Local authority benefits services could expand over the next five years and take over functions from central government, such as running pension credits and child support.
Benefits services should build on their strengths, she said; their local presence, accessibility to customers and ability to cope with change.
Why shouldn't they take on the work of the failing Child Support Agency, she suggested. The CSA had a caseload of about 1,000 cases per local authority. Revenues and benefits services know all about assessing, collecting and paying out money. With funding 'we could do what they do and do it better,' she said.
Ms Holden also urged no change to the council tax benefit system.
The current scheme, with some adjustments, can work well, she argued, and there is no need to take council tax benefit administration away from local authorities and set up a new administration - for example within Inland Revenue - to deal with it.