DWP beats counter-fraud target by £50m

Update confirms plan to use temporary staff to fill 2,500 roles reviewing Universal Credit claims
DWP's Caxton House headquarters Photo: Google Maps

By Jim Dunton

14 May 2024

The Department for Work and Pensions has said it has beaten its target for making savings from counter-fraud activities by £50m in 2023-24.

An update from the department on its 2022 Fraud Plan said initial estimates for the financial year that ended last month indicated £1.35bn in savings – up from its target of £1.3bn.

However, yesterday's update, noted that since the onset of the pandemic, more than £8bn a year has been overpaid because of fraud and error. DWP said £8.3bn was overpaid last year across all welfare benefits, with 75% estimated to be due to fraud.

The update also reiterated concerns over a "long-term rising trend in fraudulent behaviour and softening of attitudes to fraud" that the department assumes will see fraud grow at "an average of 5% a year".

Earlier this year, DWP permanent secretary Peter Schofield told members of parliament's Work and Pensions Select Committee that increased propensity for fraud was a "challenge" for the department. He said he still expected fraud to be above 2019-20 levels in 2027-28.

A major element of DWP's anti-fraud work is stepping up checks on Universal Credit recipients under a programme of "targeted case reviews", which has been scaled up and now aims to stop £6.6bn in fraud by 2027-28.

The drive involves the recruitment of nearly 6,000 officials, bankrolled with £443m of additional funding.

Yesterday's update said 3,000 staff have already been hired and confirmed that DWP is pushing ahead with controversial plans to use 2,500 outsourced staff to reach the 6,000 target.

"From autumn 2024, we will be joined by a commercial provider on a temporary basis to help us reach this target number of staff by March 2025," the Fraud Plan update said.

Last year PCS, the civil service's biggest union, said the proposed move was the wrong approach.

"Outsourcing core DWP work is not the solution," it said. "Better pay and terms and conditions would make the DWP a more attractive place to work."

Elsewhere in the Fraud Plan update, DWP said it is continuing to "explore the opportunities offered by new technologies, new data sources and advanced analytical techniques" to support the reduction and prevention of fraud in the welfare system.

The department pointed to £70m being invested in advanced analytics that is expected to generate savings "of around £1.6bn" by 2030-31.

"Sophisticated criminals already utilise such tools to analyse large amounts of data to exploit existing weaknesses and vulnerabilities in public sector systems," it said. "In DWP these tools can play a crucial role in detecting and preventing fraudulent activities in DWPs benefit systems. Going forward we want to maximise the benefits that advanced analytics and machine learning can offer."

Other measures include commissioning research to shape future communications approaches and "counter the assumption that there are no consequences of benefit fraud".

Work and pensions secretary Mel Stride said: "We are scaling up the fight against those stealing from the taxpayer, building on our success in stopping £18bn going into the wrong hands in 2022-23.

"With new legal powers, better data and thousands of additional staff, our comprehensive plan ensures we have the necessary tools to tackle the scourge of benefit fraud."

The £18bn figure cited by Stride is an estimate contained in DWP's most recent annual report and accounts of the additional benefits payments that would have been made if claims were paid "on demand" without checks on entitlement or the authenticity of documents.

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