Departments need clearer plans to cut fraud and error, says Public Accounts Committee

Public Accounts Committee says Concentrix debacle highlights potential for error as Universal Credit rollout continues

By Jim Dunton

04 Nov 2016

MPs have called on HM Revenue & Customs (HMRC) and the Department for Work and Pensions (DWP) to set more demanding fraud reduction targets, but to also ensure their work is better-managed in the wake of problems with suspended tax credits payments.

A new report from the Public Accounts Committee (PAC) said August’s “meltdown” seen in HMRC’s fraud and error checking contract with US firm Concentrix highlighted the need for both departments to make sure they had clearer fraud plans, and to get enforcement “right”.

It draws together evidence on both the extended implementation of Universal Credit and the Concentrix problems, which saw payments suspended to thousands of tax credits recipients, yet expresses disappointment that HMRC and DWP are setting themselves undemanding fraud reduction targets.

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The committee also flags concerns that DWP is not doing enough to head off anticipated Universal Credit underpayments likely to result from conflicts between recipients’ payment cycles and those of the department.

Additionally, MPs called on DWP to explain how plans to extend Universal Credit’s implementation by six months, toward an anticipated full adoption in 2022, will affect its projected costs and savings from the new welfare regime.

PAC chair Meg Hillier said introducing Universal Credit and tackling fraud and error were significant challenges for the government, but carried serious implications for many people’s lives. 

“The recent meltdown in performance of HMRC’s contractor Concentrix highlights just how important it is to keep progress in the spotlight,” she said.

“It is completely unacceptable that benefits claimants should be left in the position of being unable to pay for their daily needs.”

"Meaningful" targets

The report said neither HMRC or DWP had set “meaningful” targets for reducing fraud and error, with an HMRC target for 2016-17 that was less demanding than for the previous year cited as a prime example. The MPs recommended setting “more stretching” targets that would be renewed annually and reported on to the committee each year.

The PAC said Universal Credit’s rigid monthly assessment period was already known to pose difficulties for claimants whose pay or rent was based on four-weekly periods rather than calendar months, and that the situation was likely to prompt drops in benefit payments that came without warning.

The committee said DWP appeared reluctant to make its own systems more flexible to deal with the situation, focusing instead on encouraging employers and landlords to be flexible about their payment cycles.

“The department should also examine what it can do to adapt its systems to cater for these circumstances or provide more information about what it is doing to secure change with employers and landlords,” it recommended.

Universal Credit

On the changed costs of Universal Credit, MPs reiterated a previous demand for DWP to spell out how policy changes for the programme had impacted on the projected £20bn savings indicated in its 2015 business case.

“Despite having previously estimated that a six month delay to the programme could reduce net benefits to the taxpayer by £2.3bn, the department now maintains that the net benefits of the programme have not changed significantly,” they said. 

MPs called on it to report back with estimates by the end of March.

Civil Service World asked both HMRC and DWP for their views on the report.

A DWP spokesman responded by saying that fraud and error in the benefits system were at a “record low”, which reflected work to improve detection, prevention and recovery.

He said "swift and decisive action" had been taken in relation to the Concentrix contract, but indicated that the PAC may not get the figures on Universal Credit within its stipulated timeframe.

"The next update to the Universal Credit Business Case will be made as part of the Full Business Case process in autumn 2017" - DWP spokesperson

"The next update to the Universal Credit Business Case will be made as part of the Full Business Case process in autumn 2017," he said. "As part of the fiscal events process, the department provides the OBR with detailed costings to enable them to model any impact changes in the Universal Credit rollout schedule."

A statement from HMRC added that all of the cases it had taken back from Concentrix had now been dealt with and customers notified of the results, and that discussions with Concentrix on an early exit from its contract were now “well advanced”.

Mark Serwotka, general secretary of the Public and Commercial Services union, said the ongoing roll-out delays with Universal Credit “went hand-in-hand” with the way the Concentrix contract was handled and resulted from the government “pursuing ideology over sound decision making”.

“We are pleased HMRC has pledged to keep tax credits work in-house after the Concentrix scandal, but this now needs to be matched by a commitment to increased staffing and resources, and questions still remain about how the contract was managed,” he said.

Meanwhile, the Cabinet Office said today that its pan-public sector National Fraud Initiative had saved £198m in fraud, overpayments and errors over the past two years. 

It said the initiative had led to more than 500 prosecutions, the recovery of 54 properties for social housing, and the dismissal of 52 employees found to be not eligible to work in the UK.

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