PAC criticises ‘weak’ efforts to tackle Housing Benefit fraud

14 Jan 15

Whitehall incentives for local authorities to tackle Housing Benefit fraud and error are weak and being compounded by cuts in funding available to councils to administer it, the Public Accounts Committee has said.

Its report criticised the Department for Work and Pensions for failing to tackle Housing Benefit fraud ‘quickly or convincingly’, saying this had cost the taxpayer billions of pounds.

Around £12.6bn has been spent on Housing Benefit overpayments since 2000/01, money that the MPs said could have been used to improve the system.

The report highlighted the 17% cut in local funding to administer Housing Benefit, which has been imposed on councils since 2010/11, and said it was ‘exacerbating’ problems. The PAC is calling on the DWP to produce a proposal for how to strengthen local authority incentives to tackle fraud and error.

PAC chair Margaret Hodge said: ‘The size of overpayments is going up not down. In the last financial year £1.4bn of overpayments were made – 5.8% of Housing Benefit spending – up from £980m (4.6%) in 2010/11. £900m of the £1.4bn was claimant error, £340m was claimant fraud and £150m was official error. Even after recoveries by local authorities, this is a huge cost to taxpayers.

‘The increase shows that the department has still not effectively targeted the major sources of fraud and error – 16 years after this committee first sounded the alarm.’

She added that it was ‘completely nonsensical’ that the DWP spends just 8% of its fraud and error funding on Housing Benefit, even though Housing Benefit overpayments account for 42% of overpayments across all benefits.

The PAC is demanding that the department reviews how it allocates money and resources to tackle Housing Benefit fraud and error and report back to the committee in six months.

‘The department should also produce a proposal for how to strengthen incentives so that local authorities tackle Housing Benefit fraud and error more effectively,’ Hodge added.

‘Given the lack of evidence that the department is getting to grips with fraud and error we view with scepticism the department’s confidence that it will meet its target to reduce total fraud and error overpayments to 1.7% of benefit expenditure by March 2015.’ 

Responding to the report, a DWP spokesman insisted that money lost through fraud and error was overall, with more of it being recouped, including £1.3bn last year.

‘But we want to do more to make sure this money goes to those who need it most, which is why we’re incentivising local authorities to identify overpayments and bring fraudsters to justice.

‘At the end of last year we brought in a new detection system that will cross-check all Housing Benefit claims against up-to-the-minute information on earnings and pension income. And we expect the on-going introduction of Universal Credit to cut fraud and error by a further £1.5bn.’

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and

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