Amsterdam council calls for return of benefits after paying 100 times too much

Dutch capital paid out €188 million instead of €1.8 million, with some receiving €34,000

Cyclists pass over the Herengracht canal in Amsterdam. In a climate of unprecedented austerity, the final cost to the taxpayer of the housing benefit blunder will probably be somewhere between €1.5 million and €2 million. Photographer: Jasper Juinen/Bloomberg

Cyclists pass over the Herengracht canal in Amsterdam. In a climate of unprecedented austerity, the final cost to the taxpayer of the housing benefit blunder will probably be somewhere between €1.5 million and €2 million. Photographer: Jasper Juinen/Bloomberg

 

Ten thousand of Amsterdam’s least well-off residents who received pre-Christmas housing benefit payments 100 times larger than usual are being asked to return their windfalls – after the Dutch capital paid out €188 million instead of €1.8 million.

The city council has called in consultants KPMG to investigate how people who would normally have been paid €155 instead received €15,500, while others received as much as €34,000, without any alarms bells being set off to prevent the transfers going ahead.

As the council and its bankers argue over who caused the embarrassing blunder, it looks as though both could have some serious explaining to do.

Glitch in software

Initial reports suggest a glitch in banking software may have been at fault, though even so, finance supervisors at city hall should have noticed the gaping hole in its bank balance almost instantly, say experts.

However, in a remarkable show of civic responsibility, all but €2.4 million of the overpayment has now been recovered electronically. The rest may be difficult, if not impossible, to get back.

Privately, city council officials are accepting that as much as €1.2 million may be gone for good. They also admit the process of chasing the overpayments has so far cost more than €300,000, a figure that is rising rapidly.

So in a climate of unprecedented austerity, the final cost to the taxpayer will probably be somewhere between €1.5 million and €2 million – money that could have been spent on public services.

All this is bad news for Labour alderman Pieter Hillhorst, who was appointed Amsterdam’s finance director last year, with responsibility for a budget of billions of euro, amid a storm of opposition criticism for his lack of political or administrative experience.

“This should simply not have happened,” said Mr Hillhorst, who ordered the KPMG investigation. “How can it be that no alarm bells went off until it was too late and the money was gone? Technical failings and human error will be the key possibilities we will be looking at.”


Debts run-up
The Amsterdam authorities say they will try to help those who received the overpayments to deal with any debts run up if they spent or transferred the money before the mistake was noticed.

“Because we initially paid too much and have subsequently reclaimed the payments, you may be experiencing financial difficulties,” says a letter to those affected. “It was our mistake and we apologise unreservedly.”