Benefit overpayments are at their highest ever
estimated rate, and the quick response and focus on ensuring
prompt payments for new benefit claimants during the COVID-19
pandemic means fraud and error are likely to further
increase.1
Excluding State Pension, where the level of
fraud and error is very low, the estimated level of benefit
overpayments increased to 4.8% (£4.5 billion) from 4.4% (£3.7
billion) in 2018-19. For Universal Credit, the estimated rate of
overpayments increased from 8.7% to 9.4%, which is the highest
recorded rate for any benefit other than Tax
Credits.
The Comptroller and Auditor General of the
National Audit Office, , has qualified his opinion on the regularity of
the Department for Work
and Pensions’ 2019-20 financial statements
due to this level of fraud and error. This is the
32nd year that the DWP’s accounts have received a qualified
regularity opinion on this basis.
Benefit payments are susceptible to both
deliberate fraud and unintended error by claimants and the DWP.
Overpayments increase costs for taxpayers, and when the DWP
recovers overpayments, this can lead to problems for claimants
who face deductions from their income. Underpayments can mean
that households do not get the support they are entitled
to.
The most common cause of fraud and error is
incorrectly reported income, which led to £1.4 billion of
overpayments and £350 million of underpayments in 2019-20. People
incorrectly reporting their savings is now the second most common
cause of fraud and error, at a value of £910
million.
The DWP responded quickly to the large increase in
new benefit claims during the COVID-19 pandemic,2
redeploying staff and relaxing controls to allow it to focus on
ensuring that claimants got the money to which they are
entitled.3 The DWP recognises that these actions are
likely to increase fraud and error in 2020-21; staff referred
143,000 suspicious cases for investigation between 16 March and 5
June. The impact of these changes to controls will provide DWP
with valuable insight to support future decision making on
tackling fraud and error.
Due to COVID-19, the DWP anticipates that it
will not be able to review cases to produce an estimate of fraud
and error in 2020-21 in the usual way. Visits cannot take place
to support reviews and staff have been temporarily allocated to
higher priority work. The DWP will need to determine how else it
can assess fraud and error to ensure it remains accountable to
Parliament for its performance.
As a priority, the DWP should set out its plans
to reverse the temporary changes made to the administration of
benefits in response to COVID-19, and provide an assessment of
the impact of these changes on the level of fraud and error. It
should also clarify how it will measure fraud and error for
2020-21 and in the longer term. Looking further ahead, it should
set annual fraud and error targets by individual benefit so that
it can demonstrate the progress of its
initiatives.
, the head of the NAO, said today:
“I am concerned that fraud and error in
benefit payments have risen again. Fraud and error have a real
cost, both for those who face deductions from their income due to
overpayments and because it reduces the public funds available
for other purposes.
“As the Department takes on a set of
unprecedented challenges arising from COVID-19 it is more
important than ever that my qualification is not seen as business
as usual and the Department responds in a cost-effective way to
minimise risks of fraud and error.”
- ENDS -
Notes for
Editors
-
The benefits sampled to produce the estimates and
some aspects of the underlying methodology have changed over
time. The Department revised some aspects of its methodology in
2019-20 which led to a reduction in the overall 2018-19
overpayment estimates when these were restated. Underpayments
were also restated, although the overall rate remained
unchanged.
-
There was a large spike in the number of new claims
for Universal Credit as the main working-age benefit. The
Department’s provisional statistics show that as at February
2020, there were 2.6 million households on Universal Credit.
From 1 March to 26 May 2020, the DWP received 2.4 million new
claims to Universal Credit, with a peak of over 100,000 a day.
This has since reduced to less than twice the average daily
level of new claims before the peak. Other benefits, such as
New Style JSA and ESA, have also seen increases in claims over
this period.
-
For example, claimants no longer have to attend a
job centre for a face-to-face interview.
-
The Department for Work and Pensions annual report
and accounts 2019-20 are available here.
