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Benefits Agency errors led to 500m pounds in pay-outs

The Benefits Agency last year made a record number of over and underpayments of income support, making overpayments amounting to more than half a billion pounds and underpayments estimated at pounds 77m, writes Nicholas Timmins.

And, despite an extensive computerisation programme at the Department of Social Security, it will be 'years' before a significant improvement is made in the accuracy with which the 'safety net' benefit is paid, Sir John Bourn, the Comptroller and Auditor General, has recorded.

The findings yesterday led Sir John to qualify the agency's accounts for the sixth year since income support was introduced in 1988.

For the first time since then, the actual total of money over and underpaid fell slightly as a percentage of the pounds 16.34bn paid out. But the number of cases in which mistakes were made stood at an all-time high at 16.8 per cent.

Among the 21 offices sampled, the two best performers made mistakes in fewer than 9 per cent of cases. But in six of the 21 offices mistakes were made in at least a quarter of cases. In some cases the agency had failed to take account of all loans, in others it had used incorrect mortgage balances or incorrect interest rates for calculations.

Attempts are made to recover overpayments where a claimant's failure to report changes in circumstances is to blame, Sir John said in his report.

But 'overpayments arising from official mistakes are . . . written off. In cases where underpayments have occurred, the agency will normally pay claimants the arrears due'. Most of the cases were official errors.

Mistakes were also made in paying mortgage interest to 550,000 income support claimants to the tune of pounds 81m in overpayments and pounds 17.4m in underpayments. Overall the DSS underestimated its expenditure by pounds 1bn, and, despite being voted an extra pounds 790m during the year, is having to seek another pounds 141m.

Sir John recorded that the agency 'recognise that there are long-standing problems in administering the income support scheme. They believe therefore that it will require a sustained effort over a period of years before they will be able to achieve a significant and lasting improvement in the accuracy of this benefit'.

Alistair Burt, the junior social security minister, promised action, with every mortgage interest case reviewed, computer improvements, and the introduction of computers at post office counters which should improve forecasting.

The department is also to switch its checks so that more are carried out before payments are made.

Report of the Comptroller and Auditor General, HC 670-IX; HMSO.