Fraud and Error Stocktake Contents

3 The impact on claimants

16. In 2013–14 the departments underpaid claimants by £1.6 billion, meaning that many households did not get the support they were entitled to. However, neither department has set targets for preventing underpayments.28 The Department for Work & Pensions (DWP) told us that it had not previously set such targets, but gave no reason why this could not be done. Likewise, HM Revenue & Customs (HMRC) did not deny that such targets could be set.29

17. HMRC said that reminding people of the need for accuracy and honesty helps to both prevent and correct fraud and error. It has made changes to the way it interacts with claimants, for example introducing new reporting requirements and using digital accounts. HMRC told us it has also improved the education and support it gives to claimants who contact it by telephone.30 However, HMRC said that individual claimants are responsible for ensuring that claims are correct, and it does not accept responsibility for contributing to mistakes. HMRC sends settlement letters for claimants to check their final tax credits award, but it admitted these were complex and very hard for people to understand.31

18. In autumn 2014, HMRC began a payments-by-results contract with a private sector partner, Synnex-Concentrix UK Ltd, to significantly increase resources for checking tax credits claims.32 HMRC said that Concentrix’s approach mirrors its own processes. HMRC admitted that claimants had initially complained about the overly threatening tone of letters they received from Concentrix, which had led to them being rewritten.33 HMRC accepted that it can be difficult for claimants to provide all the information requested, but said that it thought 30 days was a reasonable period to allow for a response. HMRC acknowledged, however, that claimants might react differently to receiving a request for detailed personal information from a private sector company, than if it had come from HMRC itself.34

19. DWP said that most fraud and error is caused by people not telling it things that they should have.35 It has recently run two communication campaigns to raise claimants’ awareness of its activities to detect and punish fraud. DWP has also strengthened its measures against fraudsters and negligent claimants. Since 2012 it has imposed nearly 70,000 penalties for fraud, including prosecutions, cautions and stopping benefits, and more than 150,000 fines for claimant error.36

20. DWP said that it takes cases to court to create a deterrent effect, both to the individual concerned and to claimants more generally.37 The Comptroller and Auditor General’s Report shows that since 2010, DWP’s initiatives to punish wrongdoing had cost £11 million and delivered savings of just £8 million. Furthermore, between 2015–16 and
2021–22, DWP plans to spend a further £40 million on projects to punish wrongdoing, which it expects to save £64 million, a lower rate of return than other projects to tackle fraud and error.38 DWP acknowledged that because prosecuting such cases was expensive, it was increasingly using civil penalties. However, DWP has no evidence regarding the impact of penalties on the behaviour of fraud offenders or claimants more widely.39

28 C&AG’s Report, paragraphs 1.4, 2.5

30 Qq 77, 78, 88, 136; C&AG’s Report, paragraphs 3.2, 3.16

36 Q. 103; C&AG’s Report, paragraph 3.16

38 C&AG’s Report, Figure 5 and Figure 13

© Parliamentary copyright 2015

Prepared 26 October 2015