Press Release - Department for Work and Pensions: Tackling
Benefit Fraud
13 February 2003
The Department for Work and Pensions have made good progress in
tackling benefit fraud and estimating the level of fraud and error
in key benefits, according to the National Audit Office. By March
2002 the Department had cut the estimated level of fraud and error
in Income Support and Jobseeker’s Allowance by 24 per cent over
their 1997-98 baseline, outperforming their target of a 10 per cent
reduction. More needs to be done however, as the rate at which the
level of loss is reduced slowed in 2001-02, and current performance
suggests that meeting future fraud reduction targets remains
challenging.
Head of the NAO, Sir John Bourn today reported to Parliament
that benefit fraud costs an estimated £2 billion a year. In 1999,
the Department developed a strategy to tackle benefit fraud with
the aim of getting benefit payments correct from the start, ensure
they are adjusted as customers’ circumstances change, detect when
payments go wrong and take prompt action to correct them, with
appropriate penalties to prevent a recurrence.
The Department carry out checks on all new benefit claims before
they are approved for payment and make additional checks on higher
risk Income Support and Jobseeker’s Allowance benefit claims. In
2001-02, 1.1 million of such claims were subject to additional
checks, a reduction of 20 per cent from the year before. The
Department have gradually improved the targeting of these checks.
Around one in six checks resulted in error being identified.
Performance varies significantly between regions. Bringing the
performance of all regions up to those with the higher returns in
2001-02 might have increased the total weekly reduction in wrongly
paid benefit identified by such checks by up to a further 22 per
cent.
In 2001-02, the Department accepted 390,000 cases of suspected
fraud for investigation, with around 161,000 investigations
resulting in an adjustment to benefit and/or identification of
overpayment. The aggregate weekly reduction in benefits paid, as a
result, was around £5.5 million. But there was a reduction of
around 12 per cent in the number of cases accepted for
investigation from 2001 to 2002, partly because of a desire by
regions to investigate only those cases based on better quality
intelligence. This has led to a reduction in the overall value of
fraud detected. The reduction in checks and investigations may
jeopardise further progress towards the Department’s target to
reduce losses from fraud and error.
High standards of investigation are necessary to ensure that
people suspected of fraud are treated fairly and that the evidence
found is enough to caution, penalise or prosecute fraudsters and to
stop the fraud. The Department are working to achieve consistent
high standards across regions and to tackle the highly variable
quality across local authorities. They have also set performance
standards and allocated additional funding for local authorities to
help improve administration of Housing Benefit and reduce
losses.
The Department also have a target, from April 2003, to cut losses
on Housing Benefit by 25 per cent by 2006. However they will not
have an accurate estimate of the level of Housing Benefit fraud and
error until late 2003 owing to problems and delays in measuring the
loss. This leaves uncertainty over the Department’s ability to meet
the target.
The NAO and the Department agree the need for good practices to
be shared. This includes fraud investigators in the Department and
in local authorities working effectively together and sharing data;
and the need to develop specialist staff skills and use local
knowledge and experience in selecting benefit claims for further
checks. Since 2001 the Department have worked jointly with Inland
Revenue and HM Customs and Excise to pursue fraud in the shadow
economy, with encouraging results.
Where a fraud is detected, the Department and local authorities
seek to recover the full amount claimed fraudulently and to stop or
reduce the benefit paid. One in seven frauds detected by the
Department also leads to a caution, fine or prosecution of the
benefit customer. The Department should carry out further research
into the deterrent effects of these different types of sanction.
Almost all cases brought to prosecution by the Department lead to a
conviction for fraud. In 2001-02, over 11,000 people were convicted
and around 650 fraudsters were imprisoned.
In 2001-02, when the Department introduced an incentive payment
of £2,000 for each successful prosecution and made professional
training available, local authorities brought around 1,700
prosecutions for Housing Benefit fraud, treble the number in
1998-99.
The Department have embarked on a long term publicity campaign
to change people’s attitudes to benefit fraud, by stressing to
potential fraudsters the likelihood of being caught. An independent
evaluation of the campaign, commissioned by the Department, found
that the results were encouraging.
Sir John said today:
"The Department have a set of programmes that are
designed to make fraud more difficult to commit, increase
deterrence, increase the probability of frauds being detected and
have increased the penalties for committing fraud. These programmes
have produced some good results but more needs to be done to
maintain progress. Amongst other actions the Department should
continue to concentrate on areas of higher risk, address the
decline in the fraud prevention and investigative activity, and
evaluate the deterrent effect of the different sanctions
available."
Notes for Editors
- The Comptroller and Auditor General’s report on tackling
external fraud against the Inland Revenue will follow on 28
February 2003.
- Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.org.uk/ Hard copies can
be obtained from The Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office employing some 750 staff. He and
the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 11/03
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