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| Housing benefit overpayments are up, but why? | Housing benefit overpayments are up, but why? |
| (7 months later) | |
| Statistics released today on housing benefit recoveries and fraud show that £3.4 billion was overpaid in benefits between 2011 and 2012, representing 2.1% of all benefit expenditure. But the reasons for overpayment may come as a surprise - though fraud accounts for £1.2 billion, official error contributes £0.8 billion of overpayments in benefits. Claimant error accounts for the remaining £1.4 billion. | Statistics released today on housing benefit recoveries and fraud show that £3.4 billion was overpaid in benefits between 2011 and 2012, representing 2.1% of all benefit expenditure. But the reasons for overpayment may come as a surprise - though fraud accounts for £1.2 billion, official error contributes £0.8 billion of overpayments in benefits. Claimant error accounts for the remaining £1.4 billion. |
| The housing benefit statistical release, which has been collected by the Department for Work and Pensions (DWP), offers no further explanation of the way that official and claimant error are classified, or how fraud is distinguished from error. The breakdown in causes of benefit overpayment is found in an annex in the release. | The housing benefit statistical release, which has been collected by the Department for Work and Pensions (DWP), offers no further explanation of the way that official and claimant error are classified, or how fraud is distinguished from error. The breakdown in causes of benefit overpayment is found in an annex in the release. |
| Housing benefit overpayment increasing | Housing benefit overpayment increasing |
| On their website, the DWP defines overpayment as any amount which has been paid by way of housing benefit "to which there was no entitlement". The total value of housing benefit which is outstanding is currently £1.2 billion. Since April 2008, this value has increased every quarter suggesting that fraud and error is occurring at a faster rate than the DWP is able to remedy it. | On their website, the DWP defines overpayment as any amount which has been paid by way of housing benefit "to which there was no entitlement". The total value of housing benefit which is outstanding is currently £1.2 billion. Since April 2008, this value has increased every quarter suggesting that fraud and error is occurring at a faster rate than the DWP is able to remedy it. |
| In fact, the amount of housing benefit overpayments recovered each quarter is also on an upward trend, but the values don't match the amounts that are lost each quarter. For example, £198 million was overpaid in benefits between July and September 2012, but only £128 million was recovered in the same period. That means that although overpayments and recoveries are increasing at roughly the same rate, if the value of overpayment and the value recovered continue to differ then the gap between the two might widen. | In fact, the amount of housing benefit overpayments recovered each quarter is also on an upward trend, but the values don't match the amounts that are lost each quarter. For example, £198 million was overpaid in benefits between July and September 2012, but only £128 million was recovered in the same period. That means that although overpayments and recoveries are increasing at roughly the same rate, if the value of overpayment and the value recovered continue to differ then the gap between the two might widen. |
| Almost a quarter of a million cases were referred to DWP investigators in the year ending September 2012, down 6% from the previous year. Of the cases that are referred to them, local authority fraud investigators subsequently close more than half each year. Of these, just a small fraction (less than 7%) are closed with a benefit interest for the DWP. | Almost a quarter of a million cases were referred to DWP investigators in the year ending September 2012, down 6% from the previous year. Of the cases that are referred to them, local authority fraud investigators subsequently close more than half each year. Of these, just a small fraction (less than 7%) are closed with a benefit interest for the DWP. |
| Dealing with overpayment | Dealing with overpayment |
| Statistics have also been released on the amount that is written off each year. From 2011 to 2012, more than £73 million of housing benefit overpayments were written off, 9% more than the previous year. The DWP website explains that there are three types of write-offs; | Statistics have also been released on the amount that is written off each year. From 2011 to 2012, more than £73 million of housing benefit overpayments were written off, 9% more than the previous year. The DWP website explains that there are three types of write-offs; |
| • Non-recoverable - "These overpayments are caused by official error, be it LA or departmental, when the claimant could not reasonably have been expected to realise they were being overpaid. These overpayments cannot be resurrected and recovered at a later date." It's not legally permissible to resurrect these cases at any date, meaning that the £0.8 billion of housing benefit overpaid last year because of 'official error' permanently non-recoverable. • Discretionary write-offs - "when the LA uses its discretion and decides not to recover an overpayment (or any outstanding balance) e.g. because of financial hardship, terminal illness, severe medical conditions or it would be uneconomical to recover". Because each write-off in this category is judged on its own merits, it's difficult to tell whether local authorities use the same standards to reach this decision. • Standard write-offs - "when the claimant cannot be traced or all methods of recovery have been tried and have been unsuccessful". If the claimant is notified that their case has been written off, the case can't be resurrected, even if the claimant is subsequently traced. So the DWP rarely tell claimants when an overpayment case has been written-off. | • Non-recoverable - "These overpayments are caused by official error, be it LA or departmental, when the claimant could not reasonably have been expected to realise they were being overpaid. These overpayments cannot be resurrected and recovered at a later date." It's not legally permissible to resurrect these cases at any date, meaning that the £0.8 billion of housing benefit overpaid last year because of 'official error' permanently non-recoverable. • Discretionary write-offs - "when the LA uses its discretion and decides not to recover an overpayment (or any outstanding balance) e.g. because of financial hardship, terminal illness, severe medical conditions or it would be uneconomical to recover". Because each write-off in this category is judged on its own merits, it's difficult to tell whether local authorities use the same standards to reach this decision. • Standard write-offs - "when the claimant cannot be traced or all methods of recovery have been tried and have been unsuccessful". If the claimant is notified that their case has been written off, the case can't be resurrected, even if the claimant is subsequently traced. So the DWP rarely tell claimants when an overpayment case has been written-off. |
| Other possible responses to overpayment include 'offering' cautions (5% of all referrals in 2012) or administrative penalties (3% of referrals) and prosecuting (3%). Only a fraction of these conclude in the interest of the DWP. For example, 246,300 cases of housing benefit overpayment were referred to the DWP in the year ending September 2012. In the same period, there were 2,395 prosecutions resulting in guilty outcomes and 640 cases resulted in an administrative penalty in the DWP's favour. | Other possible responses to overpayment include 'offering' cautions (5% of all referrals in 2012) or administrative penalties (3% of referrals) and prosecuting (3%). Only a fraction of these conclude in the interest of the DWP. For example, 246,300 cases of housing benefit overpayment were referred to the DWP in the year ending September 2012. In the same period, there were 2,395 prosecutions resulting in guilty outcomes and 640 cases resulted in an administrative penalty in the DWP's favour. |
| Meanwhile, the number of fraud investigators has fallen considerably since 2008, from 1,425 full-time employees to 1,155. 84% of these investigators are based in England (where 88% of overpayments occur), 6% are based in Wales (which accounts for 3% of overpayments) and 10% are based in Scotland (8% of overpayments). | Meanwhile, the number of fraud investigators has fallen considerably since 2008, from 1,425 full-time employees to 1,155. 84% of these investigators are based in England (where 88% of overpayments occur), 6% are based in Wales (which accounts for 3% of overpayments) and 10% are based in Scotland (8% of overpayments). |
| Caveats | Caveats |
| The methodology used to collect this data has its limitations. For one thing, it's reliant on the provision of information from local authorities who don't all send their data at the same time and aren't always able to answer all of the 15 questions asked by the DWP. This is partly because some local authorities have a far higher number of benefits claimants than others, making it more difficult for them to process these numbers on a quarterly basis. That means that where authorities didn't respond, estimates were used. | The methodology used to collect this data has its limitations. For one thing, it's reliant on the provision of information from local authorities who don't all send their data at the same time and aren't always able to answer all of the 15 questions asked by the DWP. This is partly because some local authorities have a far higher number of benefits claimants than others, making it more difficult for them to process these numbers on a quarterly basis. That means that where authorities didn't respond, estimates were used. |
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| SOURCE: Department for Work and Pensions | SOURCE: Department for Work and Pensions |
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