The Department for Work and Pensions’ Accounts 2020–21 – Fraud and error in the benefits system – Report Summary

Summary

The level of fraud and error in the benefit system almost doubled during the pandemic from what was already the highest rate since records began. Overpayments of benefits now stand at an eye watering £8.3 billion, 7.5% of the Department for Work and Pensions’ overall benefit expenditure of £111.4 billion (excluding State Pension). The Department’s accounts have been qualified every year since 1988–89 due to levels of overpayments and underpayments in benefits expenditure. Fraud and error had been rising year-on-year even before COVID-19, but the pandemic has opened-up weaknesses in the Department’s defences and brought new opportunities for fraudsters—at huge cost to the taxpayer.

At the start of the pandemic, the Department took steps to support people affected by restrictions and the unprecedented surge in people claiming benefits, with Universal Credit claims doubling between March 2020 and March 2021. However, to manage the number of claims, ensure speed of payment, and put in place safety measures for its staff and claimants, the Department introduced ‘easements’ whereby it relaxed or adapted many of the controls it normally had in place to reduce the likelihood of fraud and error. Both organised criminals and dishonest opportunistic individuals have used this opening to steal from the taxpayer. The Department warned us in September 2020 that responding to the spike in demand for benefits during the pandemic would increase fraud and error, but the amount of taxpayers’ money being lost is simply unacceptable.

We are pleased to hear that the Department is investing in efforts to reduce fraud and error, including improving the way it uses data and intelligence to tackle the causes of fraud and error, and that it has seen some key successes from early initiatives. However, we remain sceptical about whether its approach will result in a real and sustained reduction in the levels of fraud and error, particularly as the Department states it will be unable to demonstrate a reduction in fraud and error in 2021–22. We expect to see more rapid results from closing the door the Department was forced to leave ajar during the pandemic.