Source · Select Committees · Public Accounts Committee
Recommendation 29
29
We are concerned about the risk associated with trying to reclaim an overpayment and the...
Conclusion
We are concerned about the risk associated with trying to reclaim an overpayment and the time it takes to recover an overpayment. The Department told us that it has “very good and wide-ranging powers in terms of debt recovery” and that “there are cases where things are written off, but they are exceptional cases”.57 However, around £290 million of non-recoverable benefit overpayments were written-off in 2019–20, with an additional £7 million relating to customer fraud also written-off.58 Although there is a possibility (not certainty) to recover from State Pension, this could be years or decades away.59 The Department’s accounts show that it anticipates that it will not be able to recover a significant portion (44%) of its existing benefit overpayments and Tax Credits debt, recognising a £1.9 billion impairment in its accounts. It reported that ‘around £1.0 billion in benefit debt (this is debt accrued over time) was recovered by the Department and Local Authorities in 2019–20’.60 Interacting with vulnerable claimants
Government Response
Not Addressed
HM Government
Not Addressed
The government agrees with the Committee’s recommendation. Target implementation date: July 2021 6.2 The department can recover debt in various ways, including directly from benefits, from earnings via a Direct Earnings Attachments, or ultimately, from a debtor’s estate. 6.3 Overall deductions policy is complex. Recovery is increasingly made via Universal Credit payments. The purpose of the overall deductions policy in Universal Credit is to both safeguard the welfare of claimants who have incurred debt and to provide a cost effective and efficient mechanism to recover outstanding overpayments. 6.4 Regulations protect claimants from excessive deductions. From October 2019, the overall maximum level of deductions that can be taken from Universal Credit was reduced from 40% to 30% of the Standard Allowance. This will decrease to 25% with effect from October 2021. Equally, through the priority order for deductions, the department seeks to protect vulnerable claimants by providing a repayment method for arrears of essential services. This means that the debt rate can only be calculated once other deductions have been taken into account. 6.5 The department is improving operational efficiency via, for example, Repay My Debt, which will enable customers to pay their debt online and increased automation of processes. The department is also developing data analytics to facilitate a more proactive approach to managing financial hardship. 6.6 The department will look to provide additional information in its annual report and accounts to show the different recovery options, the sums attributable to each method and outstanding debt stock.