Committee of Public Accounts


Press Notice No. 31 of Session 2002-03, dated 4 July 2003


THIRTY-FIRST REPORT: TACKLING BENEFIT FRAUD (HC 488)

Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today the Department for Work and Pensions have lost momentum in tackling the unacceptable levels of benefit fraud.

Mr Leigh was speaking as the Committee published its 31st Report of this Session, which examined: progress by the Department for Work and Pensions in reducing fraudulent claims for welfare benefits; action still needed; and the special problems of Housing Benefit fraud. The Department for Work and Pensions spend around £100 billion a year on welfare benefits and estimate that they lose some £2 billion a year through fraudulent claims for benefit. The most vulnerable benefits are Income Support, Jobseeker's Allowance and Housing Benefit which account for some 60% of the loss.

The Committee found that although the Department have made some progress in reducing the losses from fraud and error on Income Support and Jobseeker's Allowance by 24% since 1997-98, the current level of loss is still not acceptable. The rate of reduction slowed in 2001-02, and the Department need to regain momentum. It is clearly not acceptable to have a situation where the Department's accounts have been qualified for the last 13 years, or that some regions have performed half as well as others. This variation suggests that fraud and error could be reduced by sharing good practice and better targeting of the Department's checks on claims and investigation work. The Department should agree performance improvement plans with each region.

There remain many deficiencies in the performance of local authorities in housing benefit administration and anti-fraud work, despite repeated commitments over the years by the Department to address the longstanding problems. The Department have now launched a number of further initiatives, for example new performance standards and an anti-fraud subsidy scheme, and they intend to review progress in joint working between Jobcentre Plus and local authorities. They need to demonstrate that these initiatives can deliver results, unlike some earlier initiatives.

The Department's experience over the years suggests that the arrangements whereby local authorities pay housing benefit are insufficiently robust to deliver the benefit without substantial losses to the taxpayer. If the Department cannot make these arrangements work more effectively they will need to consider what alternative methods of delivery might align payments better with lawful entitlement.

The complexity of the benefits system must be reduced if the Department are to make real, sustained progress in reducing fraud. Reducing complexity would help in restricting the opportunities for fraudsters to exploit the confusion faced by many claimants about their obligations and entitlement, and also in reducing the propensity for errors by Departmental staff in paying benefits. Simpler benefits may be less well targeted and perhaps more expensive, but the Department should seek to identify areas in which the costs might be mitigated by administrative savings and reductions in fraud.

Mr Leigh said today:

"The taxpayer is being ripped off by benefit fraudsters to the tune of £2 billion a year. The Department for Work and Pensions have lost momentum in reducing this unacceptable level of fraud. Earlier progress in tackling fraud on Income Support and Jobseeker's allowance has slowed, and the Department must bring performance in the worst regions up to the level of the best.

"The Department have repeatedly tried to address fraud on Housing Benefit over the years, and have now launched further initiatives. The Department must make these work and reduce the level of fraud or else should consider changing the arrangements for delivering some benefit payments so that they only reach those who are fully entitled to them."


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