Cost of benefits errors revealed

The Government has been urged to tackle "considerable" errors in the benefits system after a new report found that more than £2 billion was overpaid and £1.3 billion underpaid to claimants.

The figures, for 2009/10, showed that the problem had not improved for years, costing the taxpayer huge amounts of money, said the Public Accounts Committee.

Margaret Hodge, chairman of the committee, called on the Department for Work and Pensions (DWP) to improve its performance if it was to meet its target of reducing the total cost of fraud and error by 25% by 2015.

"We know the Government intends to simplify the benefits system but the changes won't start before 2013, so the Department must act now to deal with these problems. What concerns us is that the Department still lacks a clear plan of action, including a way of measuring progress.

"The Department's focus is entirely on its own losses due to fraud and error and not underpayments to poor people who depend on the benefits to which they're entitled. There is no target for reducing underpayments but it is essential that the Department does not neglect this problem.

"What is clear is that the Department must get better at learning the lessons from what works. The Department's accounts have been qualified for 22 years because of the amount of money involved in fraud and error. It must work to get its house in order."

The report said that £2.2 billion of overpayments and £1.3 billion of underpayments were made in the year in question because of administrative errors by DWP staff and mistakes by claimants.

The value of the errors as a proportion of total benefit spending of £148 billion was low, but still involved "very significant" sums of public money, said the report.

The committee accused the DWP of not addressing underpayments, despite the "hardship" they created for people in need.

"The Department is not making use of all available sources of information, such as calls to advice lines or feedback from quality checking teams, to identify the reasons why staff make mistakes and where guidance and training efforts should be directed as a result. Greater use of risk profiling would help identify which customers are most likely to make mistakes on their benefit claims, allowing interventions to be targeted more effectively.

"Wider welfare reforms have the potential to reduce errors in the long-term by simplifying benefits administration, but waiting for the implementation of the Universal Credit is not an option.

"The reforms will not be implemented in time to contribute much towards the 2015 target, and it is therefore essential that the Department maintain its current focus on getting error levels down now," said the report.

A DWP spokesman said: "Our welfare reforms will simplify the benefits system, making it easier to understand and less open to mistakes. We are absolutely committed to reducing fraud and error, and our new strategy sets out our plans to tackle this problem."