The Department of Work and Pensions (DWP) has rejected calls from MPs to introduce a target to reduce benefits underpayments to less than 0.5% of expenditure, despite recent figures showing that underpayments have increased to record levels.
Recent figures from the National Audit Office (NAO) reveal that £1.8bn in social security benefits were underpaid last year, up from £1.5bn or 0.9% in 2014-15, which the Commons Work and Pensions Committee says “can have an enormous effect on individuals and can be a false economy as they transfer the burden to other services”.
The DWP already has a target to reduce overpayments, but remain reluctant to introduce a similar target to address the scandal of vulnerable people being underpaid benefits.
However, the cross-party committee notes: “Real time earnings information in Universal Credit is expected to improve the accuracy of benefit payments and should result in a reduction in underpayments over the next few years”.
Responding to the committee’s recommendation, the DWP said: “The Department publishes comprehensive data on underpayments as part of our bi-annual national fraud and error in the benefit system statistics. 2014/15 final estimates showed that underpayments had remained stable at 0.9% of expenditure, which equates to £1.5bn in monetary value.
“The Department previously rejected a recommendation from the Public Accounts Committee to set a target for underpayments.
“This is because the Department’s fraud and error measures are designed to ensure payments are correct and as such impact both over and underpayments alike. Therefore we do not believe a target for underpayments is necessary.
“The Department understands the importance of paying the right money to each of its customers and will continue to tackle the causes of underpayments, as part of the wider approach to ensure claimants are paid the amount to which they are entitled.
Adding: “Claimant error is the biggest cause of underpayments (approximately two thirds, equating to £1bn). We are currently working up a number of measures that will help strengthen claimant responsibility. This will include clear signposting on how claimants can report changes along with a commitment that we will promptly update any claim where someone has been in touch. We will continue to review the letters we send customers as part of this work.
“Claimants have a responsibility to report their circumstances correctly. Where underpayments are identified, as a result of official error the Department will pay arrears in full at the earliest opportunity. Underpayments resulting from the claimant’s failure to notify the Department of a change of circumstance will be paid dependant on the circumstances.
“The Department makes information on benefit entitlement available in many locations, including doctors’ surgeries, welfare rights premises and Jobcentre Plus offices. This helps ensure that people are aware of their entitlement to benefits and how to claim.”
Frank Field MP, Chair of the Committee said: “We note that the DWP took six months to respond to this report, the central point of which was about delivering the correct benefits on time, and the hardship that is caused by delays.
“This response is very timely in one sense though, in that the NAO has just reported that total underpayments have increased to their highest level to date.
“The DWP has said it considers setting a target for reducing underpayments unnecessary despite our recommendation, and same recommendation by the Public Accounts Committee. That low income people and families struggling to make ends meet were underpaid £1.8 billion in benefits last year strongly suggests otherwise.”
“The Auditor General has also refused to sign off the Department’s accounts for the 24th year running, at least partly due to unacceptably high levels of benefits error.”
DWP ministers have also rejected calls to publish data on Employment and Support Allowance and Work Capability Assessment clearance times, as well as statistics on Short-term Benefit Advances, claiming “all claims should be processed owing to the nature of some ESA claims” which “require some claimants to have a Work Capability Assessment before their claim is processed”.
In respect to publishing data on short-term Benefit Advances, the DWP rejected the recommendation on the grounds that:
“The financial needs test for STBAs is based on avoiding serious risk or damage to the health or safety of the claimant or any member of their family. It therefore follows that if someone is in that position, they would mention it to a member of staff when being told they will not receive their benefit immediately.
“People clearly are aware of STBAs, evidenced by the fact that for the year to September 2015, there were 228,039 requests received (around 7 per cent of the total number of claims to IS, JSA or ESA for the same period).”