In its latest value-for-money profile, the commission examined the costs the council of paying out Housing Benefit and the recently localised Council Tax Benefit.
This found that, in 2012/13, local authorities spent £827m administering the benefits on behalf of the Department for Work and Pensions. The DWP paid £466m towards this cost, leaving councils to fund the remaining £361m themselves.
Councils received a subsidy of just under £25bn for the benefit payments bill, but had to fund a further £468m from other sources to pay for the support schemes.
‘Combined with the money councils spent on benefit administration, this meant councils directly funded £829m of the money used to deliver the government’s welfare programmes,’ the Audit Commission stated.
‘This is a small decrease from the £849m directly funded by councils in 2011/12.’
Nearly three out of five councils (58%) recorded spending up to twice as much on administration than was provided by the DWP. This subsidy has been cut by central government, and the amount paid to councils can also be reduced if local authorities fail to properly claim it.
Audit Commission chair Jeremy Newman said: ‘Councils have reduced their administrative costs, even though the number of benefit recipients has rise. But as funding for delivering this service has fallen, councils may need to make further cost reductions.
‘Our analysis shows that £125m could have been saved in 2012/13 if higher spending councils had reduce their spending to the average of councils of their type with a similar caseload.’
He urged councils to ensure that processed benefit claims promptly and accurately because delays and mistakes could result in overpayments and errors.
The commission noted that auditors qualified 78% of councils’ subsidy claims in 2011/12 because of processing errors or non-compliance with DWP requirements. While figures for 2012/13 are still being verified, early indications suggest a similar level of qualification will apply, the watchdog said.
