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National Audit Office report: Reducing losses in the benefits system caused by customers’ mistakes

Reducing losses in the benefits system caused by customers’ mistakes

DWP does not yet have enough evidence to demonstrate that its activities to reduce the cost of mistakes by customers have been value for money. Although mistakes are difficult to detect, correct and prevent, the scale of overpayments and underpayments demonstrates a clear need for improvement.

"The benefits system is complicated and it is inevitable that mistakes occur. The Department for Work and Pensions, therefore, faces a significant challenge in tackling error by claimants. "The Department has demonstrated a firm commitment to tackling administrative error, while its resolve to tackle customer error has so far been less evident. It now needs to bring its focus on customer error to the same level. The key to success in each area is a coherent strategy supported by good information on what works to deliver the best results."

Amyas Morse, head of the National Audit Office

 

A report today from the National Audit Office concludes that the Department for Work and Pensions does not yet have enough evidence to demonstrate that its activities to reduce the cost of mistakes by customers have been value for money. Mistakes made by claimants in the information they provide to the Department, termed customer error, are difficult to detect, correct and prevent. However, the report concludes that the scale of overpayments and underpayments demonstrate a clear imperative for improvement.

Mistakes made by customers are difficult for the Department to tackle because they often arise from a change in customers’ circumstances, which customers may not realise they have to tell the Department about. Overpayments due to customer error, which are estimated at £1.1 billion in 2009-10, represent a substantial loss to the taxpayer. And underpayments, which were approximately £800 million in 2009-10, can cause hardship for the families affected.

The establishment by the Department of the Fraud and Error Council and a previous similar committee shows a commitment to tackling fraud and error. However, the NAO found little evidence that there had yet been sufficient attention paid to reducing losses due to customer mistakes. The Department launched a five year strategy for tackling error in January 2007 but there has been no discernible decrease between 2006-07 and 2009-10 in underpayments and overpayments due to customer error as a percentage of total benefits expenditure.

The Department and its agencies have initiated measures to improve customer service and reduce customer errror, but it does not yet have enough information to target these initiatives effectively. The Department does not know, for example, whether there are any common patterns that would enable it to target interventions more effectively across all benefits. The Department also does not have enough consistently measured data on the costs and benefits of its interventions.

 

Publication details:

ISBN: 9780102970036 [Buy a hard copy of this report from TSO]

HC: 704, 2010-2011

Published date: January 21, 2011