Reducing errors in the benefits system - Public Accounts Committee Contents

Written evidence from the Department of Work and Pensions



1.   At the PAC Hearing on 8 December, I promised to write in response to a number of the Committee's questions concerning Housing Benefit and Council Tax Benefit fraud figures, expenditure on Housing Benefit fraud investigation, incentives for local authorities to investigate fraud, overpayment recoveries, and links with SOCA. Also, more generally, I promised to provide some information in relation to the Computer Weekly article referred to at the hearing, which apparently stated that 19 of the DWP's IT Projects were over budget or late, and on how the Department scored in the most recent Capability Review.

2.   Mr Barclay mentioned that fraud relating to Housing Benefit and Council Tax Benefit was 1.2% in both 2005/06 and 2009-10. In 2005/06 the figure for both Housing Benefit and Council Tax Benefit fraud was 1.0%. In 2009/10, the percentage had increased slightly to 1.3% in Housing Benefit and 1.1% in Council Tax Benefit. The monetary value over the same period increased from £180m (£140m in Housing Benefit and £40m in Council Tax Benefit) to £31 Om (260m Housing Benefit and £50m Council Tax Benefit).

3.   Mr Barclay also referred to official error in Housing Benefit in 2009/10 as being £300 million. I have been unable to identify the source of that figure as my Department's published estimates show official error in 2009/10 to be £200m.

4.   We estimate that it costs around £70m a year to investigate local authority benefit fraud. Around £350m in overpayments are recovered by local authorities each year. However, this includes overpayments arising not just from fraud but also from customer and official error.

5.   Local authorities are incentivised to investigate fraud. Where Housing Benefit has been paid fraudulently, reimbursement from DWP to the local authority is reduced from 100% to 40%. This encourages the local authority concerned to pursue recovery. Where they recover the overpayment in full, they achieve 140% reimbursement when taken together with DWP subsidy. In addition, local authorities are further incentivised through being able to retain sums raised from administrative penalties and through the provision of free investigator training and prosecution services from DWP.

6.   With regard to local authority links with SOCA, I can confirm that accredited financial investigators within local authorities can submit a request to SOCA to search the SARs database on their behalf for information relevant to their specific investigations.

7.   In terms of the article in Computer Weekly that reported on the hearing of the Work and Pensions Select Committee on 19 November 2008 regarding DWP IT Procurement and that stated that "19 IT projects at DWP were over-budget or late", I can confirm that that these figures were not accurate.

8.   The hearing was based on a National Audit Office (NAO) memorandum, commissioned by the Work and Pensions Select Committee: "Department for Work and Pensions: IT Programmes". The memorandum noted that seven of the Department's 19 most significant IT enabled projects were delivering at or below original budget and on time; two more were being delivered on time, although over their original budget, and another was under budget but over time.

9.   Nine projects were at that time both over their original budget estimate and taking longer than originally anticipated to complete. However, the scope of five of these projects had been altered significantly to meet changing business needs, with consequent increases in budget and in the time required to deliver. All changes had been agreed by the Department's governance processes.

10.   Since that hearing I am pleased to say that the vast majority of the projects that had not already been completed have been delivered successfully. They include the Pensions Reform Delivery Programme; the Data Centre Strategy; the Jobseekers Regime and Flexible New Deal; the Centralisation of Benefit Processing; the Fraud Referrals and Interventions Programme and the Provider Referrals and Payments project.

11.  Interestingly, in his open letter to you as outgoing chairman of the Public Accounts Committee, Edward Leigh recognised, in respect of IT projects that: "there is a wealth of best practice, advice and good examples such as the Department for Work and Pensions' Pension Credit and Payment Modernisation Programme."

12.   Finally, regarding how the Department fared in its last Capability Review, I can confirm that we last went through a full Capability Review exercise in June 2008. The Department was assessed as either well placed or strong in the following seven areas:

  1. Ignite passion, pace and drive;
  2. Take responsibility for leading delivery and change;
  3. Focus on outcomes;
  4. Base choices on evidence;
  5. Build common purpose;
  6. Develop clear roles, responsibilities and delivery model(s); and
  7. Manage performance.
  8. The following three areas were identified for further development:
  9. Set direction;
  10. Build capability; and
  11. Plan, resource and prioritise

13.   The overall scores were an improvement on the Department's previous, 2006, Capability Review and saw the Department being assessed as one of the top scoring Government Departments overall.

14.   Separately, but in relation to the discussion around the standards of training in the Department, it may be helpful to draw your attention to this year's peer review of Departmental performance against the Skills Strategy for Government. DWP came fourth out of all Government Departments. For the third year in succession we were in the top tranche of Departments and received a score of over 90%.

10 December 2010

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