Page last updated at 13:35 GMT, Friday, 27 February 2009

Benefit errors 'can be recouped'

Cash
The action group said the ruling would affect the UK's poorest people

The government is entitled to take legal action to recover social security benefits it paid "by mistake", a judge has ruled.

The Child Poverty Action Group had argued that ministers had no power to seek to claw back overpayments where the recipient had done nothing wrong.

But in a test case the High Court ruled the government was "entitled to ask for money back" under common law.

The Department for Work and Pensions welcomed the High Court ruling.

They said: "We have a duty to recover public monies where they have been paid out in error and where it does not cause undue hardship to our customer."

But lawyers said the ruling could impact on hundreds of thousands of people.

Between March 2006 and February 2007, the government wrote to 65,000 claimants who had received too much in benefits, saying it was allowed to ask for the money back.

It said it would seek recovery through the courts if necessary.

Deputy High Court Judge Michael Supperstone QC ruled against the action group's argument that the Work and Pensions Secretary had no power to do so.

Appeal permission

He declared that under common law the government was "entitled to ask for money back on the basis that the recipient was not entitled to receive it".

However, recognising the widespread implications of his ruling for many people, he gave the group permission to appeal against the decision.

No more letters will be sent out until the appeal judges have given their ruling.

We have a duty to recover public monies where they have been paid out in error and where it does not cause undue hardship to our customer
Department for Work and Pensions spokesman
Child Poverty Action Group's solicitor Sarah Clarke said: "No-one has yet been taken to the county court, so far as we know, but this decision opens the way for it to be done.

"If the judgment stands, this can be done even where a claimant has an appeal tribunal ruling that an overpayment should not be recovered as there was no failure to disclose relevant information and no attempt was made to misrepresent the facts."

Ms Clarke said: "We don't know how many people will be affected, but it could run into hundreds of thousands."

A Department for Work and Pensions spokesman said: "We examine each case individually, taking into account our customer's circumstances, and we always seek to reach an agreement on the terms of the recovery."

At least 2.6bn in UK benefits was lost through fraud and errors in the year to March 2008.

Official statistics confirmed that 2% of the total benefit bill was overpaid, including a 380m overspend on pension credit.

The government had previously been criticised for problems with overpayments of its tax credits.

More than 6bn has been mistakenly paid since they were introduced in 2003.

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