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.