Councils struggle to cut £1.15bn fraud

13 Feb 03
Councils are failing to detect four-fifths of housing benefit frauds, the National Audit Office said this week. The government has also made the system more complex and prone to fraud, despite repeated calls for simplification, auditors said. The Dep.

14 February 2003

Councils are failing to detect four-fifths of housing benefit frauds, the National Audit Office said this week. The government has also made the system more complex and prone to fraud, despite repeated calls for simplification, auditors said.

The Department for Work and Pensions estimates that fraud costs the £11.5bn programme £500m a year in losses, but local authorities were able to identify just £95m of this.

In a report on the department's work, entitled Tackling benefit fraud, the NAO praised progress in reducing fraud and error in income support and jobseeker's allowance claims.

The department succeeded in cutting fraud and error against a 1997/98 baseline by 24%. Losses still totalled £1.15bn in 2001/02, of which £700m was due to fraud and the remainder error.

But savings of £9.5m were missed through variations in regional performance, the report said. Estimated losses in 2000/01 ranged from 9.2% in the Chilterns to 5.3% in the West Country.

Housing benefit fraud was more problematic. The report warned that the department may miss its target of cutting this by a quarter by 2006 because it will not have an accurate estimate of fraud levels until next winter.

The NAO said: 'The complexity of the housing benefit scheme is widely acknowledged as a major factor in poor local authority administration and the resulting risks for fraud and error.

'Although a government review in 2000 proposed partial simplification as a first step, in practice, the scheme has become more complex.' This created opportunities for fraudsters to make pleas of genuine errors.

Three-quarters of housing benefit frauds arose from claimants failing to report changes in their circumstances.

Auditors found that thresholds to trigger investigations were twice as high as they should have been when the DWP launched its new anti-fraud subsidy scheme last April. These were reduced after it emerged that only nine councils would have met the targets.

In 2001/02 more than 11,000 people were convicted for benefit frauds, of whom 650 were jailed. Councils prosecuted 1,700 people for housing benefit fraud, a rate which had trebled in three years.

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