Recommendations & Conclusions
12 items
2
Recommendation
Twenty-Sixth Report - The Department fo…
Rejected
The Department risks allowing high levels of fraud and claimants disengaging with its compliance processes to become normal. The Department has repeatedly claimed that there is an increasing propensity to fraud in society in general since the pandemic. It believes that this is in part driving the record levels of …
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The Department risks allowing high levels of fraud and claimants disengaging with its compliance processes to become normal. The Department has repeatedly claimed that there is an increasing propensity to fraud in society in general since the pandemic. It believes that this is in part driving the record levels of fraud and error in the benefit system. However, it is unable to point to convincing evidence that increasing fraud in society must lead to increasing losses to the taxpayer. The Department does not fully understand the reasons why fraud and error in benefit payments remain at record levels. We are therefore concerned that the Department’s narrative about fraud in society could encourage a complacent attitude toward unprecedented and unacceptable levels of benefit fraud and that people come to see committing benefit fraud as normal. We are also concerned about the sharp increase in the number of claimants choosing not to engage with the Department’s sampling exercise to measure fraud and error. These claimants accounted for 14.4% (£852 million) of all Universal Credit overpayments in 2021–22, an increase of £328 million compared with 2020–21. The Department assumes that all such claims are fraudulent but admits that it has no statistically significant information to support this view. It is therefore unable to say whether claimants who fail to engage have done so because they are fraudsters or have been unwilling or unable to engage for other 6 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system reasons. Given this uncertainty, the Department should do more to reassure itself that it has struck the right tone in its communications with claimants to encourage trust and engagement with its services. Recommendation: Before the end of January 2023, we expect the Department to write to us with a clear plan of how it intends to increase the number of claimants responding to its fraud and error sampling exercises. In doin
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Government response AI summary
The government disagrees, stating that there is a well-established methodology for dealing with customers who do not co-operate with the benefit review process and should not be receiving benefit. They also state that they continually review all of its customer letters to ensure they are …
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HM Treasury
3
Recommendation
Twenty-Sixth Report - The Department fo…
Rejected
The success of the Department’s strategy to bring down fraud and error is dependent on highly uncertain assumptions. The Department has set out its strategy to tackle fraud and error in Fighting Fraud in the Welfare System. This includes a £613 million investment in counter-fraud activities. The plan is dependent …
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The success of the Department’s strategy to bring down fraud and error is dependent on highly uncertain assumptions. The Department has set out its strategy to tackle fraud and error in Fighting Fraud in the Welfare System. This includes a £613 million investment in counter-fraud activities. The plan is dependent on the Department’s recruitment and training of enough people to implement its fraud counter-fraud activities in a difficult hiring environment, while simultaneously making headcount reductions in line with wider cuts to civil service staffing. The legislation needed to grant new powers the Department needs to deliver its counter- fraud strategy was not included in the Queen’s speech. Without new powers to access third-party data it will have limited ability to crack down on fraud driven by claimants misreporting the value of their savings or capital. The Department will be dependent on close cross-government working, including with the new Public Sector Fraud Authority, and is reliant on HM Revenue & Customs’ (HMRC’s) progress in collecting more timely information about self-employment earnings to address this driver of Universal Credit overpayments. Recommendation: As part of its Treasury Minute response, the Department should set out in detail how its counter-fraud plan would be impacted if it is not able to get the staff, powers or HMRC data that it needs, and what its contingency plans would be in these circumstances.
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Government response AI summary
The government disagrees with the recommendation, stating that setting out detailed contingency plans for various scenarios is unnecessary and could distract from the delivery of its existing plan to reduce fraud and error.
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HM Treasury
5
Recommendation
Twenty-Sixth Report - The Department fo…
Rejected
The Department’s lack of transparency over its use of data analytics risks eroding public trust in the benefit system. The Department’s strategy to bring down fraud and error will depend increasingly on the use of data analytics and machine learning to identify potentially fraudulent claims. It has trialled a model …
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The Department’s lack of transparency over its use of data analytics risks eroding public trust in the benefit system. The Department’s strategy to bring down fraud and error will depend increasingly on the use of data analytics and machine learning to identify potentially fraudulent claims. It has trialled a model to detect fraud in Universal Credit advances. This uses historical fraudulent claim data to predict which claims are likely to be fraudulent in future and flag these to caseworkers for their review. The Department is aware of the potential for data analytics methods to generate outcomes that could have an adverse impact on certain claimants. For instance, some cases flagged as potentially fraudulent will turn out to be legitimate claims. If the model were to disproportionately identify a group with a protected characteristic as more likely to commit fraud, it could inadvertently obstruct fair access to benefits. The Department has taken steps to evaluate the potential impact of data analytics and machine learning on groups with protected characteristics, but the results are inconclusive and it has not made them public. The Department expects it will need to regularly update its assessment of the potential impact on vulnerable claimants as it develops its data analytics over time. Recommendations: The Department should report annually to Parliament on its assessment of the impact of data analytics on protected groups and vulnerable claimants. The Department should also consider what role the Social Security Advisory Committee can play in supporting public trust over the use of data analytics in the welfare system.
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Government response AI summary
The government disagrees with the recommendation, stating that the recommendation does not fall within the remit of the Social Security Advisory Committee.
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HM Treasury
7
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
We challenged the Department to explain why benefit fraud remained so high and had not yet returned to pre-pandemic levels. The Department could not tell us when it expected fraud and error to return to pre-pandemic levels, nor could it tell us when Universal Credit overpayments were likely to reach …
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We challenged the Department to explain why benefit fraud remained so high and had not yet returned to pre-pandemic levels. The Department could not tell us when it expected fraud and error to return to pre-pandemic levels, nor could it tell us when Universal Credit overpayments were likely to reach the 6.5% specified in the Business Case.8 It admitted that levels of fraud and errors within the benefits system were “massively too high”, but told us that it was not surprised at the extent of the increase.9 It told us that a large proportion of the increase in fraud and error was due to the higher number of Universal Credit claims during the pandemic. It explained that these claims were “inherently riskier, because there was a lot more self-employment” and that it lacked the timely data it needed to verify and assess these claims.10 It also told us that there had been an increase in the propensity to commit fraud across society in general. It explained that it considered fraud and error to have been high in 2021–22 as a result of: • A shift in the benefit claimant caseload toward riskier individuals, with more self-employment earnings and possession of savings or other types of capital; • The sampling exercise to measure rates of fraud and error took place between October 2020 and November 2021, a period affected by the pandemic during which key controls over fraud were significantly relaxed due to social distancing; and • The Department is still developing key tools to prevent fraud. These include controls over Universal Credit that are set out in the business case but are not yet fully operational, wider use of data analytics to identify fraudulent cases, and increased data sharing with HMRC that would enable it to tackle fraud relating to self-employment earnings.11 6 Committee of Public Accounts, Department for Work and Pensions Accounts 2020–21 – Fraud and error in the benefits system, Twenty-Fifth Report of Session 2021–22, HC 633, 17 November 2021 7 DWP ARA 202
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Government response AI summary
The government disagrees with the Committee’s recommendation and states that the OBR is the government’s independent forecaster, and the department is working with OBR to review its baseline assumptions, and to ensure fraud and error is more visible within the overall forecast, when revised at …
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HM Treasury
10
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
The Department has repeatedly linked the high level of benefit fraud since the pandemic to an increase in the propensity to commit fraud in society more generally. It told us “there is no doubt” that underlying fraud in society is going up, and that the fraud and error in the …
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The Department has repeatedly linked the high level of benefit fraud since the pandemic to an increase in the propensity to commit fraud in society more generally. It told us “there is no doubt” that underlying fraud in society is going up, and that the fraud and error in the benefit system remained at record levels in part because “the tide is rising” and it was battling against it.18 We challenged the Department on its evidence for this belief. It asserted that this view was based on what it has seen “across Government and indeed internationally”, and the British Social Attitudes Survey, but did not provide further detail and admitted it was “difficult not to be anecdotal”.19 Claimants’ engagement with the benefit system
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Government response AI summary
The government disagrees with the committee's recommendation and believes there is a well-established methodology for dealing with customers who do not co-operate with the benefit review process. They are seeking to understand better how it might change benefit policy, process, or service design to prevent …
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HM Treasury
11
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
The Department’s fraud and error statistics show that the biggest growth area for Universal Credit overpayments in 2021–22 was claimants ‘failing to provide evidence or engage with the process’. This category applies to cases where the claimant had given up their benefit entitlement rather than fully engage in the Department’s …
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The Department’s fraud and error statistics show that the biggest growth area for Universal Credit overpayments in 2021–22 was claimants ‘failing to provide evidence or engage with the process’. This category applies to cases where the claimant had given up their benefit entitlement rather than fully engage in the Department’s fraud and 12 Committee of Public Accounts, Department for Work and Pensions Accounts 2020–21 – Fraud and error in the benefits system, Twenty-Fifth Report of Session 2021–22, HC 633, 17 November 2021 13 HM Treasury, Treasury Minutes - Government response to the Committee of Public Accounts on the Twenty- Second to the Twenty-Sixth reports from Session 2021–22, CP 603, January 2022 14 Correspondence from Peter Schofield CB, Permanent Secretary, Department for Work and Pensions, Re: Fraud and Error Targets, 18 May 2022 15 Qq 41–42 16 Q 43 17 Qq 44–45 18 Q 18; DWP ARA 2021–22, pages 60, 76 19 Q 22 12 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system error measurement exercise, and where the Department was unsure of the reason why. Claimants failing to engage or provide evidence accounted for 14.4% (£852 million) of all Universal Credit overpayments in 2021–22, an increase of £328 million compared with 2020–21. The Department assumes for statistical purposes that all claims in this category are fraudulent.20 We asked the Department whether it considered non-engagement as a red-flag for fraud, or as proof of fraudulent activity. It told us that the logic underlying was based on the principle that “non-engagement means that your money stops” and its assumption was that a legitimate claimant would need the money and be highly motivated to engage and keep their claim active.21
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Government response AI summary
The government disagrees with the committee's recommendation and believes there is a well-established methodology for dealing with customers who do not co-operate with the benefit review process. They are seeking to understand better how it might change benefit policy, process, or service design to prevent …
Read full response →
HM Treasury
12
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
We asked the Department whether it had considered explanations for failure to engage other than deliberate dishonesty, such as concern about the impact on employment or housing if a claimant appeared to under investigation. It stressed that the labelling of claimants who fail to engage as fraudsters was only for …
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We asked the Department whether it had considered explanations for failure to engage other than deliberate dishonesty, such as concern about the impact on employment or housing if a claimant appeared to under investigation. It stressed that the labelling of claimants who fail to engage as fraudsters was only for the purposes of producing statistics. It told us that it has performed some limited work to understand the reasons for lack of engagement, but admitted it had no statistically significant data yet. It explained that it expected its planned ‘Targeted Case Review’ of two million open Universal Credit claims will provide further detail. We asked the Department whether there was anything attached to a claimant’s record showing that their claim was statistically being treated as fraudulent. It told us there was not, but added that claimants who do not engage with Targeted Case Review will be flagged on the Universal Credit system and be unable to get back on benefits without engaging with the Department’s enquiries.22
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Government response AI summary
The government disagrees with the Committee’s recommendation and asserts there is a well-established and accepted methodology for dealing with customers who do not co-operate with the benefit review process and should not be receiving benefit, classifying them as customer fraud, for fraud and error measurement …
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HM Treasury
14
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
We observed that some claimants may struggle to understand the Department’s communications and use its services. We questioned the Department on how it might improve its customer service to make it easier for claimants to engage, especially where they have less experience of understanding of the benefits process. It acknowledged …
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We observed that some claimants may struggle to understand the Department’s communications and use its services. We questioned the Department on how it might improve its customer service to make it easier for claimants to engage, especially where they have less experience of understanding of the benefits process. It acknowledged that its services can be complicated for customers, and it committed to understanding this in more detail and to simplify some of its processes to make it easier for genuine claimants. It told us this may include mapping out its services from the customer point of view to understand where it can simplify the process and making greater use of digital solutions, but did not set out a timeframe for this work.25 25 Qq 30–33 14 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system 2 Reducing fraud and error in the benefit system The Department’s strategy to tackle fraud and error
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Government response AI summary
The government disagrees with the committee's recommendation, stating that there is a well-established and accepted methodology for dealing with customers who do not co-operate with the benefit review process.
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HM Treasury
15
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
In May 2022 the Department published its strategy to reduce fraud and error following the pandemic, which is set out in Fighting Fraud in the Welfare System. The three main strands of this are:26 • £613 million investment in counter-fraud measures during the Spending Review period. Most of this will …
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In May 2022 the Department published its strategy to reduce fraud and error following the pandemic, which is set out in Fighting Fraud in the Welfare System. The three main strands of this are:26 • £613 million investment in counter-fraud measures during the Spending Review period. Most of this will fund an expansion of frontline staff headcount, and a ‘Targeted Case Review’ of around two million open Universal Credit claims. • New powers to access third-party data, seize evidence, and make arrests, which will require the passage of legislation. • Close working across the public and private sectors. Most significantly with HM Revenue & Customs, as the Department is dependent on information from its systems to tackle fraud relating to self-employment earnings.
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Government response AI summary
The government disagrees with the committee's recommendation and reiterates its existing plan to reduce fraud and error, focusing on frontline staff, legal powers, and public/private sector collaboration, funded by existing investments and seeking further opportunities to clamp down on fraud across government.
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HM Treasury
16
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
We questioned the Department on the challenges it may face in implementing its strategy. The Department told us that it will achieve the planned increase in frontline counter-fraud staff to 9,500 full-time equivalents by July 2022. It explained that its plan to review over two million Universal Credit cases will …
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We questioned the Department on the challenges it may face in implementing its strategy. The Department told us that it will achieve the planned increase in frontline counter-fraud staff to 9,500 full-time equivalents by July 2022. It explained that its plan to review over two million Universal Credit cases will require a further 2,000 staff, which it was “building up gradually” and it expected to take until April 2024 to be fully resourced.27 We asked the Department what steps it was taking to ensure that it could recruit the staff that it needed given the current employment market. The Department recognised that “it is a tight labour market” but that it expected its jobs to be “incredibly attractive … [and] … add huge value” as well as being interesting and of benefit to society.28 We asked the Department how the Government’s planned reduction of civil service headcount by 90,000 staff would impact its strategy. It told us it could not say more until the Government had made a decision about how it will distribute the planned reductions.29
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Government response AI summary
The government disagrees with the committee's recommendation and reiterates its existing plan to reduce fraud and error, focusing on frontline staff, legal powers, and public/private sector collaboration, funded by existing investments and seeking further opportunities to clamp down on fraud across government.
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HM Treasury
17
Conclusion
Twenty-Sixth Report - The Department fo…
Rejected
We have previously recommended that the Department should communicate to Parliament what additional powers or changes to legislation it needed to improve controls on specific fraud and error risks.30 The Department set out the new powers it believes it requires in Fighting Fraud in the Welfare System, which includes greater …
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We have previously recommended that the Department should communicate to Parliament what additional powers or changes to legislation it needed to improve controls on specific fraud and error risks.30 The Department set out the new powers it believes it requires in Fighting Fraud in the Welfare System, which includes greater access to third- party banking data which would enable it to crack down on fraud caused by claimants misreporting the value of their savings and capital.31 We noted that this legislation was not reflected in the most recent Queen’s speech and asked what impact this would have on the Department’s plan for reducing fraud and error. The Department told us that the legislation strand of its strategy was a longer-term goal that would take time to bring into 26 DWP ARA 2021–22, page 232 27 Qq 56, 59 28 Qq 57–59 29 Qq 7–8 30 Committee of Public Accounts, Department for Work and Pensions Accounts 2019–20, Twenty-Sixth Report of Session 2019–21, HC 681, 18 November 2020 31 Department for Work & Pensions, Fighting Fraud in the Welfare System, CP 679, May 2022 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system 15 effect, even if the legislation were passed immediately. It added that it definitely needed the expanded powers in the longer-term to enable it to prevent fraud relating to the value of claimant savings and capital, but that its plan for this Spending Review period was focused on detection and removal of fraud and error already in the welfare system through its £613 million investment.32
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Government response AI summary
The government disagrees with the committee's recommendation and reiterates its existing plan to reduce fraud and error, focusing on frontline staff, legal powers, and public/private sector collaboration, funded by existing investments and seeking further opportunities to clamp down on fraud across government.
Read full response →
HM Treasury
18
Recommendation
Twenty-Sixth Report - The Department fo…
Rejected
During our examination of the Department’s 2020–21 Annual Report and Accounts we concluded that the Department was taken by surprise by the significant increase in the levels of Universal Credit fraud attributed to misreporting of self-employment earnings during the pandemic.33 The Department accepted that it needed to more and claimed …
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During our examination of the Department’s 2020–21 Annual Report and Accounts we concluded that the Department was taken by surprise by the significant increase in the levels of Universal Credit fraud attributed to misreporting of self-employment earnings during the pandemic.33 The Department accepted that it needed to more and claimed that it would continue to work across government to improve access to data that would support its efforts to tackle these overpayments.34 We asked the Department why it thought levels of fraud and error remained so high in 2021–22. It explained that part of the reason was that the Universal Credit claims made during the pandemic were inherently riskier, with higher levels of self-employment, and that it lacked timely information to verify the earnings of these claimants. It acknowledged that there was more it needed to do on self- employment fraud by working to improve data sharing with HMRC, and in particular by improving access to information on self-employment earnings collected by HMRC as part of its Making Tax Digital programme.35 Assessment of the impact and cost-effectiveness of its activities
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Government response AI summary
The government disagrees, pointing to its existing plan to reduce fraud and error, the £613 million investment received through Spending Review 2021 and Spring Statement 2022, and the plan to legislate for additional powers. They also reference HMRC sharing information with them. The department doesn't …
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HM Treasury