By Richard Johnstone | 12 July 2012
The chair of the Public Accounts Committee has hit out at the Department for Work and Pensions after its accounts were qualified for the 24th successive year.
Margaret Hodge said it was ‘just unacceptable’ that the highest spending department in Whitehall has been unable ‘to administer its spending properly’ since 1988/89.
Auditor general Amyas Morse today announced that the DWP’s 2011/12 accounts had to be qualified because of the high level of fraud and error in benefit expenditure.
The department has estimated that total amount of benefits overpaid due to fraud and error in 2011/12 was £3.2bn, down only £100m from the year before. This represented around 2% of the total benefit expenditure of £159bn.
Underpayments in the year have been estimated at around £1.3bn, exactly the same amount as in 2010/11. This is around 0.8% of total benefits spending.
However, auditors said that the introduction of the Universal Credit, in place of host of existing benefits, could ‘reduce significantly’ the problems of verifying entitlement to benefits, which leads to mistakes.
New claimants will start to receive Universal Credit in place of Jobseeker’s Allowance, Employment Support Allowance, Housing Benefit, Working Tax Credit and Child Tax Credit from October 2013. More than 1 million people will be moved on to it by April 2014, with all claimants receiving it by 2017.
Morse said: ‘The level of fraud and error in the welfare system remains unacceptably high. I recognise, however, the difficulty of administering in a cost-effective way a benefits system of such complexity.
‘The department should use the development of Universal Credit as an opportunity to enhance its processes to demonstrate what a modern, effective and joined-up benefits system will look like. In refreshing its approach to reducing fraud and error, the department needs to continue to improve its understanding of the root causes of fraud and error.’
But Hodge said with ‘huge sums’ of money being lost the government simply can’t afford to carry on like this’.
She added: ‘The department is relying on the introduction of Universal Credit to get its house in order, but the transition to Universal Credit is full of risks and the department won’t even tell us if it is on schedule.
‘The department has got to get a grip on fraud and error now. Despite its assurances to my committee, it has not done so and it must do better.’
Responding to the qualification, a DWP spokeswoman said: ‘The current benefit system is far too complicated, which leaves it open to fraud and error.
‘Universal Credit will revolutionise the way we pay people benefits by simplifying and automating the system to ensure taxpayers’ money is going to those who need it the most. It will dramatically reduce the chances of fraud entering the system and will cut down on error as it will be much easier to understand and administer.’
• Also today, Morse qualified his audit opinion on the 2011/12 Social Fund White Paper Account, which records some benefit payments, such as the winter fuel allowance, and discretionary awards made to some people on low incomes. These include crisis loans and community care grants.
The accounts have been qualified for the ninth year running because of the ‘material levels of incorrect payments’ found in both discretionary and regulated awards.
In 2011/12, the fund paid out £3.1bn, of which an estimated £45.6m was made in error. However, this is down by more than half compared to 2010/11, when £114.3m was paid erroneously.
The chair of the Public Accounts Committee has hit out at the Department for Work and Pensions after its accounts were qualified for the 24th successive year.
Margaret Hodge said it was ‘just unacceptable’ that the highest spending department in Whitehall has been unable ‘to administer its spending properly’ since 1988/89.
Auditor general Amyas Morse today announced that the DWP’s 2011/12 accounts had to be qualified because of the high level of fraud and error in benefit expenditure.
The department has estimated that total amount of benefits overpaid due to fraud and error in 2011/12 was £3.2bn, down only £100m from the year before. This represented around 2% of the total benefit expenditure of £159bn.
Underpayments in the year have been estimated at around £1.3bn, exactly the same amount as in 2010/11. This is around 0.8% of total benefits spending.
However, auditors said that the introduction of the Universal Credit, in place of host of existing benefits, could ‘reduce significantly’ the problems of verifying entitlement to benefits, which leads to mistakes.
New claimants will start to receive Universal Credit in place of Jobseeker’s Allowance, Employment Support Allowance, Housing Benefit, Working Tax Credit and Child Tax Credit from October 2013. More than 1 million people will be moved on to it by April 2014, with all claimants receiving it by 2017.
Morse said: ‘The level of fraud and error in the welfare system remains unacceptably high. I recognise, however, the difficulty of administering in a cost-effective way a benefits system of such complexity.
‘The department should use the development of Universal Credit as an opportunity to enhance its processes to demonstrate what a modern, effective and joined-up benefits system will look like. In refreshing its approach to reducing fraud and error, the department needs to continue to improve its understanding of the root causes of fraud and error.’
But Hodge said with ‘huge sums’ of money being lost the government simply can’t afford to carry on like this’.
She added: ‘The department is relying on the introduction of Universal Credit to get its house in order, but the transition to Universal Credit is full of risks and the department won’t even tell us if it is on schedule.
‘The department has got to get a grip on fraud and error now. Despite its assurances to my committee, it has not done so and it must do better.’
Responding to the qualification, a DWP spokeswoman said: ‘The current benefit system is far too complicated, which leaves it open to fraud and error.
‘Universal Credit will revolutionise the way we pay people benefits by simplifying and automating the system to ensure taxpayers’ money is going to those who need it the most. It will dramatically reduce the chances of fraud entering the system and will cut down on error as it will be much easier to understand and administer.’
• Also today, Morse qualified his audit opinion on the 2011/12 Social Fund White Paper Account, which records some benefit payments, such as the winter fuel allowance, and discretionary awards made to some people on low incomes. These include crisis loans and community care grants.
The accounts have been qualified for the ninth year running because of the ‘material levels of incorrect payments’ found in both discretionary and regulated awards.
In 2011/12, the fund paid out £3.1bn, of which an estimated £45.6m was made in error. However, this is down by more than half compared to 2010/11, when £114.3m was paid erroneously.
