1 Extent of error
1. The Department for Work and Pensions is responsible
for much of the benefits system, and the majority of payments
are processed by the Department's agencies, Jobcentre Plus and
the Pension, Disability and Carers Service. The benefits system
is both large and complex: there are around 30 different types
of benefits and pensions, with 900 distinct rates of payment.[2]
In 2009-10, some £148 billion of payments were made to 20
million people.[3] We took
evidence on two reports from the Comptroller and Auditor General
looking at administrative and customer error in the benefits system.[4]
2. The Department estimates
that it made a total of £3.1 billion of overpayments and
£1.3 billion of underpayments in 2009-10 as a result of fraud,
customer error or administrative error (Figure 1).[5]
Of these totals, error accounted for £2.2 billion in overpayments
and £1.3 billion in underpayments. Administrative error accounted
for £1.1 billion of overpayments and £500 million of
underpayments in that year.[6]
Customer error resulted in overpayments of £1.1 billion,
and underpayments of £800 million in 2009-10.[7]
Figure 1: The extent of fraud and error in the
benefits system
3. The Department launched a five-year strategy for
tackling error in January 2007 which included an emphasis on training
and support for staff and informing customers of their responsibilities.[8]
Despite this, levels of error have remained constant over the
past few years.[9] Figure
2 shows that between 2006-07 and 2009-10, there was no sustained
decrease in the level of over or underpayments due to administrative
and customer error, taken as a percentage of total benefits spending.[10]
Figure 2: Overpayments and underpayments as a
result of error
Administrative error as a percentage of benefit
expenditure
Source: A C&AG's report, Figure 2
Customer error as a percentage of benefit
expenditure
Source: C C&AG report, Figure 4
4. The extent of fraud and error has resulted in
the Department's accounts being qualified for the past 22 years.
Sir Leigh Lewis, the Permanent Secretary for the Department until
his retirement in December 2010, told us that the failure to lift
the qualification was the 'biggest single disappointment' of his
five years leading the Department.[11]
The new Permanent Secretary, Robert Devereux, told us he was now
committed to removing the qualification on the accounts.[12]
5. In conjunction with HM Revenue and Customs, the
Department published a new joint strategy in October 2010, entitled
Tackling fraud and error in the benefit system. The strategy
aims to secure a reduction of 25% in the cost of overpayments
due to fraud and error over the next four years.[13]
6. The Government has committed to providing the
Department for Work and Pensions and HM Revenue and Customs an
extra £425 million over four years for measures to reduce
fraud and error, which the Department believes is sufficient to
implement its initiatives.[14]
However, the Department does not yet have a clear plan of how
it will utilise its funding to reduce the cost of fraud and error,
or how it will evaluate the initiatives.[15]
The Department's last strategy in January 2007 to reduce fraud
and error was not supported by an action plan, although the Department
has started to compile an action plan to support the 2010 strategy.[16]
7. The
Department's focus on reducing overpayments has meant it has not
given sufficient attention to tackling underpayments.[17]
The average weekly underpayment detected on Income Support because
of customer error was nearly £24, equivalent to 29% of the
average weekly payment, which can cause significant financial
hardship for claimants.[18]
However, the Department does not have a target to reduce underpayments.[19]
2 Q 2 Back
3
C&AG's report, Minimising the cost of administrative errors
in the benefit system, para 1; C&AG's report; Reducing
errors in the benefits system caused by customers' mistakes,
para 1 Back
4
C&AG's report, Minimising the cost of administrative errors
in the benefit system, HC 569, Session 2010-2011; C&AG's
report, Reducing losses in the benefits system caused by customers'
mistakes, HC 704, Session 2010-2011 Back
5
C&AG's report, Minimising the cost of administrative errors
in the benefit system, para 1.3; C&AG's report, Reducing
losses in the benefits system caused by customers' mistakes,
para 1 Back
6
C&AG's report, Minimising the cost of administrative errors
in the benefit system, paras 2, 4 Back
7
C&AG's report, Reducing losses in the benefits system caused
by customers' mistakes, para 1.4, pg 14 Back
8
Qq 74, 79, 97; Department for Work and Pensions, Getting welfare
right: Tackling error in the benefits system, para 3.36; C&AG's
report, Reducing losses in the benefits system caused by customers'
mistakes, para 8, pg 6 Back
9
C&AG's report, Reducing losses in the benefits system caused
by customers' mistakes, para 8, pg 6 Back
10
Qq 44-48; C&AG's report, Minimising the cost of administrative
errors in the benefit system, para 11; C&AG's report,
Reducing losses in the benefits system caused by customers'
mistakes, para 1.6, pg 16 Back
11
Q149 Back
12
Q160 Back
13
Qq 164-166, 168, 176-179; The Department for Work and Pensions
and HMRC: Tackling fraud and error in the benefit and tax credit
systems, October 2010, para 15, pg 14 Back
14
Qq 20, 23, 141, 173; The Department for Work and Pensions and
HMRC: Tackling fraud and error in the benefit system Back
15
Qq 165-174 Back
16
C&AG's report, Reducing losses in the benefits system caused
by customers' mistakes, para 17; Ev 36 Back
17
Qq 227-28 Back
18
C&AG's report, Reducing losses in the benefits system caused
by customers' mistakes, para 11 Back
19
Qq 227-245 Back
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