Government has shown a “paucity of ambition” in its work to tackle fraud and error in the benefits and tax credits systems, MPs said today.
A Public Accounts Committee (PAC) report called for a greater focus on preventing – rather than detecting and correcting – over- and underpayments resulting from fraud and error.
In 2013-14 HM Revenue & Customs (HMRC) and the Department for Work and Pensions (DWP) overpaid benefit and tax credit claimants by £4.6bn, and underpaid claimants by £1.6bn.
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PAC chair Meg Hillier said that against that background the committee “would expect to see government departments setting firm targets for reducing fraud and error”.
She continued: “Yet while HMRC has made progress in tackling tax credit fraud and error, it has no meaningful framework for making further progress during the transition to Universal Credit. This is not good enough. Similarly, the DWP must be far clearer in setting targets for reducing fraud and error for individual benefits.”
HMRC has reduced fraud and error in the tax credits system from 8.1% in 2010 to 4.4% in 2013-14 – an achievement described by the Public Accounts Committee today as “encouraging”.
The Department for Work and Pensions, however, has not met its overall target, with fraud and error making up 1.9% of benefit spending in 2015, rather than a target of 1.7%.
The report recommends that both departments should do more to understand why claimants make mistakes and develop stronger systems to prevent over-and underpayments.
It noted that between 2010 and March 2015 DWP spent just £27m of a planned £192m budget to prevent fraud and error.
This was largely due to the closure of the IRIS programme which aimed to identify risky claims, and the committee said DWP “was unable to explain clearly why it had stopped a programme which potentially would have saved more than it cost”.
MPs also questioned the way tax credits claimants are being treated by a private sector company employed to check claims, saying “we are concerned that the contractor’s approach has been over threatening”.
A government spokesperson said: “Since 2010, we have saved over £5bn by reducing fraud and error. Tax credits fraud and error has almost halved, while overpayments in the benefits system has fallen below 2% - to its lowest ever level.
“The reforms we have made to the benefits system will better guard against fraudsters. Universal Credit and Real Time Information alone are expected to save the public purse £3.2bn a year and we will continue to tirelessly pursue and recover payments from the minority who do try to abuse the system.”