Errors wipe out £500m fraud savings

10 Mar 05
A £500m reduction in benefit fraud by the Department for Work and Pensions has been wiped out by rising overpayments to claimants, the DWP's permanent secretary admitted to MPs this week.

11 March 2005

A £500m reduction in benefit fraud by the Department for Work and Pensions has been wiped out by rising overpayments to claimants, the DWP's permanent secretary admitted to MPs this week.

Sir Richard Mottram was forced to acknowledge that the DWP still estimated the cost of 'fraud and error' for benefits claims across central and local government at £3bn annually, just hours after ministers claimed they had slashed fraud alone by 25% since 2001.

Addressing a conference in London on March 9, benefits minister Chris Pond said the DWP had successfully reduced annual benefit fraud from around £2bn in 2001 to £1.5bn this year.

But Mottram, addressing a meeting of the Commons' Public Accounts Committee that afternoon, told MPs that while councils and government departments had undertaken a successful campaign to reduce fraudulent claims for Income Support, Jobseeker's Allowance and Housing Benefit, overpayments to claimants had increased from £1bn in 2001 to around £1.5bn.

Mottram blamed that on 'departmental churn' – a combination of the changing nature of the DWP as a department and an overhaul of its administration and accounting systems.

The PAC was assessing the DWP's performance in combating fraud after the National Audit Office was forced to qualify its accounts for the fifteenth year running because of fraud issues.

Committee members were visibly angered by Mottram's admission. Labour MP Brian Jenkins said: 'You seem to be telling us that it doesn't matter what we or you do, the [overall] level of fraud and error remains about the same?'

Mottram countered: 'We have made substantial progress against many forms of benefit fraud.' But he admitted that a large proportion of the £1.5bn in annual overpayments was 'not going to be recoverable'.

The overpayments issue overshadowed Pond's speech, which outlined reforms to the way councils' housing benefit and council tax benefit administration is assessed by the Benefit Fraud Inspectorate.

From April, inspectors will rate councils on a scale of one to four against four performance criteria designed to ensure that they focus on the outcomes of their benefits process, including quicker payments and reduced fraud.

It also follows concerns from councils, the Audit Commission and the BFI itself that the DWP's previous performance targets were too difficult to attain and could drag down councils' Comprehensive Performance Assessment scores.

Pond told PF: 'We were conscious of councils' concerns about their CPA scores and we feel this new system will more comfortably reflect authorities' benefit administration performance.

'It was also motivated by the need for all organisations to do more to focus on outcomes such as reduced fraud.'

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