Benefit Administration (Funding) (Hansard, 9 June 2003)

§ Malcolm Wicks [pursuant to his answer, 3 April 2003, Official Report, c. 835–37W]

Half of the administration subsidy for both housing benefit and council tax benefit is funded through a grant from the Department for Work and Pensions. This is allocated to individual local authorities using a formula agreed in consultation with the local authority associations. The formula takes account of the size of the caseload and the complexity of housing benefit cases, with elements for accommodation and staffing costs. The remaining half is funded by the Office of the Deputy Prime Minister, the National Assembly for Wales and the Scottish Executive through the Revenue Support Grant (Grant Aided Expenditure in Scotland) within their local government finance settlements.

From 2003–04, administration subsidy will be paid entirely by this Department as one direct grant to local authorities. During 2003–04, we will also distribute an additional £33 million for on-going and transitional costs associated with the introduction of the pension credit as well as £11 million for on-going costs associated with new tax credits.

The Department also helps fund the administration of the Verification Framework and payments are made through the Help Fund to support various local authority led initiatives aimed at improving housing benefit administration where lack of funds is a barrier. A further £223 million Verification Framework funding is being made available for the three years from April 2003. This will provide a 50 per cent. increase in both set-up and on-going funding. We are also investing £200 million over the next three years in helping authorities meet the new Performance Standards.

Actual expenditure on the administration of these benefits, as reported by local authorities, exceeds the total subsidy provided by central Government. Local authorities account for their expenditure in very different ways. For example, some will include a portion of central charges for administrative costs that will have little to do with housing benefit administration in their housing benefit costs. Some will provide a cost net of additional grants from the Department. Because the data reported by authorities do not reflect a uniform accounting standard across authorities, reported expenditure across all authorities may not be directly comparable with the grants paid figures.

The information available is in the tables.

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DWP Administration Subsidy and Caseload
	Housing benefit administration initial allocation (£ mission)	Average housing benefit caseload	Council tax administration initial allocation (£ million)	Average housing benefit caseload	Additional in year payments (£ million)
1998–99	97.9	4,414,000	61.2	5,257,000	3.0
1999–2000	87.6	4,198,000	72.0	5,022,000	5.0
2000–01	86.8	3,952,000	74.2	4,731,000	13
2001–02	89.7	3,844,000	76.3	4,636,000	–
Notes:

1. Caseload data refer to households claiming housing benefit, which may be a single person, a couple or a family. More than one benefit household can live in one property, for example, two or more adults in a flat or house share.

2. Caseload figures for any non-responding authorities have been estimated.

3. Council tax benefit caseload totals exclude any second adult rebate cases.

4. Housing benefit caseload figures exclude any extended payment cases.

5. The data are the average of caseloads taken in May, August, November and February of each year.

6. Figures have been rounded to the nearest £100,000.

7. Additional payments have been made to cover policy and procedural changes for both housing benefit and council tax benefit administration.

8. Additional in-year payments were made towards administration of procedural changes.

Sources:

1. Social Security Income Related Benefits (Subsidy to Authorities) Amendment Orders 1999 to 2002.

2. Housing Benefit and Council Tax Benefit Management Information System Quarterly 100 per cent. caseload stock-count taken in May, August, November and February 1998–99 to 2001–02.

DWP Expenditure on Anti-fraud Initiatives, the Verification Framework and the Help Fund
£ million
	Challenge funding	Benefits agency/ local authority joint working payments	Security against fraud and error (SAFE) and weekly benefit savings	Verification framework	Help Fund
1998–99	9.5	—	18.6	5.5	—
1999–2000	5.5	—	15.5	29.1	—
2000–01	2.9	2.7	12.2	24.4	—
2001–02	—	1.4	14.4	38.6	1.8

Notes:

1. Although not specifically for administration, local authorities are given financial incentives for investigating and detecting fraud.

2. Challenge Funding was a scheme where councils could submit bids for innovative anti-fraud initiatives.

3. The Security Against Fraud and Error (SAFE) scheme was first introduced in April 2001 and fully replaced the Weekly Benefit Savings (WBS) scheme in April 2002.

4. SAFE and WBS figures are subject to revision by local authorities.

5. Figures have been rounded to the nearest £100,000.

6. The reduction in SAFE and WBS funding may be attributable to increased VF funding which may have led to a fall in the level of

fraud entering the benefit system.

Sources:

1. WBS and SAFE figures are from local authorities' audited final subsidy claims.

2. Challenge Funding and Joint Working Payment figures from 1998–99 to 2000–01 are from DSS/DWP Appropriation Accounts. 2001–02 figures are from DWP records.

3. VF data are from DWP administrative records.

4. Help Fund expenditure is in the Social Security Income Related Benefits (Subsidy to Authorities) Amendment Order 2002.

Reported Administrative Costs of Local Authorities in Great Britain
	Housing benefit (£ million)	Council tax benefit (£ million)	Total (£ million)	DWP funding as percentage of reported expenditure
1997–98	349.7	192.7	542.5	43
1998–99	361.4	192.0	553.3	35
1999–2000	379.6	209.4	588.9	36
2000–01	412.2	229.9	642.1	32
Notes:

1. Figures have been rounded to the nearest £100,000.

2. Figures are subject to revision by local authorities.

Sources:

1. English authorities—reports to the ODPM, and its predecessors, using form RO4.

2. Welsh authorities—reports to the Welsh Assembly using form RO4. Prior to devolution, returns were made to the Welsh Office.

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3. Scottish authorities—reports to the Scottish Executive using Local Financial Return LFR9. Prior to devolution, returns were made to the Scottish Office.