"Ever since the Department for Work and Pensions began
measuring fraud and error, rates have consistently remained at a
high level. This has been most notable in the case of means tested
benefits where evidence of entitlement can be difficult to verify
or easy to get wrong.
"No system to administer benefits can ever be perfect
but I believe that there is scope for the Department to reduce
fraud and error levels significantly. I therefore welcome its
commitment to do so, as shown by the refreshed approach it intends
to take to driving down incorrect payments."
Amyas Morse, head of the National Audit Office, 19 July
2011
The head of the National Audit Office, the Comptroller and
Auditor General, has qualified the 2010-11 accounts of the
Department for Work and Pensions. The Department’s accounts have
been qualified every year since 1988-89. The latest accounts have
been qualified because of the material level of fraud and error in
expenditure on state benefits (except for the State Pension which
has a low level of error). The total of overpayments made by DWP,
due to fraud and error, is an estimated £3.3 billion (or 2.1 per
cent of total expenditure on benefits administered by the DWP of
£153.6 billion).
In 2010-11, the total overpaid breaks down into approximately
£1.2 billion lost to fraud, £1.2 billion to customer error, and
£800 million to official error. The total sum lost, £3.3 billion,
is an increase on that in the previous year (2009-10: £3.1 billion)
but constitutes the same proportion of overall benefit expenditure
(2009-10: 2.1 per cent). Total underpayments in 2010-11 are
estimated to be £1.3 billion.
Some benefits are prone to error and the Department faces
significant challenges in administering a complex benefits system
in a cost effective way. The Department has, however, refreshed the
approach it intends to take in reducing fraud and error. The
Government’s proposal to introduce a Universal Credit to replace
some of the existing working-age benefits, which are the benefits
which have historically suffered from the highest rates of fraud
and error, is an opportunity to reduce fraud and error.