The Department for Work & Pensions should have increased its focus on Housing Benefit fraud and error sooner, according to a report from the National Audit Office. The total level of benefit overpayment due to fraud and error has increased to an estimated £1.4 billion in 2013-14 (5.8% of spending on this benefit) from £980 million in 2010-11 (4.6%).
In 2013-14, the DWP spent £23.9 billion on this means-tested benefit to help the 5 million households on low income to pay rent. Claimant error is the main cause of overpayments (£900 million in 2013-14) while the estimated rate of fraud has remained the same at 1.4% (£340 million).
The DWP accepts that it is ultimately responsible for Housing Benefit fraud and error, and bears most of the financial risk if overpayments are not prevented or identified. The report considers that the DWP has not established sufficiently clearly how the responsibilities for tackling fraud and error are divided between it and local authorities.
According to today’s report, the DWP has relied too heavily on the incentives in the subsidy process (when local authorities reclaim payments) and the valuable, but limited, data sharing and matching it provides. As a result, the Department’s management of Housing Benefit fraud and error has not provided value for money over the last few years.
Today’s report notes that the funding to support local authorities’ administration of claims related to Housing Benefit fell by 17% between 2010-11 and 2013-14. At the same time, the number of people claiming Housing Benefit increased by 5%.
The DWP is increasing its focus on tackling Housing Benefit fraud and error. As it finalizes its plans, it will need to show it has addressed certain issues: including targeting interventions more on major areas of loss and exploiting data to identify riskier claims and strengthen decision-making.
The DWP is making major changes to the administration of Housing Benefit, including the introduction of a single fraud investigation service, and intends in the longer term to centralize the administration of working age Housing Benefit claims as part of Universal Credit. However, what effects the changes might have, and when, remain uncertain.
Among the NAO’s recommendations is that the Department should set out clearer responsibilities for reducing fraud and error.