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Government struggles to settle grants and compensation

Author: ICAEW Insights

Published: 08 Jun 2021

Recent reports into the Windrush Compensation Scheme and COVID-19 business support grants highlight how government can improve its administration of grants to individuals and businesses.

The National Audit Office’s (NAO) recent investigation into the Windrush Compensation Scheme and CIPFA’s recent report into COVID-19 business support grants highlight the challenges facing government in making payments to individuals and businesses and provide insights on how grant administration can be improved.

The Windrush Compensation Scheme was established by the Home Office to financially compensate the Windrush generation for the losses they suffered through not being able to demonstrate they were living in the UK legally. The scheme was first announced in April 2018 and launched a year later following a consultation around its design. The NAO reports that the Home Office provided two different sets of objectives, but both involved the scheme being accessible, delivering value for money, and compensating victims quickly.

Unfortunately, the NAO reports that the Windrush Compensation Scheme is not achieving these objectives, with only 633 people compensated in the first two years out of an estimated 11,500 potentially eligible victims.

Problems include a lack of awareness and a lack of trust resulting in the Home Office only receiving 19% of the claims it was anticipating, together with burdensome documentation requirements and 13 different categories of financial compensation available to claimants. For some categories, like access to benefits or driving licenses, claimants need to apply separately to different organisations. Confusion for claimants is evidenced by the fact that 327 have had their claim rejected while 230, over 10% of the total, have appealed the Home Office’s decision or compensation offer.

The complexity of the scheme has hindered the ability of caseworkers to efficiently process claims, with the Home Office only able to make final decisions on 38% of claims. The NAO reports that over half of cases subject to quality assurance checks were returned to the caseworker, with an average of 154 staff hours taken to process a case through to payment compared to the initial estimate of 30 hours. As a consequence, compensation payments totalling £14.3m by the end of March 2021 cost £8.1m to administer.

COVID scheme contrast

The slow pace, complexity and burdensome nature of the Windrush Compensation Scheme contrasts with the speed and broad eligibility criteria of the £12bn of COVID-19 business support grants administered by local authorities through the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund. However, in both cases the reports highlight inadequate IT systems and a lack of available data as being obstacles to meeting their respective objectives.

For COVID-19 business support schemes, CIPFA highlights how records in local authority systems were out of date and how local authorities had to deal with regularly changing, conflicting guidance from central government about the assurance required. Similarly, the NAO reports that the Windrush Compensation Scheme was launched when the Home Office had only six full-time equivalent caseworkers in post compared to its estimated requirement of 125 and staff had to use manual spreadsheets until the case management system was updated for policy changes.

The NAO says the Home Office took on feedback from stakeholder groups and caseworkers. In December 2020, it introduced a preliminary payment of £10,000 as soon as a claimant has demonstrated they had suffered harm and significantly increased ‘impact on life’ payments.81% of the total payments under the scheme to 31 March 2021 were made after these changes were introduced.

Commenting on both reports, Oliver Simms, Manager, Public Sector Audit and Assurance for ICAEW, said: “The NAO’s investigation into the Windrush Compensation Scheme highlights how poor administration can hamper the ability of the government to deliver on its objectives, in this case with significant adverse impacts to individuals. The contrast between how difficult and time-consuming it has been for Windrush victims to obtain £14.3m of compensation and how quickly businesses received £12bn of COVID-19 support payments is striking.

“Despite that, there are still lessons to be learned in how grant administration can be improved, with CIPFA highlighting many ‘issues and inefficiencies inherent in the system’. There is a need for adequate planning, effective IT systems and avoiding disproportionate complexity if government is to be able to pay people effectively and efficiently.”

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