The Work and Pensions Select Committee has accused the coalition government of over-emphasising benefit fraud in a report on fraud and error in the benefits system.
According to official statistics included in the report, of the total £5.1 billion of ‘incorrectly’ paid benefits, £1.6 billion was underpaid and £3.5 billion overpaid.
Of the £3.5 billion in overpaid benefits £700 million was due to ‘official’ DWP or local government errors, £1.6 billion was blamed on ‘claimant error’ (unintentional errors on claim forms etc) and £1.2 billion was due to claimants deliberately seeking to “mislead DWP or local authorities”.
The amount lost to claimant fraud represents just 0.7% of the entire 2012/13 benefits expenditure and the figure has remained relatively constant for several years.
The report says that “there is a large disparity between the official estimate of benefit fraud and the public perception”.
A survey by Ipsos Mori in 2013 found that the general public believed that 24% of all benefits were claimed fraudulently, 34 times greater than the official 0.7% estimate.
The Work and Pensions Select Committee, which consists of MPs from all the main political parties, say that the government’s approach to tackling fraud and error in the benefits system “appeared to place emphasis on addressing fraud”.
Minister for Welfare Reform, Lord Freud and David Gauke MP, Exchequer Secretary to the Treasury, “appeared to place emphasis on addressing fraud” in a strategy document announced in 2010. They highlighted the government’s intention to:
- Employ private sector firms on a payment by results basis, where appropriate, to ensure the full adoption of cutting-edge private sector fraud prevention techniques;
- Redirect resource to the front line to prevent fraud and error from entering the system in the first place, through enhanced checks and tougher sanctions for those even attempting to defraud;
- Ensure that anti-fraud activity is protected from cuts, including through the recruitment of over 200 new anti-fraud officers to sanction a further 10,000 fraudsters every year;
- Remove the current silo-based approach to tackling fraud, by creating new integrated cross-departmental data-matching and fraud investigation services (see Single Fraud Investigation Service, chapter 4);
- Introduce a system for rewarding members of the public who provide information that results in significant recovery of public funds;
- Respond to the growing threat of organised fraud through a new Identity Fraud Unit and far tougher sanctions for those involved;
- Introduce a new mobile regional fraud taskforce to investigate each and every claim in high fraud areas, to increase the certainty of detection;
- Address the weakness of the current penalty regime by abolishing cautions as a penalty for fraud, increasing asset seizures, and introducing far tougher one-strike and two-strike penalties, and a new three-strike rule;
- Clean up nearly 2 million claims to remove error; and
- Increase the frontline support provided by “Big Society partners” to help educate and support customers to get it right first time.
The Work and Pensions Select Committee say that of these measures, “seven focus solely on benefit fraud, one is aimed at fraud and error generally, and only two appear to be specifically designed to combat error”.
Benefit fraud and error is extremely complex with many different causes and ‘risk factors’. Analysis by the National Audit Office (NAO) shows that the incorrect reporting of income accounts for 47% of all benefit overpayments.
Claims made by a single person when they are living with a partner accounts for 13% of all overpayments, whilst claims made by people living ‘abroad or untraceable’ represent 11% of benefit overpayments.
The incorrect disclosure of savings accounts for 8% of all benefit overpayments, according to official statistics.
The report says that the over-reliance on claimants to report changes in their circumstances to different parts of the DWP, HMRC, local authorities and other official bodies, means that they “aren’t always aware who needs to be told what information, and when”.
Criticising the government’s over-emphasis on benefit fraud, the Work and Pensions Select Committee recommended that:
“Whilst we understand that making a distinction between claimant error and fraud is not always straightforward, we believe that DWP could be clearer about the official estimated level of benefit fraud.
“We therefore recommend that DWP publish, on separate days, discrete statistical summaries of its estimated rates of a) fraud and b) official and claimant error in the benefits system, alongside its more detailed report, to reduce the risk of confusion or conflation of these statistics in media reporting and public perceptions about benefit fraud, and to emphasise the importance of actions to reduce error as well as fraud.