“I have had to qualify my opinion on the Department for Work and Pensions accounts because of the levels of fraud and error: an estimated £2.7 billion of overpayments and £1.2 billion of underpayments. While it is promising that the total proportion of fraud and error continues to fall and the Department has put in place measures to try to reduce this still further, the Department should be aware of the risks of further fraud and error due to the pressure on the benefits system because of the current economic downturn.”
Amyas Morse, the head of the National Audit Office, 20 July 2009
The head of the National Audit Office, the Comptroller and Auditor General, has today qualified the accounts of the Department for Work and Pensions for the 20th consecutive year. The accounts have been qualified because of the material level of fraud and error in expenditure on state benefits, except for State Pension which has a low level of error and therefore this element of the accounts has not been qualified. The total loss due to fraud and error is an estimated £2.7 billion.
Across the £135.9 billion of benefits administered by DWP, a total of £900 million was lost to fraud, £900 million to customer error, and £900 million to official error. The total sum lost represents two per cent of overall benefit expenditure; this is a decrease in the percentage of benefits being overpaid which was 2.1 per cent in the previous year and is the lowest ever recorded. In monetary terms the estimated actual loss has remained the same over the last four years. Total underpayments in 2008-09 are estimated to be £1.2 billion.
The benefits system is very complicated and some benefits are prone to error; therefore the DWP faces significant challenges in reducing fraud and error. The Department has, however, developed a number of initiatives to help tackle fraud and error and bring the level of overpayments down.