Recommendation 28

Evidence suggests that the amounts claimants owe from benefit overpayments, benefit advances and Tax Credits are all likely to increase further in 2020–21. The Department temporarily suspended most debt recovery in March 2020 and reintroduced the recovery of new overpayments in late September.55 With recovery action paused and a surge in new claims at a time when fraud and error controls had been relaxed, it is very likely amounts owed from benefit overpayments will have risen. The amounts due from benefit advances is expected to increase as the Department reports that ‘from 1 March 2020 to 26 May 2020, 1,185,240 advance payments were issued’ (around 971,420, are new claim and benefit transfer advances). Around £1.2 billion of Tax Credits debt was transferred from HM Revenue & Customs to the Department in 2019–20 as claimants moved onto Universal Credit. This will continue as customers with Tax Credit debt either make claims to Universal Credit or are ‘migrated’ from Tax Credits to Universal Credit.56