£1.85bn owed by benefits claimants

Benefit claimants owe almost two billion pounds in overpaid money, report says
12 April 2012

Benefit claimants owe an "immense" £1.85 billion in overpaid money but the Department for Work and Pensions is recovering less than £300 million a year, according to a parliamentary report.

The cross-party Commons Public Accounts Committee said the DWP needs to "significantly improve" the way it pays benefits and step up efforts to recover overpayments.

Among the 1.6 million debtors are more than 30,000 people who owe more than £10,000 and more than 100,000 people who have four or more different debts. About 8,600 of these owe sums topping £20,000 and their average £30,581 debt would take more than 60 years to repay at the maximum £9.75 a week which can be recouped from people still on benefits.

The report said the DWP has been successful in improving debt recovery procedures, increasing the amount recouped from £180 million in 2005-06 to £281 million in 2008-09. But the size of the total debt was continuing to rise - reaching £1.85 billion by March 31, 2009, an increase of 11% on two years before - because overpayments were still larger than repayments.

The committee warned the situation is likely to get worse as the recession makes people less able to repay money owed.

Income Support claims accounted for more than 70% of all debts. And £9.3 million of overpayments of less than £65 were written off during 2007-08 because they were considered too small to justify the cost of recovering them.

Committee chairman Edward Leigh said: "An immense amount of money, currently £1.85 billion, is owed to the Department for Work and Pensions by claimants who have been paid too much benefit.

"The size of the debt is increasing, moreover, as the amount of overpaid benefit being clawed back is outstripped by the amount referred for recovery action. The current economic malaise is only likely to make worse the rate at which debt can be recovered.

"If the department is to deal with this rising trend in benefit debt, then it has to improve the way it approaches the prevention of debt. It should also review its procedures for validating claims for Income Support, a benefit which is particularly susceptible to big overpayments."

Shadow work and pensions secretary Theresa May said: "Labour need to get a grip. It is unforgivable that while taxpayers are tightening their belts, the Government is racking up more debt through poor administration."

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in