MPs challenge plans to reduce benefit fraud and error

The Department for Work and Pensions (DWP) has been warned by MPs it needs to deal with escalating fraud and error in benefit claims fairly, in light of the difficulties many claimants are facing as a result of the pandemic

The public accounts committee (PAC) reviewed DWP’s latest accounts, pointing out that even before Covid-19, benefit fraud and error overpayments were at their highest ever rates, with around £1 in every £10 of universal credit paid incorrectly.

The estimated overpayment rate, excluding state pension, now stands at 4.8% (£4.5bn) out of a total benefit expenditure of £93.1bn for 2019-20; this is DWP’s highest ever estimated overpayment rate.

The department’s accounts have been qualified every year since 1988-89.

The report stated: ‘The department has given us multiple reassurances that it will be able to reduce the rate of fraud and error in benefit expenditure and is committed to working towards removing the qualification of its accounts.

‘It is good at understanding the types of fraud and error in the system, but it is currently unable to demonstrate the cost-effectiveness of its counter fraud and error controls.

‘Improving its understanding of its control’s cost effectiveness is vital to ensure it is putting in place the best possible response to fraud and error.
‘We welcome what seems to be a new, more confident and constructive attitude and will be holding the department to account for improving its performance, aided by the fraud and error targets it has agreed to set.’

PAC heard evidence that the number of people on universal credit rose from 2.9m in February to 5.6m in August, with a peak of over 100,000 new claims a day at the end of March.

MPs said they recognised the hard work and commitment of the department’s staff in ensuring that 89% of new claims from 1 March 2020 to 26 May 2020 were paid on time and in full.

To manage this though, DWP made changes to benefit delivery, including turning off some controls that are ordinarily in place to mitigate the risk of fraud and error.

As a result, PAC warned the large increase in caseload combined with this easing of controls mean that losses to the taxpayer through benefit fraud and error are expected to increase significantly in 2020-21.

DWP has invested in data analytics, which it hopes will allow it to prevent fraud and error before it enters the system. However, PAC raised concerns about the potential for discrimination or bias caused by using artificial intelligence and machine learning on different claimant groups.

Meg Hillier, PAC chair, said: ‘DWP staff are to be highly commended for the incredible job they have done getting benefits to millions of new claimants in a crisis, many of whom never expected to have to rely on the welfare safety net. 

‘But the DWP’s system of fixing its errors can penalise the least secure with yet more debt and even lower incomes. A benefits system that can act to further reduce the stability of recipients is unlikely to be able to offer value for money.

‘DWP has now finally committed to a target for reducing its levels of error, and levels of fraud – it must ensure that the means it uses to get there do not further marginalise and discriminate against those who have little or no financial resilience to deal with the income changes these mistakes lead to.’

Department for Work and Pensions Accounts 2019–20 PAC report is here:

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