department has improved the effectiveness of its debt management operations. The amount of cash recovered is increasing, but so is the amount tied up in debt, [because] recoveries are not keeping pace with the growth in identified overpayments. Helping more customers stay out of debt will need to be an important part of the answer.”

However, Steve Webb, Lib Dem shadow Work and Pensions Secretary was less enthusiastic, citing the Government’s record on benefit overpayments as “appalling,” particularly as so much is down to official error.

“The benefits system is crucial to help people in a recession. It cannot afford to lose money because of poor administration,” Webb said. “The benefits system needs to be much simpler, not least so officials can understand it properly.”