Spending watchdog qualifies DWP accounts over "unacceptable" benefit fraud and error levels

Department for Work and Pensions accounts qualified again as NAO says fraud and error in the benefits system "remains unacceptably high"

By matt.foster

16 Jul 2015

"Unacceptably" high levels of fraud and error in the benefits system have once again caused the public spending watchdog to qualify the accounts of the Department for Work and Pensions.

A National Audit Office report published on Thursday found that while the DWP had made "many efforts" to reduce fraud and error over the years, the slight fall it had achieved against last year's total did not represent "a statistically significant change".

In 2013-14, overpayments through fraud and error totaled £3.3bn, representing 2% of the DWP's £163.9bn overall benefit spending forecasts. 

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The 2014-15 accounts show that the department has managed to reduce gross overpayments to £3.2bn, with payments resulting from fraud and error now making up 1.9% of the £168.1bn total forecast benefit expenditure for the year.

But NAO chief Amyas Morse said levels of fraud and error in the system were still too high.

"The department's accounts, and those of predecessor departments administering this expenditure, have received similar qualified audit opinions since 1988-89," he said.

"Issuing an audit qualification is a serious matter, and the fact that similar qualifications have been in place for such a long period of time does not lessen that seriousness. I consider that the overall value of fraud and error in benefit expenditure remains unacceptably high, and the qualification of my audit opinion reflects that."

The watchdog said that while final figures on fraud and debt payments have yet to be published, the department is "not on track" to meet its own target of bringing the level of overpayments down to 1.7% of total benefit spending.

Morse's audit also found that while fraud and error within those benefits directly administered by the DWP had fallen since 2013-14, it had risen in the Housing Benefit system, which is administered by local authorities. 

The DWP launched a fresh strategy to combat fraud, error and debt in the benefits system in April, with measures including better sharing of data with HM Revenue and Customs and a publicity drive encouraging claimants to notify the department of any change in circumstance.

That strategy was welcomed by Morse as a step in the right direction, but the comptroller and auditor general warned that its success would require careful monitoring and clear lines of accountability, including for frontline staff.

"As planned interventions are rolled out, the department must collate information and undertake rigorous measurement so that each intervention can be assessed to determine if it works and is actually delivering the planned savings and outcomes," he said.

A spokesperson for DWP said the department was making progress in tackling fraud and error, adding that the wider shake-up of the welfare system promised by Universal Credit would help to tackle the problem.

"Fraud and error has fallen below 2% for the first time in a decade and we recover around £900m annually in incorrectly paid benefits," the spokesperson said.
"Universal Credit is already simplifying the complex benefit system and is predicted to prevent a further £500m in fraud. Using ‘real time’ data, we are now able to immediately detect undeclared earnings or income and correct or adjust a person’s benefits."

Benefit fraud & error – the key figures:

- The DWP groups overpayments and underpayments in the benefits system into three categories; those caused by official error on the part of government; those caused by claimants themselves making mistakes; and those caused by deliberate fraud by claimants.

- According to the department's accounts, claimant error made up £1.3bn of the £3.2bn overpayment total in 2014-15. Fraud made up a further £1.1bn, while mistakes by officials led to £0.7bn of overpayments.

- But there was also an estimated £1.4bn-worth of underpayments to claimants in 2014-15, the accounts show, equating to 0.9% of the department's total projected benefit spending. Of those, £0.9bn were down to errors by claimants, and £0.5bn were the fault of government bodies.​


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