DWP accused of passing the buck for 'unacceptably high' benefits fraud

PAC chair says DWP does not have plan to "get a grip" on the billions it is losing every year
The DWP estimates it overpaid £6.5bn last year due to fraud. Photo: Adobe Stock

By Tevye Markson

09 Nov 2022

The Department for Work and Pensions needs to "get a grip" on record levels of fraud and error in the benefits system and take responsibility for tackling the "eyewatering" sums, the Public Accounts Committee has warned.

DWP’s 2021-22 accounts, released in July, showed the department had overpaid a record £8.5n in benefits, excluding state pension.

The department estimates £6.5bn of that overpayment was due to fraud. PAC's report on fraud and error in the benefits system today said overpayments were “unacceptably high”.

DWP has attributed the record levels of overpayments to the relaxation of fraud and error controls during the Covid-19 pandemic and an increase in fraud in society.

But Dame Meg Hillier, chair of PAC, accused the department of passing the buck. “DWP is blaming everything from the pandemic to ills in wider society for unprecedented and wholly unacceptable levels of fraud in the benefits system,” she said.

“But the truth is losses to the taxpayer to fraud and mistakes have been at record levels and rising for years. DWP didn’t have a plan to get a grip on the billions it was losing every year before the pandemic, and it doesn’t have one now.”

PAC said the department's narrative about fraud in society “could encourage a complacent attitude toward unprecedented and unacceptable levels of benefit fraud” and mean people “come to see committing benefit fraud as normal”.

DWP also needs strike the right balance between being robust in tackling fraud and ensuring claimants are treated fairly, the MPs said.

The committee pointed out that the department has assumed all claims from Universal Credit where claimants choose “not to engage” with the department's fraud and error measurement exercises were fraudulent, but that DWP also admitted that it has no statistically significant information to support this view.

PAC also criticised high levels of underpayments in the state pension system – 237,000 pensioners have been underpaid a total of £1.5bn in the last 37 years, the department has estimated.

Work to fix this is behind schedule, delayed by a year to the end of 2024. PAC said the department’s efforts are “too slow to meaningfully put things right”, and “too little, too late for many affected pensioners”.

The committee said it was also unconvinced that DWP’s systems are “adequate to detect further underpayments before they build up into major issues in future”.

A DWP spokesperson expressed disappointment that the report did not recognise the department’s recent efforts.

“We are disappointed the committee did not recognise that we are already delivering on the bold and ambitious Fraud Plan, published in May this year, that sets out our next steps, including recruiting trained specialists and seeking new powers to help us tackle fraud,” the spokesperson said.

“This builds on the existing work DWP has done to address fraud and error, with savings from correction and prevention of fraud and error totalling £2bn last year.”

The PAC report did refer to the department’s Fighting Fraud in the Welfare System strategy, welcoming the plans but questioning their deliverability.

“The department cannot be confident about the deliverability of its strategy because it is dependent on assumptions around recruitment in a challenging hiring environment, newly legislated powers which it has yet to obtain, and the activities of wider government”,” MPs said.

Responding to PAC's claim that the department has not had a grip on fraud "for years", DWP said it had brought fraud and error in the welfare system close to near record lows before the pandemic.

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