The Comptroller and Auditor General, Amyas Morse, has qualified his audit opinion on the accounts of the Department for Work and Pensions owing to the material level of fraud and error in benefit expenditure, other than State Pension where the level of fraud and error is lower.
The accounts of the Department, and those of predecessor Departments administering this expenditure, have received similar qualified audit opinions since 1988-89.
The Department estimates total overpayments due to fraud and error in 2013-14 are £3.3 billion, which equates to 2 per cent of the total forecast benefit expenditure of £163.9 billion. This has decreased from 2.1 per cent to 2 per cent since 2012-13, which the Department primarily attributes to the removal of Council Tax Benefit from the estimate following its abolition in April 2013. The Department estimates the total underpayments in 2013-14 to be £1.4 billion, or 0.9 per cent of total benefit expenditure.
Within those figures, the Department estimates that in 2013-14, fraud and error within State Pension resulted in overpayments of £0.11 billion, which is 0.1 per cent of related expenditure, and underpayments of £0.12 billion, which is 0.1 per cent of related expenditure.
In order to develop effective ways of reducing fraud and error in benefits expenditure, the Department needs to understand properly how and why overpayments arise in individual benefits.
According to the NAO, some benefits, mainly those with means-tested entitlements, are more inherently susceptible to fraud and error owing to their complexity, the difficulties in obtaining reliable information to support the claim and the challenges of capturing changes in a claimant’s circumstances. These more difficult to administer benefits, such as Pension Credit, tend to be the ones exhibiting the highest estimated rates of fraud and error.
In contrast, the C&AG has again been able to issue a clear opinion on regularity on the Social Fund White Paper Account 2013-14. This is because the Department has achieved a substantial and sustained reduction in the level of error for Social Fund benefits.