Leicester City Council has written off almost £3 million of overpaid benefits after admitting it is unlikely to be able to recover the debts from low-income households across the city.
A Leicester Mercury report explained that most of the debt is due to claimant error – but probably not deliberate fraud.
Instead, in most cases, the claimant’s circumstances changed in a way that should have meant their benefits were reduced, but they failed to inform the council of this due to an honest mistake.
Alison Greenhill, finance director at the city council, told the newspaper the figure is typical for a city council of Leicester’s size, and is a relatively small proportion of the total £135 million housing benefits bill each year.
Speaking to the council’s overview scrutiny committee, she also explained why it is difficult to reclaim overpaid housing benefits.
“It’s a very difficult one,” she said. “It is the most difficult one to collect because, when we are aware of an overpayment, the benefits recipients are on low income.
“We can’t go in and say to them, ‘We have given you £300 you shouldn’t have had so we are not going to pay your housing benefits for the next three weeks.’ We can’t do that.”
Nearly £10 million of overpaid housing benefits remains outstanding and, although it is not likely to be repaid in full, the council has made arrangements to recover the overpayments where possible.
This includes measures such as attachments to earnings, so those claimants who are now earning a sufficient amount can repay some of their debt without pushing them into poverty.