Committee warns of DWP failure to address fraud and error

The level of fraud in the benefit system has almost doubled during the pandemic from what was already the highest rate since records began, new figures have revealed.

Overpayments of benefits now stand at £8.3bn, a total that is 7.5% of the DWP’s overall benefit expenditure of £111.4bn excluding the state pension.

According to the Public Accounts Committee, fraud and error were rising year-on-year before COVID-19 – and the NAO has qualified DWP’s accounts every year since 1988/89. However, the Committee has suggested the Department’s response to the pandemic opened “new weaknesses” in its systems.

It warned that “both organised criminals and dishonest opportunistic individuals” have exploited these weaknesses to steal from the taxpayer, billions of whose money “is almost certainly lost”.

At the start of the pandemic, the DWP introduced several fraud and error controls to enable it to manage “unprecedented new numbers of claims”, alongside implementing public health measures.

The DWP had warned the Committee in evidence in September 2020 that responding to the spike in demand for benefits during the pandemic would increase fraud and error, however the Committee has today suggested the amount of taxpayers’ money being lost is “simply unacceptable”.

Chair of the Public Accounts Committee, Meg Hillier, said: “Mistaken overpayments now account for 7.5% of DWP’s benefit expenditure. Add to this the huge task of correcting years of underpayment of state pension, and the department’s resources are stretched.

“This is a real-life waking nightmare for the huge numbers of people affected, from the most vulnerable in our society to the full-time working families who still struggle daily to make ends meet.”

The DWP revealed it has been investing in data and intelligence systems, and in 3,000 new staff, to tackle the years of payment errors that had been uncovered even before the pandemic began.

However, the Committee said it remains “sceptical” about whether this approach will result in a reduction in the levels of fraud and error – after the DWP admitted in September 2020’s evidence that it will be unable to demonstrate any such improvements in 2021/22.

“The Department appears unequipped either to properly administer our labyrinthine benefits system or detect and correct years of mistakes across too many of our basic state welfare entitlements, far pre-dating its current woes,” Hillier added.
“This situation is untenable and taxpayers – who also include benefit claimants – are losing billions because of it. There needs to be a step change in understanding the impact of benefit errors on people’s lives and restoring trust, because as we’ve seen recently with pension underpayments, once a mistake in the system materialises it can take years to resolve.”

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