1 Moving more swiftly to tackle overpayment
and the rising trend in benefit debt
1. As at 31 March 2009, the Department for Work
and Pensions (the Department) was owed £1.85 billion from
its customers as a result of the overpayment of benefits, an increase
of 11% on the £1.67 billion that had been owed two years
previously.[2] The Department
has made some good progress and the proportion of recoveries to
the total amount owed has risen from 13.3% in 2005-06 to 15.3%
in 2007-08 (Figure 1). However, the total 'debt stock'
has risen substantially over the last four or five years. The
Department attributed this to an improvement in performance in
the volume of referrals of benefit overpayments for recovery action.
The number of referrals being made by Jobcentre Plus and the Pension,
Disability and Carers Service to the central debt recovery team
have increased by 60% since 2005-06, and the Department considered
it is set to achieve its target of referring 95% of overpayments
for recovery action.[3]
Figure
1: Total Value of Benefit Overpayment Debt 2003-04 to 2007-08
Source: C&AG's Report, Figure 10
2. Seventy per cent of benefit debt arose from
the payment of Income Support.[4]
This benefit is largely means-tested and has a high volume of
large value overpayments.[5]
The Department's biggest challenge is reducing debt from Income
Support to a more acceptable level.[6]
While the Department undertakes risk-based checks on Income Support
cases, these reviews usually only take place once a year, and
only the risk that triggered the review is examined, so the case
is not subject to a full case check. Given that the total value
of Income Support debt is over £1.2 billion,[7]
this limited level of checking is inadequate.[8]
3. Some £900 million (46% of the debt) was
owed by debtors with multiple debts[9]
and the Department had 100,000 customers with four or more debts.
Multiple debts account for 35% of all debtors.[10]
There were 44,000 people with six to 10 debts and 12,000 with
11 to 20 debts. Multiple debts reduce the Department's capacity
to recover debt quickly, as only one debt can be recovered at
a time and there are statutory limits on what it can recover on
affordability grounds.[11]
Recovery of benefit debt is generally limited to a maximum of
£9.75 per week for those still on benefit.[12]
The Department is introducing new initiatives such as encouraging
debtors to pay off debts in lump sums.[13]
4. The Department has concentrated much more
than it has done in the past on large debtors. A third of the
debt was owed by those owing more than £10,000, despite the
fact that they made up less than 3% of all debtors (Figure
2).[14] Conversely,
only about 10% of the debt, £182 million, was owed by those
owing less than £500, though they made up in quantity 61%
of all the debtors.[15]
Prompted by the C&AG's report, the Department has set up a
Large Debtors unit specifically to focus on whether it can do
more to recover from the relatively small number of people who
owe it the most money.[16]
Figure
2: Average Debt Balances as at 31 March 2008
Debt Value
£
|
Total Debt
£ (millions)
| Total Number of Debtors
(thousands)
|
Average Balance
£
| Number of Weeks to recover at £9 per week
|
| <65 |
8.0 | 229.9
| 35 |
4 |
| 65-100 |
11.1 | 134.6
| 82 |
9 |
| 101-250
| 52.8 |
314.5 | 168
| 19 |
| 251-500
| 110.1 |
305.0 | 361
| 40 |
| 501-1,000
| 180.6 |
255.1 | 708
| 79 |
| 1,001-5,000
| 611.8 |
286.2 | 2,138
| 238 |
| 5,001-10,000
| 340.6 |
49.1 | 6,937
| 771 |
| 10,001-20,000
| 309.2 |
22.6 | 13,681
| 1,520 |
| Over 20,000
| 263.0 |
8.6 | 30,581
| 3,398 |
Source: NAO analysis of departmental data—includes
Housing Benefit and Social Fund
2 Q 2 Back
3
Q 35 Back
4
Q 53 Back
5
C&AG's Report, para 2.2 Back
6
Q 54 Back
7
C&AG's Report, Figure 5 Back
8
Q 23 Back
9
C&AG's Report, Figure 9 Back
10
Q 18 Back
11
Q 7 Back
12
Q 55 Back
13
Q 28 Back
14
Q 2 Back
15
C&AG's Report, para 2.3 Back
16
Q 2 Back
|
