By Richard Johnstone | 26 June 2014
The Department for Work and Pensions has been told by auditors that it must take action to better understand why there are overpayments in some welfare benefits after its accounts were qualified for the 16th year in a row.
Comptroller and auditor general Amyas Morse today announced the qualification of the accounts due to the material level of fraud and error in benefit expenditure.
According to the latest figures, total overpayments due to fraud and error in 2013/14 are £3.3bn, which equates to 2% of the total forecast benefit expenditure of £163.9bn. This was down from the level of 2.1% in 2012/13, which the DWP attributed to the removal of Council Tax Benefit from the estimate following its abolition, and localisation to councils, in April 2013. The department estimated that total underpayments in 2013/14 to be £1.4bn, or 0.9% of total expenditure.
Within those figures, fraud and error relating to the State Pension is estimated at overpayments of around £110m, or 0.1% of related expenditure, and underpayments of £120m, also 0.1%. This lower level meant spending on the State Pension was not qualified.
However, in order to develop effective ways of reducing fraud and error in benefits expenditure, the NAO said the department needed to properly understand how and why overpayments arise in individual benefits.
Some benefits, mainly those with means-tested entitlements, are more susceptible to fraud and error owing to their complexity and the difficulties in obtaining reliable information to support the claim, as well as the challenges of capturing changes in a claimant’s circumstances. These more difficult to administer payments, such as Pension Credit, tend to be the ones exhibiting the highest estimated rates of fraud and error.
‘Issuing an audit qualification is a serious matter, and the fact that similar qualifications have been in place for such a long period of time does not lessen that seriousness,’ Morse said.
‘I consider that the overall value of fraud and error in benefit expenditure remains unacceptably high, and the qualification of my audit opinion reflects that.
‘We recognise the challenges involved in reducing fraud and error. We are working with the department to develop our approach to evaluating the adequacy of its response to fraud and error in benefit expenditure.’
A DWP spokeswoman said the department was committed to doing all it could to reduce levels of fraud and error.
‘The fact is fraud and error is now proportionately lower than before the start of the Parliament and we are recovering more money than ever,’ she said.
‘As part of our long-term plan, we have created a joined up Fraud and Error Service, and will be bringing local authority and Revenue & Customs investigators into DWP, and have announced tougher new measures against those who cheat the system.’
