COMMONS

Terms of Reference: fraud and error in the benefits system

23 January 2014

Background

Official estimates of incorrect social security benefit payments—overpayments and underpayments—are categorised into three groups:

  1. Official error, due to "inaction, delay or a mistaken assessment by DWP, a local authority or HMRC"
  2. Claimant error, when "claimants make inadvertent mistakes with no fraudulent intent", and
  3. Fraud, in which claimants "deliberately seek to mislead DWP or local authorities which administer benefits on DWP’s behalf to claim money to which they are not entitled."

Recently published official statistics show that the total estimated value of overpayments due to fraud and error across all benefits in 2012/13 was £3.5 billion. This was 2.1% of total benefits expenditure (£166.6 billion). Of the total £3.5 billion of estimated overpayments:

  • £1.6 billion was due to claimant error
  • £1.2 billion was due to fraud, and
  • £0.8 billion was due to official error

The Department for Work and Pensions (DWP) and local authorities recovered around £900 million of these overpayments; therefore the net loss to DWP was around £2.6 billion.

Total estimated underpayments due to official and claimant error were estimated to be £1.6 billion—£1 billion of which was due to claimant error.

Government action to tackle fraud and error

In October 2010 DWP and HMRC published a joint fraud and error strategy. It set out actions to "Prevent, Detect, Correct, Punish and Deter" fraud and error in the benefits and tax credits system.

Later this year the Government will launch a Single Fraud Investigation Service (SFIS) to investigate benefit fraud across DWP, HMRC and local authorities. All of DWP’s fraud, error and compliance services will be brought together to form a new DWP Fraud and Error Service (FES).

In January 2014 DWP launched an advertising campaign—Benefits: are you doing the right thing?—to last for four to six weeks in six pilot areas. The campaign features posters and newspaper and facebook adverts, which highlight the importance of notifying DWP of changes in circumstance and the risk of a fine or criminal prosecution for failing to do so. They also encourage people to report those they suspect of claiming benefits to which they are not entitled. 

The Committee’s inquiry

The Committee will inquire into the causes of error and vulnerability to fraud within the benefits system and the adequacy of the Government’s fraud and error reduction strategy. It is particularly keen to identify potential improvements and hear about examples of good practice, including lessons to be learned from the private sector.

Submissions of no more than 3,000 words are invited from interested organisations and individuals.

The Committee is particularly interested in:

  • Where errors occur in the benefits system and the adequacy of steps being taken to reduce them, including: internal DWP processes; communication and joint working between departments and local authorities, including through the single DWP Fraud and Error Service (FES); and communication with claimants
  • Approaches to tackling benefit fraud, including: the proposed Single Fraud Investigation Service (SFIS); steps designed to discourage fraudulent claims and identify potentially fraudulent claims at the earliest possible stage; and the recently announced "Benefits: are you doing the right thing?" campaign
  • The implications for fraud and error of the introduction of Universal Credit and other welfare reforms, including the risks of online fraud; and the potential impacts on fraud and error reduction of utilising real-time information (RTI) on earnings, and
  • Lessons to be learned from the private sector, including on online fraud protection and data protection issues

Submissions do not need to address all of these points.

The deadline for submitting evidence is Friday 28 February.

How to submit your evidence

  • To encourage paperless working and maximise efficiency, select committees are now using a new web portal for online submission of written evidence. The web portal is available on our website.
  • The personal information you supply will be processed in accordance with the provisions of the Data Protection Act 1998 for the purposes of attributing the evidence you submit and contacting you as necessary in connection with its processing.
  • Each submission should:
  1. be no more than 3,000 words in length
  2. be in Word format with as little use of colour or logos as possible
  3. have numbered paragraphs
  • If you need to send a paper copy please send it to: The Clerk, Work and Pensions Committee, House of Commons, 7 Millbank, London SW1P 3JA
  • Material already published elsewhere should not form the basis of a submission, but may be referred to within a proposed memorandum, in which case a web link to the published work should be included.
  • Once submitted, evidence is the property of the Committee. The Committee normally, though not always, chooses to make public the written evidence it receives, by publishing it on the internet (where it will be searchable), or by making it available through the Parliamentary Archives. If there is any information you believe to be sensitive you should highlight it and explain what harm you believe would result from its disclosure. The Committee will take this into account in deciding whether to publish or further disclose the evidence.
  • Select Committees are unable to investigate individual cases.
  • Further guidance (PDF PDF 1.25 MB) on submitting evidence to Select Committees is available on the parliamentary website.

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