Source · Select Committees · Public Accounts Committee
Recommendation 7
7
The people that are being overpaid and underpaid are amongst those least likely in society...
Conclusion
The people that are being overpaid and underpaid are amongst those least likely in society to be able to pay the money back or absorb an underpayment. The nature of means tested benefits means people entitled to receive the benefits are already those in society with the lowest incomes and savings. Even within this group, those with the least are affected the most by having to repay debts: for instance, Universal Credit claimants with the lowest incomes face larger deductions to repay debts (including advances) applied to their first Universal Credit payment. These deductions can be substantial and are more likely to be so for low income claimants; 45% of Universal Credit claimants on low incomes have 20% or more of 8 Department for Work and Pensions Accounts 2019–20 their personal allowance deducted in the first assessment period, compared to 27% across all claims. Recommendations: The Department should do more to understand the impact that both overpayments and underpayments have on claimants and ensure that vulnerable claimants are treated with care when dealing with error on the claim. As the Department investigates the impact of its COVID-19 response, it should consider systemic causes of underpayment and act quickly to assess and address these issues. We would like to hear from the department how it intends to do this. Department for Work and Pensions Accounts 2019–20 9 1 Background and the Department’s response to COVID-19
Government Response
Not Addressed
HM Government
Not Addressed
The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 7.2 The department agrees that it needs to recover money efficiently without disadvantaging customers. As part of the response to the COVID-19 pandemic, debt recovery was paused for three months from April 20 20. Recovery recommenced from July 2020 but the department continues to apply a flexible approach. 7.3 All customers or their representatives can contact Debt Management if they are experiencing financial hardship in order to request a reduction in their rate of repayment or a temporary suspension of repayment, depending on their financial circumstances. The department’s analysts are currently looking at how the department can use financial data to help identify vulnerable customers at source so that deductions can be tailored, and collection strategies refined. 7.4 The department remains committed to delivering Breathing Space. This Treasury-led policy, due to take effect in 2021, will allow people with problem debt to obtain protection from creditor action and time to access debt advice, enabling them to arrange a suitable solution to their debts. 7.5 The Cabinet Office recently conducted a public call for evidence on the issue of ‘Fairness in debt management’. The department will be working with government colleagues in order to consider the key findings. 7.6 A key priority for our work is to get benefit payments correct at the outset. Part of this is about helping claimants to report their circumstances correctly. The increased use of data will help the department check entitlement and correct any over or underpayment at the earliest opportunity. Verify Earnings and Pensions alerts are very much part of this approach. 7.7 At a strategic level, the department will continue to analyse the root causes of fraud and error so that future initiatives can target the causes of underpayments. Where underpayments are identified as a result of official error, the department will pay arrears in full at the earliest opportunity. 7.8 The department will write to the Committee with an update on its progress in Spring 2021.