Benefit Claimants Will Not Have To Return £1 Billion Over-Paid

(Daily Mail) – BENEFIT CLAIMANTS have today been handed the right to keep one billion pounds a year in wrongly-paid handouts.

The Appeal Court ruled that Whitehall has no right to try to force them to give back benefits which have been wrongly paid because of bureaucratic mistakes.

The decision, in a key test case, affects payments made by the Department of Work and Pensions.

They include many of the benefits that cost the taxpayer the most, including Income Support, Incapacity Benefit, Housing Benefit, Pension Credit and the state pension.

Auditors say errors by clerks and managers inside DWP offices were responsible for £900 million in benefit overpayments last year.

The figure is certain to have gone up this year as the recession has pushed the total of DWP benefit payments up by well over 10% — to almost £150 billion.

Today’s ruling came after a two-year legal battle in which a poverty pressure group challenged attempts by the DWP to claw back money overpaid to claimants.

Under social security law, officials can demand repayment of benefits wrongly paid because people mistakenly misrepresent their circumstances or innocently fail to disclose important information that would reduce their benefit entitlement.

An example would be someone who honestly neglects to disclose that they have begun living with someone and are no longer living alone.

Those who deliberately lie on benefit claim forms to get more money can be prosecuted for fraud.

But the 1992 Social Services Administration Act does not give the DWP the right to demand the return of money wrongly paid because of blunders by its own staff.

Until 2006, the DWP sent out letters to those who had been overpaid through official mistakes, which invited them to discuss how they might pay the money back.

But in 2006 and 2007, the department sent out a new letter to 65,000 overpaid claimants.

It claimed a legal right to take back money paid out due to official mistakes, and threatened to sue in the county courts those claimants who refused to co-operate.

Specimen cases put before the court included overpayments totalling £2,055 in one case and £796 in another.

Appeal Judge Lord Justice Sedley yesterday backed the protests of the Child Poverty Action Group, which said the DWP was unfairly pursuing claimants who had been overpaid through no fault of their own.

He said: ‘The covering letters seek, creditably, not to threaten and not to alarm unduly.’

But he added that they ‘can be devastating to a person already living in or close to penury.’

His decision overturned the ruling of a High Court judge earlier this year who said the Government was entitled to use the courts to ask for its money back.

The Appeal Court judgement said the complex machinery of social security law should be enough to deal with the problem of overpayments and that it was wrong to threaten claimants with the civil courts as well.

Child Poverty Action Group lawyer Graham Tegg said: ‘That amounted to double jeopardy. The DWP was saying, “heads I win, tails you lose.”

‘We brought this case because we know that letters sent to vulnerable claimants threatening court action if they do not repay have caused considerable distress.

‘We are delighted with the ruling that the DWP cannot recover these overpayments through the courts.’

Estimates of payments wrongly made by the DWP were published by the Whitehall spending watchdog, the National Audit Office, in July. It said that DWP benefit spending lost £900 million through fraud, £900 million through mistakes by claimants, and £900 million through errors on the part of officials.

The Appeal Court blow to the Department of Work and Pensions follows the scandal over overpayment of tax credits, which threw Gordon Brown’s flagship new benefits system into disrepute.

Around £6 billion in tax credits have been overpaid since 2003 and there has been a longstanding row over the demands by Revenue and Customs, the department responsible for tax credits, to get its money back.

The Appeal Court case, however, only applies to benefits paid out by the DWP.

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One Response

  1. Presumably some MPs will be encouraged by this ruling.

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