Up to 1,000 workers in Fife missed out on a vital cost-of-living support payment from the Tories due to major loopholes in the benefits system.
Hundreds of Dunfermline families in need were denied a £326 cash grant in July by the UK Government even though they expected to be eligible.
SNP MP Douglas Chapman claimed workers were being “punished for working more” as some people were snubbed for doing too much overtime.
Other households may have lost out on the cash support because of how their wages are paid or because they received bonuses from their employers.
How does the support scheme work?
The cost-of-living scheme was announced by the Tories in May and aimed to help those facing escalating energy costs with two one-off payments totalling £650.
The cash is targeted at those on benefits such as Universal Credit, but under current rules, welfare payments are reduced if people earn more than expected.
Workers who do more overtime beyond their standard hours than normal can eventually see their Universal Credit payment fall to zero.
The same can also happen to employees who are paid every four weeks if they end up receiving two paycheques in the same month, making it look like their earnings are higher than usual.
When a universal credit recipient misses out on their regular payment, this is known as a “nil award”.
Dunfermline and West Fife MP Mr Chapman said he was shocked to find out constituents in this position were denied cost-of-living cash.
The SNP politician said it was “frankly appalling” hundreds of households had been penalised for working more often.
He said: “The cost-of-living payment was introduced to help people with sky-high bills, who are struggling to keep their head above water.
“Denying it to a thousand people in West Fife because they may have worked a bit of overtime or got paid every four weeks instead of every month is frankly appalling.
“I’m stunned to learn how many of my constituents have been affected by this.”
Conservative minister Victoria Prentis, who runs the department for work and pensions, confirmed to Mr Chapman up to 1,000 residents from 800 homes in his constituency had missed out.
Mr Chapman said: “I’ve raised this issue with the minister for welfare delivery, but trying to have a proper discussion about this flawed policy is like trying to get blood from a stone.
“Ministers are simply uninterested in hearing about the problems, and a thousand people in West Fife have been left worse off as a result.”
Tory benefits row
Mr Chapman’s anger over the cost-of-living loopholes came as splits emerged within the Conservatives over potential cuts to benefits.
It’s feared handouts to poorer households could be slashed if the Tories embark on another wave of austerity.
Cabinet minister Penny Mordaunt broke ranks and said she believes benefits should rise at the current rate of inflation, a policy which has not been announced by the government.
Families in Fife have already been hit hard by the cost-of-living crisis as the country braces for a tough winter.
In August, former prime minister Gordon Brown said poverty was “soaring” in the region and charities were “dreading” the coming months.
The ex-Labour leader claimed vulnerable pensioners may resort to sleeping on church floors to stay warm while avoiding higher bills.
Buildings across Fife could be used as “warm banks” during winter to help those worried about their energy costs.
In September a new cost-of-living support scheme was unveiled by the council.