November 08, 2006

Welfare payments still not under control

So the National Audit Office has qualified the accounts of the Department of Work and Pensions (DWP) for the seventeenth year.

The amount lost from payments in all benefits in 2005-06 because of fraud and error is approximately £2.7 billion, representing 2.2% of the DWP’s total expenditure in 2005-06 of £124.2 billion.
Regarding fraud, the DWP estimates there was a £200 million reduction in losses in relation to Income Support, Jobseekers Allowance and Housing Benefit. In respect of error, initiatives are underway to target the most significant causes of officials’ mistakes regarding Income Support, Jobseekers allowance, Pension Credit and Disability Living Allowance, which are estimated to account for some 60 per cent of the total amount of loss caused by official error in these benefits.

The DWP is also working to strengthen controls on customer overpayments and to improve recoveries of the losses. New systems rolled out in 2005-06 will help the Department track and thereby recover identified customer overpayment debts. Currently, a significant number of potential overpayments are delayed in their recovery by a combination of system backlogs and poor debt referral processes. From 2007-08, chief executives from each departmental Agency will be responsible for ensuring timely referral of overpayments debtors to a centralised Debt Management function for action.
Worryingly, the NAO adds that "when compared to the government departments in other countries tackling this problem, the DWP is at the forefront". Which leaves one wondering how big the leakage is across the developed world.

Do we just have to shrug and accept waste on this scale and cases like the Sheppards? Hard cases may make bad law, but perhaps they also suggest that the law is wrong. As the Taxpayers' Alliance writes
For all those who work hard, pay their taxes, and struggle to budget each month, saving for Christmas is a real hardship – which often means plenty of small sacrifices along the way. And that’s without the extra disaster that has befallen many who had spent hundreds of pounds on presents with the Farepak mail order firm, which went bust without warning last month. What message does it send out, that without working, and with enough commitment in the bedroom, you can live quite comfortably on the benefits paid for by everyone else – including having plenty to go round at Christmas?
They rightly say that "Our welfare system needs urgent reform, so it encourages work, rather than rewarding those who chose not to. And we need to decide whether we want a system that pays people so well for having children, when it is after all, their own decision."

Being kind to all welfare applicants is a gentle, easy option. But what about those who work hard and pay taxes on low incomes? - a point Boris Johnson made.

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