Recovery of housing allowance - easy to make mistakes Read full summary in English
1 Regulatory changes require time to be implemented
Need to monitor and evaluate critical trend
According to the Swedish Social Insurance Agency, it will be possible to implement regulatory changes in 2020 at the earliest, and the current provisions will remain in force until then. Hence the current problems of recovery will remain up to and including the income reconciliation of 2022. Hence the need to intensify efforts to reduce the risk of recovery within the framework of the current regulatory framework will remain for the next four years. The Swedish NAO also wishes to point out the importance of continuing to monitor and evaluate the recovery trend, also when the regulations change.
2 Missed deadline of repayment
Some recipients in residual debt
In the cases where repayment is not made in time this leads to households having residual debt. A fifth of the recovery demands remain unpaid after reminder and these households are regarded then as indebted. It is more common for households with poorer finances and higher recovery amounts to become indebted through recovery of their allowances. It is also more common for those becoming indebted through recovery to have a higher frequency of mixed income, such as gainful employment combined with sickness benefit. These features also characterise the households that incur recurrent debt through recovery demands, compared with those who were not in debt through recovery demands in previous years.It is also more common for those becoming indebted through recovery to have a higher frequency of mixed income, such as gainful employment combined with sickness benefit. These features also characterise the households that incur recurrent debt through recovery demands, compared with those who were not in debt through recovery demands in previous years.
About a quarter of households that received recovery demands for housing allowance in 2013-2017 had also received recovery demands for housing allowance in previous years.
3 Too narrow basis of regulatory changes
Solution missing an important part of problem
It is understandable that the Social Insurance Agency's proposal is focused on recovery and debt, but in the view of the Swedish NAO, the need for regulatory changes should have a broader basis, as it is more than 20 years since the current rules were adopted. In a previous audit the Swedish NAO drew attention to the problems of the present design of the housing allowance from the perspective of distribution and labour market policy, and these problems also justify a review of the regulations. The Swedish NAO would like to draw particular attention to the importance in the work of reform of regulatory impact assessments focusing on how amendments to regulations may affect various types of household in terms of distribution policy and family policy accuracy.
4 Unclear definition of responsibility
Frequent adjustments of data
The recipient has great responsibility for notifying income changes. However, it may not be clear to recipients how far their own responsibility extends. In the assessment of the Swedish NAO, it may for example be easy to overlook the fact that income changes must be notified to the Social Insurance Agency even when no allowance is being paid out in a calendar year.
Regular control of incomes in the period that allowance is paid to reduce the need for subsequent adjustments of the allowance was not considered necessary when the rules for income reconciliation were introduced. This was mainly justified by the required input of resources this would entail for the social insurance offices at the time.
Housing allowance is a means-tested benefit granted for one year at a time to households with children and young people aged 18 to 28 years. The size of the allowance depends on the household's benefit-qualifying income, the number of children in the household, the housing cost and size of the dwelling in the calendar year in which the allowance is paid. The allowance is determined provisionally for one year at a time, and the final allowance is determined up to two years after the first payment, when the Swedish Social Insurance Agency reconciles the benefit-qualifying income against income data from several agencies, above all the Swedish Tax Agency. The recipients are obliged to report on a current basis if their income changes in the calendar year in which the allowance is paid.
Nevertheless, about one third of the recipients receive demands for repayment of the provisional housing allowance, which is considerably more than was assumed when the rules were introduced in 1997. To reduce the frequency of recovery the Government decided that an effective system for reporting income changes should be created.
The Swedish NAO audited the recovery of housing allowance on the basis of the following audit questions:
- Are the Swedish Social Insurance Agency's procedures for checking changes in income deficient?
- Has the Government's governance of the Swedish Social Insurance Agency been sufficient for the purpose of achieving an effective reporting system for income changes?
- Can the recovery trend counteract the family policy objective of housing allowance?