DWP warned on benefit debts

Benefit overpayments outstrip efforts to recover money from claimants, auditors have found.

Friday's report from the National Audit Office highlighted the DWP's struggle to administer the benefits system.

The department has increased recoveries of benefit overpayments from £180m in 2005/06 to £272m in 2007/08 and an expected £279m for 2008/09.

But recoveries are not keeping pace with the rate of increase in identified overpayments.

In 2007/08, benefit payments totalled £106bn, while some 1.3 million overpayments cost taxpayers £558m.

That exceeded the recovery of £272m, meaning that the total debt increased by seven per cent from £1.67bn to £1.8bn.

Conservative MP Edward Leigh, chairman of the Commons public accounts committee, warned of a "debt mountain of benefits payments which have been overpaid to claimants".

"This is partly down to more efficient identification of debt by the department, but its recovery of this debt is not keeping pace with overpayments, which reached £558m in 2007/08," he added.

"The total debt owed by benefits recipients to the department has risen to £1.8bn and it won’t stop there.

"In these tough economic times surely the government should be helping to prevent people on benefits getting into debt, rather than having to put so much effort into recouping it from claimants once it has been overpaid?"

The NAO said the DWP recovers about £3 for every £1 spent on debt recovery, though recoveries in 2007/08 represented only 15 per cent of the identified debt outstanding by the end of the year.

Tim Burr, head of the spending watchdog, said: More benefit overpayments are being identified and referred for recovery action.

"The amount of cash recovered is increasing, but so is the amount tied up in debt, as 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."

Among its suggestions for helping people stay out of debt, the NAO recommended that the department experiment with customer contact methods such as texting to encourage prompt notification of changes in circumstances which affect benefit entitlements.