1. High levels of benefits and tax credits fraud and error remain unacceptable. Overpayments cost every household in the UK around £200 a year and waste money that government could spend on other things. HM Revenue & Customs (HMRC) and the Department for Work & Pensions (DWP) have made some progress in tackling fraud and error, but both departments have shown a paucity of ambition. HMRC has reduced fraud and error, but does not fully understand how it has achieved this, or how much further it can go. DWP did not meet its 2014–15 target for reducing fraud and error, and is relying on welfare reforms to make future improvements. These reforms will not solve all the problems, and DWP expects fraud and error to still be £5.8 billion in 2020–21, once Universal Credit has been fully rolled-out. While the departments can recover some of the money overpaid, this can create huge difficulties for people as they struggle to pay back money paid to them in error. During the next few years both departments must improve their understanding of what reductions are possible, and increase their focus on preventing both underpayments and overpayments due to fraud and error. We intend to return to the issue often during this Parliament.
Prepared 26 October 2015