Chair's statement on fraud and error stocktake
21 July 2015
A statement from Meg Hillier MP, Chair of the Committee of Public Accounts:
"Billions of pounds are lost to the taxpayer as a result of benefit and tax credit fraud and error. In 2013-14 alone, the Department for Work & Pensions (DWP) and HM Revenue & Customs (HMRC) overpaid claimants by £4.6 billion. Equally worryingly, claimants were underpaid by £1.6 billion in the same year, potentially causing hardship to those who missed out on the support to which they were entitled.
Benefit and tax credit fraud and error is a long-standing problem. HMRC has made progress but it has still only managed to reduce its overall fraud and error rate to a similar level to the DWP's rate for working age benefits. The progress made by the DWP in reducing its overpayment rate is poorer, and it also failed to achieve its target to shrink overpayments to 1.7% (reducing these to 1.9% in 2014-15 from 2.2% in 2008-09).
Prevention is always better than cure so it beggars belief that the DWP has slashed its planned spending on preventative initiatives from £192 million to £27 million between 2010 and 2015.
Preventing overpayments, rather than detecting and correcting them, is the most effective way to deliver sustainable long-term savings.
Both departments have introduced some major changes – such as the use of real-time information and the move to Universal Credit – which they hope will help reduce fraud and error. But, of course, these savings are yet to be realised and given the transition to Universal Credit is expected to take until at least 2019-20, there is still significant scope for taxpayer loss in the interim.
The DWP's recent record suggests it is struggling to deliver promised benefits and they must up their game to protect taxpayers' money. I'm sure we will want to press both departments on what they are doing to reduce fraud and error when they appear in front of my Committee in September."