The situation is revealed today after an 18-month study by the Audit Commission which says that two out of three local authorities fail to administer benefit claims efficiently.
Andrew Foster, controller of the independent watchdog, said yesterday: 'People know we are on to something extremely worrying. The people claiming this money are some of the most poor and underprivileged in society.'
Mr Foster said that up to 25 per cent of local authorities were significantly under-performing 'and at the bottom end we found sacks of mail left unopened for a year'. Only one-third of councils administer benefits properly, efficiently and effectively, the report says.
Housing benefit is a financial lifeline for many people. A majority of people living in rented accommodation get housing benefit. Most of these are council tenants but nearly 1 million private tenants also receive benefits. In addition, there are about 6 million community charge benefit claims at any one moment. It all adds up to about pounds 6bn of public money.
The report also criticises central government. Since 1982, there have been eight major benefits changes, with legislation repeatedly altered - introducing even more complexity into the system.
The Government contributes 95 per cent of the cost of benefits paid, but only one-third of the cost of administration. This also leads to tensions in the system.
Remote control: the National Administration of Housing Benefit: HMSO; pounds 8.50