More than £14 million of housing benefit was overpaid by cash-strapped councils in Nottinghamshire – with £7 million spent in the city alone.
Errors, claimants failing to inform councils of changes in circumstances and fraudsters trying to cheat the system have all been blamed by the councils involved.
The figures, released by the Department for Work and Pensions, reveal a total of £7.24 million too much was paid out by the city council from April last year to March this year.
It fared worse than both Derby City Council, which overpaid by £5.4 million, and Leicester City Council, which overpaid by £6.8 million.
The figure comes whilst local services are facing substantial cuts. Nottinghamshire Police, for example, has to find savings of £12 million in the next year.
Ian Roper, revenues and benefits business support manager at Nottingham City Council, said the authority was able to claw back a portion of the overpayments – £3.8 million in the same year – but said claimants needed to do more to help.
"Residents who are claiming housing benefit have a duty to notify us of any change of circumstances," he said. "However, to put the £7 million figure in context, the council paid out £151 million in housing benefit payments in 2014/15, and a number of the overpayments may well go back further depending on how long the change has gone unrecorded."
Among the other councils in Nottinghamshire, Ashfield Borough Council and Gedling Borough Council were the next worst offenders – with overpayments totalling £1.64 million and £1.34 million respectively.
But Councillor Michael Payne, portfolio holder for resources and reputation at Gedling Borough Council, said efforts are made to recover some of the money. He said: "We have rigorous recovery procedures and quick processing times which keep overpayments to an absolute minimum. In the last financial year we collected £600,000 in overpayments which can be extremely difficult when debtors often have no assets and are on low incomes."
And Ashfield District Council said it was working with the DWP on a "fraud and error reduction scheme" to try to reduce overpayments.
But Professor Bruce Stafford, who specialises in public policy at the University of Nottingham, believes there are flaws in the benefits system. He said: "It's very easy for people not to realise that they should have reported a change in circumstances. The government is introducing Universal Credit which might lead to an improvement. But the basic problem is that it's a very complex system, particularly with housing benefit."
The DWP claims Universal Credit will reduce fraud and error by £2.6 billion across the country. But some people aren't convinced.
Pat Sands, who works for charity Christians Against Poverty in Nottingham, said: "The whole benefits system is flawed. I think there are a lot of errors made on the part of the councils, as I've had experience of people handing in all their paperwork and then being told they've overpaid. I think Universal Credit is the biggest mistake the Government will make and I don't think it will help things."
Benefit cheats are to blame for a small portion of the overpayments.
A total of 70 people were prosecuted for benefit fraud in Nottinghamshire over the last financial year.
More than 35,000 receive housing benefits in the city alone.
A spokesman from the DWP said: "Fraud and error in the benefit system has fallen below two percent for the first time in a decade and we are committed to reducing it further."