1 The level of fraud and error in
Housing Benefit
1. On the basis of a Report by the Comptroller and
Auditor General, we took evidence from the Department for Work
and Pensions (the Department) on fraud and error in Housing Benefit.[3]
We also took evidence from Islington Council and East Kent Services.
2. Housing Benefit is a means-tested benefit to help
people on low incomes pay rent. Eligibility depends on several
factors including: income and capital; household size, ages and
circumstances; and rent levels. Five million households claim
Housing Benefit, receiving an average weekly payment of £90.
In 2013-14, £23.9 billion was spent on Housing Benefit, 15%
of the Department's total benefit spending.[4]
The Department and local authorities manage Housing Benefit. The
Department sets policy, entitlement rules and shares data and
guidance with local authorities. Local authorities have a statutory
duty to undertake the day-to-day administration of Housing Benefit
and pay claimants. Local authorities reclaim payments from the
Department.[5]
3. The Department estimated that Housing Benefit
overpayments were £1.4 billion in 2013-14. At 5.8% of expenditure,
Housing Benefit has the highest rate of overpayments among all
of the Department's benefits.[6]
The central estimate of overpayments has risen from £980
million (4.6%) in 2010-11 (Figure 1). The Department also estimated
that £370 million was underpaid in 2013-14, 1.6% of Housing
Benefit expenditure.[7]
Figure 1
Source: C & AG's Report, Housing
Benefit fraud and error, Session 2014-15, HC720, 17 October 2014,
Figure 3
4. The major cause of Housing Benefit overpayments
in 2013-14 was claimant error (£900 million), which represented
two thirds of total overpayments (claimant fraud—£340
million; official error—£150 million). The main source
of claimant error was unreported fluctuations in claimants' earnings.[8]
The Department believes that the increase in the number of in-work
claimants, for which rates of overpayment are five times higher
than claims from out-of-work claimants, is the main reason for
the increase in Housing Benefit overpayments.[9]
5. The Department stated it was May 2013 when it
first identified clear evidence of the increase in earnings-related
overpayments.[10] It
considered proposals over the next year. In April 2014 the Cabinet
Office's Fraud, Error and Debt Taskforce requested the Department's
plan to reduce Housing Benefit losses in 2014-15. In July 2014
the Department responded to these concerns by setting out short-term
plans for tackling fraud and error in Housing Benefit. The impact
and timing of these changes on levels of fraud and error remains
uncertain.[11]
6. The Department spent only 8% (£23 million)
of its fraud and error spend-to-save funding on Housing Benefit.[12]
Housing Benefit fraud and error accounts for 42% of the total
fraud and error across all of the Department's benefits.[13]
The Department argued that its wider fraud and error initiatives
on other benefits, such as Jobseeker's Allowance, would reduce
overpayments on related Housing Benefit claims. 63% of Housing
Benefit claimants would be affected by the Department's wider
initiatives to reduce fraud and error but these initiatives will
not affect Housing Benefit-only claimants, which account for around
two-thirds of overpayments. The wider initiatives would not, for
example, affect in-work claimants (who do not receive other benefits)
which the Department argued was driving the increase in claimant
error.[14]
7. In 2013-14, the estimated level of Housing Benefit
underpayments was £370 million, of which some £290 million
was due to mistakes by claimants. In addition, not all potential
claimants take up their entitlement, probably because of a lack
of awareness. We were concerned about the level of unclaimed Housing
Benefit and asked the Department what work it was doing to tackle
underpayments. It argued that its awareness campaigns were encouraging
take-up by those who are eligible for Housing Benefit. But those
campaigns—are targeted at reducing overpayments by encouraging
people to report fraud and raising awareness of the need for claimants
to report changes to their circumstances. The Department acknowledged
that its focus has been on reducing the level of overpayments
rather than increasing uptake and identifying underpayments. We
would expect the Department to be undertaking wider activities
to ensure that Housing Benefit is received by the claimants most
in need.[15]
8. The local authority witnesses acknowledged that
they have cut back on the wider work that they used to undertake
to identify fraud and error in claims that are already in-payment.
They explained that their while their caseload had increased the
funding received from the Department had gone down. As a result,
local authorities have focused on the core requirement to process
claims quickly and accurately, reducing their investment in wider
initiatives to tackle fraud and error.[16]
3 C&AG's Report, Housing Benefit fraud and error, Session 2014-15, HC 720, 17 October 2014 Back
4
C&AG's Report, para 1 Back
5
C&AG's Report, para 3 Back
6
C&AG's Report, para 2 Back
7
Department for Work and Pensions, Fraud and Error in the Benefit System: 2013/14 Preliminary Estimates (GreatBritain), 15 May 2014 Back
8
Department for Work and Pensions, Fraud and Error in the Benefit System: 2013/14 Preliminary Estimates (Great Britain), 15 May 2014 Back
9
Qq 43-45 Back
10
Qq 69,70 Back
11
C&AG's Report, para 17 Back
12
C&AG's Report, para 19 Back
13
Q 134 Back
14
C&AG's Report, para 3.7 Back
15
Qq 147-153; Department for Work and Pensions, Fraud and Error in the Benefit System: 2013/14 Preliminary Estimates (Great Britain), 15 May 2014 Back
16
Q 1 Back
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