Case Studies

Benefit fraud query

by Mark Rowe

How will the Department for Work and Pensions (DWP) manage the housing costs element of Universal Credit without increased risks of fraud and error? So the Work and Pensions Committee asks in a report.

The Government has stated that an IT system (the Integrated Risk and Intelligence Service (IRIS)) will allow it to cross-check data and provide similar safeguards against fraudulent claims under Universal Credit as are operated by local authorities within the Housing Benefit system.

However, last year the National Audit Office (NAO) found that IRIS was “missing” from the UC Pathfinders, and it remains unclear how or when DWP will achieve automated access to the range of property data available to local authorities. The committee of MPs says that such a system will need to be fully developed and tested before national Universal Credit starts.

Chair of the Work and Pensions Committee, Dame Anne Begg, said: “Through the use of RTI—real-time information on PAYE earnings—Universal Credit has the potential over the longer term to substantially reduce fraud and error in the benefits system. However, this could be seriously undermined because of the uncertainty about how DWP will administer the housing element of Universal Credit without increased risks of fraud and error. Under the current housing benefit system, local authorities can cross-check claims across a range of data relating to other council services. Unless DWP is able to cross-check Universal Credit claims in a similar way it may be less effective in tackling fraud and error. It is vital that a fully developed and tested IT system, which allows DWP to cross-check data, is in place before Universal Credit is implemented on a national scale. Worryingly, it appears that there is no automated system in use in the Pathfinders and is not clear when or how a system will be available.”

The official estimated benefit fraud rate is 0.7 per cent of total benefits expenditure. The general public’s misperception is that it is some 34 times higher. To reduce the risk of confusion or conflation in media reporting, DWP should publish statistics relating to the estimated level of benefit fraud on a separate day from those related to error in the benefits system, the MPs urge. Fraud and error rates have plateaued from 2005-06 to 2012-13, despite an “uncompromising” and “zero tolerance” approach announced by the Coalition Government. DWP will only meet the target set in 2010, to reduce the estimated overpayment rate to no more than 1.7pc by April 2015, if it employs innovative approaches which are aligned with the known risk factors associated with each benefit, the committee said.

Dame Anne Begg said: “Despite DWP devoting considerable effort and resources to fraud and error reduction, rates have hardly changed since 2005-06 and estimated overpayments remain at around 2% of total benefit expenditure. If the ambitious target is to be met, innovative approaches are needed, not more of the same.”

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