The UK government has made no progress in tackling “unacceptable” record levels of benefits fraud and is lagging behind in efforts to compensate almost 250,000 people for longstanding underpayments of the state pension, according to a cross-party group of MPs.
In a damning report on Wednesday, the House of Commons public accounts committee said “fraud and error” led the government to overpay 7.6 per cent of all benefits, excluding the state pension, in 2021-22.
That cost the taxpayer £8.5bn — more than double the £4.4bn lost to fraud and error in 2019-20.
The committee criticised ministers for failing to explain the sustained rise in fraud or produce a convincing plan to quash it.
It said the Department for Work and Pensions had repeatedly argued that there had been “an increasing propensity to fraud in society in general since the pandemic”.
This was despite the fact DWP has reinstated controls relaxed at the height of the coronavirus crisis to help officials manage a surge in benefits applications from people who had lost jobs during lockdowns.
The committee said the department’s narrative could “encourage a complacent attitude” and lead people to “see committing benefit fraud as normal”.
Committee chair Dame Meg Hillier said that although “DWP is blaming everything from the pandemic to ills in wider society for unprecedented and wholly unacceptable levels of fraud in the benefits system . . . losses to the taxpayer to fraud and mistakes have been at record levels and rising for years”.
The report said the department’s plans to cut fraud were questionable, because they would require a recruitment drive at a time when overall headcount was being cut.
Meanwhile, the legislation needed for the department to access third-party data had not been included in the Queen’s Speech, meaning it would be difficult to crack down on claimants who misreported the value of savings or capital.
The committee said DWP’s strategy also relied on increasing its use of data analytics and machine learning to detect fraud — a method that might lead to some legitimate claims being identified as fraudulent.
It added that although the department was aware of the risk of hitting some vulnerable groups disproportionately via such tools, it had yet to publish the results of trials assessing what their impact might be.
The committee described government efforts to correct systemic underpayment of the state pension dating back as far as 1985 as “too slow to meaningfully put things right”.
DWP’s goal to correct underpayments — which have left 237,000 pensioners out of pocket by £1.46bn — by the end of 2023 had already been pushed back by a year and were at risk of not being met, because its plans relied on further recruitment, retraining and automation, the report said.
It added that the delay meant some pensioners might die before receiving redress and that the department had neither communicated clearly enough with those affected nor knew whether it had identified all cases of underpayment.
DWP said it was “disappointed” that the committee had not recognised the progress it had made on an ambitious plan to tackle fraud and error. The department added that it had brought fraud and error rates to record lows immediately before the onset of the pandemic, while also rolling out the universal credit system.