By Lucy Phillips
25 November 2010
The Department for Work and Pensions is failing to tackle errors in the benefit system and continues to waste millions of pounds through incorrect payments, according to auditors.
A report published today by the National Audit Office found the department made £1.1bn in overpayments and £500m in underpayments to benefit claimants last year.
Despite the introduction of a strategy to reduce administrative error in 2007 there has been ‘no discernible decrease’ in both under and overpayments. The cost of overpayments as a percentage of benefits expenditure has remained at 0.7% while underpayments have changed from 0.4% in 2006/07 to 0.3% in 2009/10.
NAO head Amyas Morse said it was ‘frustrating’ that there had been no real improvement. ‘Progress will depend on developing a better understanding of the costs and benefits of different interventions, so that they can be targeted more effectively and are able to achieve a significant reduction in the cost of administrative error,’ he said.
The report, Minimising the cost of administrative errors in the benefit system, acknowledges the ‘scale of the challenge’ facing the DWP. There are currently 27 different types of benefit paid to about 20 million people while demand for Jobseekers Allowance doubled during the 2008/09 recession.
The government’s recently announced changes to the welfare system and introduction of the Universal Credit will be an opportunity to simplify the administrative process but will take a long time to implement, the report adds.
Margaret Hodge, chair of the Public Accounts Committee, commented: ‘The benefits system is very complex, but, of all types of error, administrative ones made by the department’s own staff and systems are those over which is should have control. But this NAO report shows that the department, despite a clear commitment to tackle the problem, still hasn’t really improved in this area.’
The auditors also noted that the scale of incorrect payments at the DWP has led to it having its accounts being qualified for over two decades.
Emma Watkins, head of public services policy at the CBI, said: ‘Our figures show that recovering debt and tackling benefit and personal taxation fraud and error could save £20bn by 2015/16. It is therefore disappointing that there has been no obvious reduction in the level of administrative errors since 2007.
‘Private and third sector organisations have expertise in administration and delivery of welfare services, and the government should make more use of them.’
