Worried councils are reporting huge backlogs in their benefits departments due to problems with a new IT system vital to the government’s flagship benefit reforms.

Councils have seen backlogs of thousands of files, in some cases upwards of 10,000, build up under the automated transfers to local authority systems project, or ATLAS.

The system launched in phases from mid-2011 and sends councils daily information about everything from changes of address and phone numbers to tax credits.

Councils have reported that the backlogs mean they may be overpaying housing benefit and some blame increased rent arrears on the system.

David Ponton-Brown, revenues and benefits manager at Scarborough Council, said: ‘This has caused severe delays during the past year.’

Breckland Council wrote to the Department for Work and Pensions, which runs ATLAS, earlier in the year because of ‘problems including wrong, out of date and duplicate information being sent’.

The backlogs are particularly worrying because ATLAS forms an integral part of the DWP’s benefit cap, which comes into force in April 2013. And the DWP committee warned, in a report published yesterday, that the efficient transfer of data between DWP systems and ATLAS is vital ‘to the successful implementation of universal credit’.

The DWP committee was so concerned that it requested that the ‘DWP provides us with further details of the steps it has taken to ensure that its interface with local authority systems is robust’. It added: ‘It is not clear from the evidence we have received from the DWP whether the capacity currently exists to ensure information is passed accurately and quickly between central and local government.’

Inside Housing is aware of at least 17 councils that claim the quantity and quality of data supplied under ATLAS has seriously affected the performance of their benefits departments in 2012. Nottingham Council had a backlog of 17,743 pieces of information, East Herts and Stevenage councils’ joint revenues and benefits service had a backlog of more than 10,000 and Lincoln and North Kesteven councils’ joint service had a 50,000 backlog, at various stages of the year.

However, a DWP spokesperson said ATLAS is forecast to save £750 million in overpayments and will cut down on administrative time.

She added that the average time for processing changes of circumstances for housing benefit claims has fallen from 12 days to 10 days during 2011/12.