Exclusive:Scottish Government has no plan to recover £36 million of benefit fraud and error

The Scotsman revealed last month that Social Security Scotland (SSS) is facing a black hole in public finances over the Scottish Government’s refusal to follow Westminster’s plans for a debt crack down.

The UK government plans to introduce new laws that will claw back overpaid benefits and fraud.

However, the Scottish Government is determined to go its own way - leaving it with no means to recover the missing millions.

Shirley-Anne Somerville, the social justice secretary, said the UK government had only confirmed its decision “reasonably recently” and the Scottish Government would be “looking to see” what it could do to recoup the money.

Currently benefit fraud and debt recovery is carried out by the DWP on behalf of SSS.

The SNP administration will need to transfer the debts to SSS and rapidly develop a debt recovery scheme or write off the £36m owed.

New Labour legislation will give the DWP powers to deduct owed money directly from bank accounts and suspend driving licences for those who owe cash.

Ms Somerville added: “We’re very clear that debt recovery is a really important part of any social security system.

“So it is exceptionally important that we look at debt recovery, but we must do that in a way that doesn't punish people.”

The cabinet secretary said removing driving licences would “leave families isolated” and have a “detrimental impact”.

SSS currently requests that benefits recipients pay back overpayments but plans for civil recovery through the Sheriff Court system are not yet active.

Without the DWP to enforce repayments of debt, the only option open to SSS currently would be to take the thousands of benefits clients to the small claims court.

Shona Robinson, the cabinet secretary for finance, was asked about The Scotsman’s story at Holyrood’s finance committee this week.

The Scottish Government is currently operating under emergency spending controls due to straitened finances.

MSP Kenneth Gibson asked Ms Robinson what the government planned to do about the potential £36m loss.

Ms Robison said she was not aware of the story or the benefits issue.

Scottish Conservative shadow social security secretary and shadow minister for local government Alexander Stewart said: “Shona Robison’s ignorance about wrongly paid benefits is alarming, and her apparent lack of concern about recovering millions of pounds of public money is disgraceful.

“Even after her embarrassing committee appearance, there is no timetable for deciding whether to write off taxpayers’ money – some of which may have been paid out to criminals.

“The SNP government has done nothing to tackle the ballooning bill for benefits or tackle errors in administration.”

The dispute is detailed in letters obtained 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.

However, while the DWP handed over letters from Mr Weston to Ms Somerville, the Scottish Government chose to entirely redact the contents of all correspondence from the SNP cabinet secretary to her Westminster counterpart.

An appeal over the decision was this week declined.

Those who currently have stable repayment arrangements with the DWP are now in limbo waiting for news of the SNP’s plans.

Ms Somerville said it was a “real, real shame” that the UK government had insisted on pressing ahead with the legislation as it was.

She added: “What we're demonstrating in Scotland is that we can run Social Security in a different way.

“It can still be robust, and it would help if the UK Government were sometimes more willing to accept that just because we want to do something in a different way in Scotland it doesn't mean that we can't work together for a collective aim, which is debt recovery.”