25 January 2008
The Department for Work and Pensions is spending £1.50 for every £1 of fraudulent benefit claims it identifies, auditors revealed this week.
A National Audit Office investigation found that benefit fraud had fallen from around £2bn in 2000/01 to £800m in 2006/07 because of anti-fraud initiatives. But more money was being spent running these initiatives than was being recovered and fraud-related losses continue to be a significant drain on public funds.
The NAO examined six anti-fraud programmes in its January 23 report. They cost the DWP £154m to operate in 2006/07 yet had identified only an estimated £106m in money paid out in fraudulent claims, of which just £22m was actually recovered.
Some initiatives were more cost-effective than others. Cases of fraud identified through the DWP's data-matching service provided better value for money than those that were generated by the 'hotline' service.
The NAO acknowledged that it was unable to quantify the amounts that might have been saved by deterring fraud.
But NAO head Sir John Bourn said: 'Although some of the department's initiatives lead to earlier interception of overpayments and may deter potential fraudsters, I believe the department could do more to determine whether its activities are cost effective.'
Public Accounts Committee chair Edward Leigh added that the department's record in recovering fraud was 'frankly embarrassing'.
The DWP issued a bullish response. Work and Pensions Secretary Peter Hain said the department had already identified areas that required immediate action to stop 'disgraceful and shameless theft'.
'Living-together fraud is now the single largest element of fraud in income support and we aim to make significant savings by stopping these cheats,' he said.
'We already use data-matching services with banks, utility companies and others that identify £24 of fraud for every £1 spent. By extending this to credit reference agencies, we can further reduce the amount of fraud.'
An inability to get to grips with the problem of fraud has led to the DWP having its accounts qualified for the past 18 years.
PFjan2008
