Government error victims in uncertainty: cabinet postpones decision on full compensation

Poverty Thousands of families are living below the subsistence level due to government error. Compensation is slow and it is unclear whether it will be complete.Christiaan Pelgrim Published onApril 1, 2024

The thousands of families living in poverty due to a government error still have to wait to see whether they will be fully, retroactively compensated. The outgoing cabinet has not made any preparations for this yet and leaves a decision to the forming parties. This is confirmed by a spokesperson for Minister Carola Schouten (Poverty Policy, ChristenUnie). As a result of this error, an estimated 6,400 families will receive fewer benefits than they are entitled to. They have often been living below the subsistence level for years because the rules on benefits, surcharges and taxes unintentionally get in the way. Most families miss out on hundreds of euros a year, some more than 1,000 euros. The Ministry of Social Affairs has known about this problem since 2016, but only announced last year that it was looking for a solution, after an article in NRC and Parliamentary questions. Also read in poverty for years, due to a government error: https://www.nrc.nl/nieuws/2023/02/28/al-jaren-in-armoede-door-een-fout-van-de-overheid-a4158294Gedupeerden are entitled to retroactive compensation, according to the Supreme Court in benefits cases, the Central Appeals Board. But so far, the cabinet has only come up with solutions for the money that victims now run out of money every year.

Municipalities are struggling

A definitive solution is long in coming: the tax authorities say they will be able to automatically pay the correct amount of benefits to this group from 2028 at the earliest. Until then, municipalities must track down these people and, every year, repair their income gap.De Tweede Kamer called on municipalities in July last year to search for victims quickly and “proactively”. But nine months later, municipalities are still struggling with this, according to a tour. They find carrying out the compensation complex and time-consuming. In eleven of the fourteen municipalities that answered questions from NRC about this, compensation has not started yet. The municipality of Elburg says it is still working on “internal preparations”. Just like Meierijstad in Brabant. This is “a complex issue”, says a spokesperson for that municipality, “requiring extensive knowledge about the allowance system”. Some municipalities, such as Gouda and Middelburg, expect affected residents to report themselves. That will probably hardly happen. According to emergency workers, most people have no idea that they are entitled to more benefits than the tax authorities say.

Extra time needed

The intention was that municipalities would receive lists containing victims early this year. But the tax authorities and UWV, which draw up these lists, need extra time to do so, municipalities were told on Friday. The lists are now expected in June. Amsterdam alderman Rutger Groot Wassink (Social Affairs, GroenLinks) expressed impatience about the absence of the lists as early as November. “We just have to sort this out together”, he said in NRC.

Calculating the compensation amount is very time-consuming

Municipalities that are already compensating their affected residents also encounter the complexity of the issue. For example, calculating the compensation amount is very time-consuming. It requires specialist knowledge of benefits, taxes and surcharges that not every municipality has. Next year, that should be easier. Minister Schouten published this month a draft bill that gives municipalities the opportunity to give all victims the same amount of compensation, regardless of their actual damage. This nationally determined amount will be generous, according to the legislation. So that it makes up for, or more than makes up for, the entire loss of income for “almost all” victims. This formulation shows that it is at least more than 1,000 euros per year. For the small group of victims with a larger loss, a personal calculation can still be made. The victims of this government error are couples whose own income is one partner: so-called single earners. That income is often a disability benefit from the UWV. In addition, some couples receive a benefit from their municipality that supplements them to the level of assistance. The net benefit amounts that the victims receive in their accounts are correct. But very specific tax rules for single earners make their gross income far too high. As a result, they must pay back the surcharges they are entitled to.

A version of this article also appeared in the newspaper of April 2, 2024.