Exclusive:SNP benefits agency still has no plan to recover £36m benefits debt year after DWP spat
A Scottish government spokeswoman insisted the £36m in owed benefits had not been written off
Ministers still have no plan to recover £36 million in benefit fraud and error a year on from a spat with the DWP.
The Scotsman told last August how benefits secretary Shirley-Anne Somerville opted to part ways with the UK benefits agency. Previously, the Department for Work and Pensions recovered fraud and overpayment on behalf of Social Security Scotland (SSS).
Labour planned to introduce new powers to take funds from claimants’ bank accounts and suspend driving licences of those who owed money.
However, Ms Somerville said these measures were inconsistent with the ethos of the more “dignified” SSS. The agreement between SSS and the DWP formally ended on March 31.
A Scottish government spokeswoman said the £36m in owed benefits had not been written off and that SSS has “extensive recovery powers” to recoup the missing money. However, it is not clear what these “extensive” powers include.
Currently, under its ethos of dignity and respect, SSS will write to claimants who owe money and ask them to volunteer to pay it back. The agency can then deduct money from the person’s ongoing benefits payments.
However, SSS can only use that mechanism for benefits paid by them while the £36 million currently owed is from benefits paid under the UK legislation. It may also be possible for SSS to take benefits clients to court to recoup money but this is understood to be prohibitively expensive in many cases. SSS has only recently had the provisions in place to be able to recover debt through the sheriff courts.
Its debt management strategy from 2023 lays out that the agency tries, where possible, to make voluntary arrangements to recover debt.
Before it can start claiming the money back, the UK administration will need to transfer the debts to SSS but this has not yet been done.
Flawed information sharing between the two organisations in December 2024 led to nearly 40,000 Scots missing out on the newly devolved winter heating payment.
Scottish Conservative finance and social security spokesman, Craig Hoy MSP said: “This is staggering incompetence from an SNP Government that seems to have forgotten they are dealing with taxpayers’ money.
“Ministers have effectively left tens of millions of pounds sitting on the table because they clearly have no interest in reining in Scotland’s out-of-control benefits bill.
“Taxpayers are being fleeced while this Government dithers, makes excuses and apparently cannot even work out how to recover money from those who have abused the system.”
Scottish Labour Social Security spokesperson Mark Griffin said: “It is astonishing that SNP inaction could cost Scottish taxpayers tens of millions of pounds.
“This is not the fair and functional social security system the SNP promised.
“The SNP must ensure that the funding in our social security system is reaching those who need it – not being lost to fraud.”
The new Public Authorities (Fraud, Debt and Recovery) Bill, sets out powers for the DWP to retrieve owed money directly from a person’s bank account.
If they were without sufficient funds, the DWP could then impose sanctions such as applying to the court for the temporary suspension of their driving licence.
A dispute between Ms Somerville and her Westminster counterpart Andrew Western was outlined in letters acquired by The Scotsman from the DWP under freedom of information legislation.
Identical requests for information were lodged with both the Scottish Government and the UK Government. The Scottish government entirely redacted the letters but the DWP released them in full.
When the plans were first announced, they were described by Labour as “the biggest fraud crackdown in a generation” targeted at “benefits cheats”.
The debt recovery situation also affects those who had stable repayment arrangements with the DWP are now in limbo waiting for news of the SNP’s plans.
The Scottish government spokeswoman added: “This debt arises from where clients were overpaid by the DWP prior to their cases transferring to us.
"We will now take over responsibility for collection of those debts, once the DWP has supplied the necessary data, and have extensive recovery powers available to us to do so.
“Suggestions that this work will be impeded by our decision not to replicate unacceptable UK Government recovery practices are therefore entirely incorrect.”
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