A report out today claims that “levels of fraud and error in benefit expenditure are unacceptably high”, with the Department for Work & Pensions overpaying an “eye-watering” £8.6 billion in 2021-22. £6.5 billion of that figure was due to fraud.
MP’s on the Public Accounts Committee found that Fraud and error were rising year-on-year before COVID-19 and the NAO has qualified DWP’s accounts every year since 1988–89.
During the pandemic “fraud and error rose to historic levels across the benefit system” reaching an estimated 7.6% (£8.5 billion) overpayment rate across all benefits, excluding the State Pension in 2021-22, compared with 4.7% (£4.4 billion) in 2019-20.
DWP maintains that current fraud levels are still due to COVID-19 but is unable to say when levels of fraud and error will fall. It has repeatedly claimed that there is increasing propensity to fraud in society in general since the pandemic but is unable to point to convincing evidence why this should lead to increasing losses to the taxpayer.
The Department assumes that all claims from Universal Credit claimants who choose “not to engage” with DWP’s fraud and error measurement exercises are fraudulent but admits that it has no statistically significant information to support this view.
The Committee warns on DWP’s ability to strike the right balance between being robust in tackling fraud and ensuring claimants are treated fairly, saying DWP’s narrative about fraud in society “could encourage a complacent attitude toward unprecedented and unacceptable levels of benefit fraud” and mean that people “come to see committing benefit fraud as normal”.
At the other end of the problem, benefits underpayments can lead to severe hardship. The Department estimates that 237,000 pensioners have been underpaid a total of £1.46 billion in State Pension, with underpayments going back as far as 1985. Work to rectify this is behind schedule and “efforts to correct the systemic underpayment of State Pension are too slow to meaningfully put things right”, and “will be too little, too late for many affected pensioners”.
The Committee remains unconvinced that DWP’s systems overall are “adequate to detect further underpayments before they build up into major issues in future”.
Dame Meg Hillier MP, Chair of the Public Accounts Committee, said:
“DWP is blaming everything from the pandemic to ills in wider society for unprecedented and wholly unacceptable levels of fraud in the benefits system. 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.”
