Conclusions and Recommendations |
1. The cost of errors in the benefits system
is considerable and has remained constant since 2006-07. Total
overpayments in 2009-10 amounted to £3.1 billion. Of this
total, staff and customer mistakes accounted for over £2
billion of overpaid benefits, while fraud accounted for another
£1 billion of overpayments. The Department needs to step
up its performance significantly if it is to meet its joint target
to reduce the cost of overpayments due to fraud and error by 25%
over the next four years. The Department and HM Revenue and Customs
have an additional £425 million over this period to tackle
the problem, but the Department has not clearly set out how it
intends to spend and evaluate this extra funding. By May 2011,
it should write to us with a clear delivery plan setting out the
interventions it will implement to meet the target, how it will
monitor progress and the corrective measures it will take if progress
toward achieving the target is inadequate.
2. The Department has focused on reducing
overpayments and neglected underpayments, despite the hardship
that underpayment of benefits can cause for claimants.
The average weekly underpayment in Income Support for affected
customers is £24, a considerable proportion (29%) of their
weekly payment. There were an estimated £1.3 billion of underpayments
due to customer and administrative error in 2009-10, but the Department
does not have a target to reduce this total. The Department's
drive to reduce overpayments must not be at the expense of reducing
underpayments. It should set clear goals to reduce underpayments
which are as challenging as its target on overpayments.
3. The Department does not know which of its
interventions have the biggest impact on reducing error because
it has undertaken only a partial assessment of their costs and
benefits. The Department has conducted
cost-effectiveness assessments of some of its interventions, but
these were incomplete and did not include all relevant costs.
The failure to identify what works best undermines the ability
of departments to manage programmes cost-effectively and is something
we see repeatedly across government. We have made similar recommendations
very recently in relation to both the work of youth offending
teams and civil tax investigations. The Department should complete
a full cost-benefit assessment of each intervention, and keep
these up-to-date, so that resources can be targeted on the interventions
that are most cost-effective at reducing error.
4. The Department does not have a sound understanding
of where and why errors arise and is not doing enough to prevent
errors entering the system in the first place.
The Department needs to improve its use of data to help it identify
sources of error and prevent mistakes from occurring.
- On administrative error, the
Department should draw on available sources of information, such
as staff feedback and calls to internal helplines, to detect where
benefits processing staff are having problems. The Department
should then use this information to revise guidance and training
in order to help staff avoid making the most common mistakes.
- On customer error, the Department should make
greater use of risk profiling to identify those customers most
likely to make mistakes on their benefit claims. The Department
introduced risk assessments for Housing Benefit in 2003 and Income
Support in 2010, but has yet to extend these to all benefits.
The Department should then target appropriate actions, such as
contacting customers to check if there have been changes in their
circumstances which would affect their benefit entitlement, and
evaluate such interventions.
5. Quality checks are an important measure
for detecting and preventing error, but Jobcentre Plus's quality
assurance arrangements are not independent enough.
The Pension, Disability and Carers Service has a national quality
checking team independent from local offices to ensure the standard
and consistency of checks, while Jobcentre Plus relies on checks
carried out by staff working in local offices. The Department
should make sure agencies learn from each other so that all agencies
adopt best practice in their quality assurance arrangements. We
expect Jobcentre Plus to fulfil its commitment to us to implement
a system of independent checks by April 2011.
6. Wider welfare reforms could reduce error
in the long term by simplifying the benefits system, but could
also distract the Department from its focus on getting error rates
down now. The Department believes that
the introduction of Universal Credit will minimise errors by simplifying
benefits administration. However, Universal Credit will not start
being phased in until 2013, and so will not be able to contribute
much to the target 25% reduction in fraud and error over the next
four years. The Department must ensure that its commitment to
reduce error remains a priority and is sustained while preparations
for Universal Credit go ahead.