SOUTHEND Council has had to raid emergency coffers after overpaying housing benefit by £691,000.

The Government has refused to reimburse the authority, which pays out housing benefit on behalf of the Department for Work and Pensions, as council officers made too many errors.

Staff have been retrained and an action plan put in place to stop the mistake happening again, but opposition councillors have called for an inquiry into how so much taxpayers’ cash could be wasted.

Martin Terry, spokesman for the Independent group of Southend councillors, said: “This is extremely disappointing and I am very angry given the cuts we have to make.

“One has to ask what could we done with this £691,000 that has been lost – perhaps keep the staff at the libraries and retain the care homes?

“It is all very well saying we have earmarked reserves, but this is just a smokescreen to cover failure. This is a huge amount of money that has been effectively wasted.

“If I lost £691,000 of my employer’s money I would expect a reprimand at the very least. A full inquiry needs to be undertaken and a full explanation needs to be heard from the head of service that is accountable for this catastrophic failure.”

Julian Ware-Lane, Labour councillor for Milton, said: “My interpretation is the over-payments made in error are about half a million more than what is considered par for the course.

“This will result in a draw down from reserves, reserves that could have been used in any special project. It shows the real losers are Southend’s residents.”

The council’s benefits team manages a caseload of more than 20,000 claimants with more than 1,000 changes in circumstances coming in every week and pays out £108million in benefits per year.

Acknowledging the complexity, the DWP allows an error rate of 0.54 per cent, but refused to reimburse the council as its error rate was 0.6 per cent in 2012/13, identified by auditors last month.

Paul Collins, Lib Dem chairman of the audit committee, said: “Of course, this is disappointing, but due to the volatile nature of the benefits system, the council has been prudent and has in previous years earmarked reserves to ensure that this will not affect service provision.

“I have been further assured by officers no claimant has been negatively impacted, that relevant staff have undergone further training and that the quality assurance and audit measures are properly in place moving forward.

“An action plan has also been developed which will be monitored by the audit committee throughout 2014/15.”