Bailiffs will enforce curb on benefits

Anger at Lilley plan to use private debt collectors
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Westminster Correspondent

Government ministers are planning to hire private firms of bailiffs to enforce a crackdown on abuses of the social security benefits system.

Internal government documents leaked to the Independent reveal that Peter Lilley, the Secretary of State for Social Security, is considering employing commercial debt recovery agents to go on to housing estates and demand the return of hundreds of millions of pounds mistakenly paid each year by his officials.

In what will be one of the most politically sensitive contracting- out exercises to date - due to begin next March - the private-sector debt enforcers will be asked to visit claimants and demand the return of the Department of Social Security's money. The bailiffs will be supplied with confidential personal details about claimants and will be expected to collect the money door to door.

Two firms will be selected for a pilot project and asked to deal with 7,500 cases, around 5 per cent of the annual total, from across the country. They will be given access to personal data on the claimants thought to have received too much money.

This will be the first time commercial debt recovery specialists have been used by the Government in this way. The move comes against increasing demands from within the Tory party to clamp down on social security abuses and complaints that not enough was being done to halt massive overpayments by the DSS Benefits Agency.

The National Audit Office, the public finance watchdog, estimates around pounds 540m a year is paid in error by the Agency to receivers of income support alone. The documents supplied to the Independent reveal the pilot exercise is to cover income support, contributory benefits and social fund payments.

So bad has the problem of overpayments by the Benefits Agency become that for the last few years the NAO has refused to give the DSS's accounts a clean bill of health. At present overpayments made through official error are written off while the Agency tries to pursue cases where claimants' finances have changed.

On 12 September John Coyle, the head of the Benefits Agency's debts recovery section, wrote to senior colleagues to say ministers were thinking about market testing their work. However, "ministers have expressed concerns about some of the sensitivities of debt recovery work and have asked for them to be evaluated via a pilot before they decide whether debt recovery is suitable for market testing", wrote Mr Coyle.

In an accompanying management note he wrote: "Ministers have asked for a pilot exercise to assess private sector performance on sensitive issues such as confidentiality, collection methods, standards of conduct and public acceptability." And they will be expected to adopt the same tough methods as if they were working for a private client. The idea, wrote Mr Coyle, is "to test the full range of recovery activities, in particular litigation and door-to-door collection." Part of the exercise will entail ministers studying possible abuses of confidentiality by the private bailiffs. For the pilot to be successful, said the note, it must address "ministerial concerns". In particular Mr Coyle explained the market test must cover the following areas: "Confidentiality - identify instances of misuse, abuse of data; political sensitivity - gauge public perception of private sector involvement; collection methods - assess acceptability to public and Benefits Agency; standards of conduct - assess acceptability and stringency of standards."

Each firm will receive 3,750 cases. They will have from March until November next year to retrieve the cash or else the case must be handed back to Benefits Agency officials. The whole exercise, including the hiring of management consultants to monitor the results according to Mr Coyle's paper is budgeted to cost pounds 548,000.

A spokesman for the CPSA, the civil service union, said this was "the most sensitive so far of the market testing exercises at the Benefits Agency". His union, he said was deeply opposed to the study and the fact that the Government was preferring to first "test the water" with a pilot was proof of ministers' own misgivings.

Chris Smith, Labour's social security spokesman, said he was horrified by the plan to use private bailiffs. "It is obviously necessary for the Benefits Agency to recoup money owing to it. But this is certainly not the way to go about it. There is a serious danger that private debt collecting sharks could be let loose with official authority. Ministers should think again."