Housing benefit claimants who are overpaid because they don’t tell the council about a change in personal circumstances face being hit with a £50 fine.
Wyre Council said it is being forced to introduce a Civil Penalty Scheme because the Department for Work and Pensions (DWP) will no longer investigate over-payments of less than £3,000 unless there are ‘aggravating circumstances’.
A similar £70 charge is planned for people who get localised council tax support, a report by Peter Mason, the head of the council’s contact centre said.
Last year, the council paid out £730,000 too much because of ‘fraud or claimant error’.
The report added: “Not only would the imposition of such a penalty offer a deterrent to those who regularly fail to report changes in their circumstances, but it would also provide the aggravating circumstances to prompt the DWP to sanction persistent offenders.”
A Wyre Council spokesman said previously the DWP would investigate for potential fraud on overpayments of £2,000 or more.
“We generate many housing benefit over-payments with a value of under £3,000 which arise as a consequence of claimants’ failure to report changes in their circumstances as they added,” he said.
“These cases are not subsequently subjected to any kind of sanction and, at worst, the person receiving the over-payment may have to pay it back over an extended period of time.
“This is very time consuming for the council, which has to absorb 60 per cent of the cost of any over-payment, and is therefore out of pocket unless they can collect at least 40 per cent back.”
The council would be able to keep the cash it gets through the charge to pay for ‘administration costs’, the spokesman added. The council hopes to bring the scheme in by next Thursday.