By Vivienne Russell
2 December 2010
The Social Fund has had its accounts qualified for the seventh year running because of payment errors.
The fund administers emergency loan and grant payments to people on low incomes. But the National Audit Office today said it had identified ‘material levels of error’ in the discretionary payments it awards. These include crisis loans, budgeting loans and funeral expense payments.
The NAO’s best estimate for the total level of overpayment in 2009/10 was £106.4m, approximately 2.6% of total payments. This is up from £83.5m in 2008/09, which represented 2.2% of payments.
For the first time, the auditor general also qualified his opinion on Sure Start maternity grants, also administered by the Social Fund, because of the level of error identified. Auditors estimated that 8.5% of payments, approximately £11.7m, had been made in error.
The NAO was also concerned about missing case papers and missing or incomplete loan agreements. This problem was compounded by 229,000 files which were accidentally destroyed by Jobcentre Plus in a paper reduction exercise last year.
NAO head Amyas Morse said: ‘The Social Fund provides financial assistance to some of the most vulnerable in society and, of course, judgements associated with making discretionary awards are to some degree subjective. However, the material level of error in these payments has led me to qualify my opinion.
‘I have identified a number of new challenges, as well as the existing issues, which the department must address in the coming year. I will continue to monitor progress made to correct these problems.’
The Department for Work and Pensions said many of the issues identified by the NAO would be addressed by the localisation of the Social Fund. ‘This is going back to local authorities who know best what works in their communities,’ a spokeswoman said.
