05 September 2008
The troubled Social Fund, which provides grants and loans to benefit claimants, has had its accounts qualified for the second year running after auditors identified £85m worth of errors in discretionary payments.
The findings follow a scathing report by the Commons work and pensions select committee last year and further criticism from social fund commissioner Sir Richard Tilt in July.
There was 'a substantial level of error' in discretionary payments covering crisis and budgeting loans and community care grants National Audit Office head Tim Burr reported in the fund's annual accounts, published on August 29.
Burr estimated the error level at £85.3m more than 11% of all discretionary payments in 2007/08. The NAO 'did not find any specific evidence of misrepresentation by customers as a contributing factor' in the error rate, Burr noted, pointing instead to staff mistakes. Missing or inadequate paperwork also contributed to the error rate, he said.
The accounts revealed that the fund does not yet have its own process in place to estimate the monetary value of fraud and errors.
Figures published in the accounts also show that the number of applicants for crisis loans soared in 2007/08, up 44% on the previous year mainly as a result of last year's floods while the number of awards increased by a third and the amount paid out rose by 17%.
But work and pensions minister James Plaskitt was forced to admit that the number of staff handling discretionary Social Fund payments fell by 10% over the year to April. This was in response to parliamentary questions from Jenny Willott, the Liberal Democrat work and pensions spokeswoman.
Willott told Public Finance: 'It is clear that the staff in control of the social fund are poorly trained and therefore making poor decisions, which not only waste taxpayers' money but divert cash from families that are really in crisis.
'The Social Fund is being appallingly managed: while demand for loans is increasing, staff levels are being cut. Staff levels must remain constant until the administration of the fund has been sorted out, and staff need far better training.'
A spokeswoman for the Department for Work and Pensions said: 'DWP and Jobcentre Plus acknowledge the problems identified by the NAO and are already taking steps to improve standards.' The Social Fund was 'very complex' and staff were 'constantly required to quickly weigh up some very difficult personal circumstances and make immediate decisions', she added.
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