Recommendations & Conclusions
33 items
2
Conclusion
Fourth Report - The Department for Work…
Accepted
DWP expects the activities set out in its counter-fraud plan to generate £9.4 billion of additional savings over the next five years. In May 2022 DWP set out its high- level plan to tackle fraud and error following the pandemic in Fighting Fraud in the Welfare System. This includes £895 …
Government response. The government agrees with the recommendation and states it is implemented. The Department for Work and Pensions will report on Annual Managed Expenditure savings in its Annual Report and Accounts 2023-24, continuing to develop and refine its experimental metric.
HM Treasury
3
Recommendation
Fourth Report - The Department for Work…
Accepted
The success of DWP’s plan to reduce fraud and error in Universal Credit is dependent on its ability to review 8 million live claims by 2027–28. The biggest element of DWP’s counter-fraud plan is a project to cleanse the benefit system of incorrect payments by reviewing millions of Universal Credit …
Government response. The government agrees with the recommendation and states it is implemented. The Department for Work and Pensions will report on Targeted Case Reviews in its Annual Report and Accounts 2023-24.
HM Treasury
4
Conclusion
Fourth Report - The Department for Work…
Accepted
DWP and HMRC face a significant challenge in making back payments to people who have been underpaid State Pension due to missing Home Responsibilities Protection. In 2021–22, DWP identified underpayments of State Pension due to gaps in the National Insurance records of people who were historically entitled to a benefit …
Government response. The government agrees and commits to publishing key management information on the exercise established between DWP and HMRC in the department’s Annual Report and Accounts.
HM Treasury
5
Conclusion
Fourth Report - The Department for Work…
Accepted
DWP is not doing enough to assure itself or Parliament that it can rely on National Insurance records to pay State Pension accurately and that it will not find further historic underpayments. The £1.3 billion underpayment of State Pension relating to missing HRP is one of three ongoing historical issues …
Government response. The government agrees and is strengthening its systems by piloting new approaches in selected services, aiming to improve feedback loops and target high-risk areas from 2024-25, with learnings informing future roll-out.
HM Treasury
6
Conclusion
Fourth Report - The Department for Work…
Rejected
DWP has not yet done enough to understand the impact of machine learning on customers and provide them with confidence that it will not result in unfair treatment. DWP is expanding its use of advanced data analytics to tackle fraud. This includes machine learning algorithms to flag potentially fraudulent benefit …
Government response. The government disagrees with detailing specific metrics for publication, citing a need to avoid compromising fraud detection. However, it will report annually on the impact of data analytics on protected groups and vulnerable claimants, starting with the 2023-24 Annual Report.
HM Treasury
1
Conclusion
Fourth Report - The Department for Work…
Rejected
On the basis of a Report by the Comptroller & Auditor General (C&AG), we took evidence from the Department for Work & Pensions (DWP) on its 2022–23 Annual Report & Accounts and the level of fraud and error in the benefits it administers.2 We also took evidence from HM Revenue …
Government response. The government disagrees with an implied recommendation regarding a 5% assumption, stating it cannot be compared to official fraud and error statistics in isolation due to various influencing factors.
HM Treasury
7
Conclusion
Fourth Report - The Department for Work…
Rejected
DWP estimates that it overpaid 12.8% (£5.5 billion) of all Universal Credit payments in 2022–23, which is much higher than any other benefit.10 We challenged DWP to explain why the fall in fraud and error promised in the Universal Credit business case has failed to materialise. DWP told us that …
Government response. The government rejects the committee's implied direction to explain the failure of fraud and error reduction, stating its commitment to a cost-effective control environment but highlighting external fraud trends beyond its direct control.
HM Treasury
8
Conclusion
Fourth Report - The Department for Work…
Rejected
We asked DWP to what extent the fact that 1 in 3 Universal Credit claims is incorrect is a result of the complexity of the system. DWP told us it is trying to make it easier for claimants to declare changes of circumstances through continuous improvements of the Universal Credit …
Government response. The government rejects the committee's implied criticism regarding system complexity, stating it is committed to reducing fraud and error but acknowledges external trends impacting fraud levels are not directly in its control.
HM Treasury
9
Conclusion
Fourth Report - The Department for Work…
Rejected
We challenged DWP to explain whether it still expects Universal Credit overpayments to fall to 6.5% as it had previously committed to. DWP explained that 6.5% was the level implied in the business case as a result of the expected reduction in fraud and error from merging legacy benefits into …
Government response. The government rejects the committee's implied direction to explain how it will achieve the 6.5% overpayment target, stating it's committed to reducing fraud and error but external trends impact the level of fraud, which is outside its direct control.
HM Treasury
10
Recommendation
Fourth Report - The Department for Work…
Accepted
We questioned DWP on whether it expects the impact of the pandemic on fraud and error to gradually fade or to remain elevated for some time. DWP told us that although it expects the impact of the pandemic to fall away over time, it now believes that there is a …
Government response. The government agrees and states the recommendation is implemented, providing detailed evidence from various sources, including crime data and Cifas, to justify its assumption of a 5% annual increase in fraudulent behaviour.
HM Treasury
11
Recommendation
Fourth Report - The Department for Work…
Accepted
We asked DWP to clarify why it assumes in its forecast that there is an ongoing increase in the general propensity to commit fraud in society. DWP explained that this is a judgement based on estimates produced by a range of other bodies. These include Cifas which has reported an …
Government response. The government agrees and states the recommendation is implemented, providing detailed evidence from various sources including police recorded crime data, Cifas, and the British Social Attitudes Survey to support its assumption of a 5% annual increase in fraudulent behaviour.
HM Treasury
12
Conclusion
Fourth Report - The Department for Work…
Acknowledged
We also asked HMRC if it is also seeing an increase to commit fraud among taxpayers as a whole. HMRC told us it does not forecast a propensity to fraud but that the tax gap, which might be considered an equivalent figure, has been holding steady.20 In written evidence submitted …
Government response. The government agrees with the Committee’s recommendation and states it has presented detailed evidence to the Office for Budget Responsibility (OBR), who have incorporated this within the overall forecast for fraud and error prevalence in the welfare system.
HM Treasury
13
Recommendation
Fourth Report - The Department for Work…
Rejected
We have previously found that the DWP lacks the ability to demonstrate that its counter-fraud activities are having the intended impact and are cost-effective.22 Alongside its forecast that benefit overpayments will not return to pre-pandemic levels until 2027– 28, DWP has set a target to achieve £1.3 billion of fraud …
Government response. The government rejects the recommendation, stating that while DWP is committed to reducing fraud and error, external trends impacting the level of fraud in the benefit system are not directly within its control.
HM Treasury
14
Conclusion
Fourth Report - The Department for Work…
Accepted
We have reported previously on the historical underpayment of State Pension due to errors by DWP affecting some pensioners who are married, widowed or over-80, most recently when we examined DWP’s 2021–22 Annual Report & Accounts. During that inquiry DWP told us it estimated that 237,000 pensioners had been underpaid …
Government response. The government agrees with the Committee’s recommendation and provided details of the scope of the exercise and plans to address outstanding work in its 2022-23 Annual Report and Accounts. It will provide updated details of its plans in its 2023-24 …
HM Treasury
15
Conclusion
Fourth Report - The Department for Work…
Accepted
In January 2021 DWP launched an exercise to identify affected pensioners and make any back payments. We asked DWP to provide an update on its progress in correcting these underpayments. DWP told us that it is on track to complete the married and over-80 groups by the end of 2023 …
Government response. The government agrees with the Committee’s recommendation and provided details of the scope of the exercise and plans to address outstanding work in its 2022-23 Annual Report and Accounts. It will provide updated details of its plans in its 2023-24 …
HM Treasury
16
Recommendation
Fourth Report - The Department for Work…
Accepted
When we examined DWP’s 2021–22 accounts, it told us about another category of historical State Pension underpayment caused by gaps in the National Insurance records of women who had previously claimed Child benefit.29 DWP and HMRC explained to us that between 1978 and 2000, people claiming Child Benefit should have …
Government response. The government agrees to the recommendation, stating the correction exercise for Home Responsibilities Protection underpayments began in Autumn 2023 and will continue to be refined by DWP and HMRC, providing clarity on tax treatment for arrears.
HM Treasury
17
Recommendation
Fourth Report - The Department for Work…
Accepted
We asked HMRC what it is doing to correct the National Insurance record so that DWP can in turn make any back payments of State Pension. HMRC explained that it no longer holds the relevant records and that identifying all of the people who may be 25 Committee of Public …
Government response. The government agrees to the recommendation, confirming the correction exercise for Home Responsibilities Protection underpayments started in Autumn 2023 and outlining how DWP and HMRC will continue to refine plans and address tax implications, with a target implementation date of …
HM Treasury
18
Conclusion
Fourth Report - The Department for Work…
Accepted
We asked HMRC how it can be sure that it will reach the right people and also avoid paying out any illegitimate claims. It told us that it would apply due diligence to all claims. HMRC also told us that alongside targeted letters it is planning a communication campaign to …
Government response. The government agrees with the committee's implied concern and commits to working with HMRC by Winter 2024 to set out an approach for assuring the integrity of the National Insurance record, including engaging with a joint Internal Audit review.
HM Treasury
19
Recommendation
Fourth Report - The Department for Work…
Accepted
We asked DWP how much people could receive in back payments of State Pension. DWP told us it assumes an average back payment of £5,000 for people above State Pension age and £3,000 for the next-of-kin of those who are deceased. DWP’s accounts report that overall 210,000 pensioners may have …
Government response. The government agrees to the recommendation, confirming the correction exercise for Home Responsibilities Protection underpayments began in Autumn 2023, and outlining how DWP and HMRC will continue to refine plans and address tax implications.
HM Treasury
20
Recommendation
Fourth Report - The Department for Work…
Accepted
We asked HMRC and DWP when they expect to have a firmer idea of the scale of the issue and the timeframe for making back payments. HMRC told us it intends to send out the letters to potentially affected people over the next 18 months. It added it expects to …
Government response. The government agrees to the recommendation, stating the correction exercise began in Autumn 2023 and DWP will continue to refine its plans with HMRC, providing updates in its 2023-24 Annual Report and Accounts, along with specific rules for handling income …
HM Treasury
21
Recommendation
Fourth Report - The Department for Work…
Accepted
We asked HMRC to confirm whether pensioners receiving lump sum back payments would be liable for a tax charge and whether it would take a sympathetic approach to handling any issues. HMRC confirmed that the tax charge could apply. It told us that “Generally, we will be as generous as …
Government response. The government agrees to the recommendation and states DWP and HMRC are working together on the correction exercise, which began in Autumn 2023, and clarifies specific rules for how income tax on arrears payments will be calculated and collected.
HM Treasury
22
Recommendation
Fourth Report - The Department for Work…
Accepted
DWP now reports multiple underpayments relating to issues in the National Insurance record. In addition to the HRP underpayment, DWP has also identified that the National Insurance records for 10 million people claiming Universal Credit have not been updated properly. DWP estimates that 137,000 of these people have already reached …
Government response. The government agrees and commits DWP and HMRC to work together, engaging with a joint internal audit review, to provide assurance on the integrity of National Insurance records and their interaction with the benefit system by Winter 2024.
HM Treasury
23
Conclusion
Fourth Report - The Department for Work…
DWP noted that the government has recently announced a new National Insurance credit for people subject to the High Income Child Benefit Charge.49 It explained that the charge applies when one parent in a household earns more than £50,000, and means that they must complete a self-assessment tax return to …
HM Treasury
24
Recommendation
Fourth Report - The Department for Work…
Accepted
During our examination of DWP’s 2021–22 Accounts, we were unconvinced that its control processes were adequate to detect underpayments before they build up into major issues.53 DWP has previously acknowledged “an inability to pick up patterns of underpayment, which had been going on for many years”.54 We asked DWP to …
Government response. The government agrees with the recommendation and states it uses existing quality checks while piloting new approaches to strengthen early detection of underpayments, with evaluation and potential wider roll-out planned from 2024-25.
HM Treasury
25
Conclusion
Fourth Report - The Department for Work…
Accepted
DWP set out its plan to tackle benefit fraud following the pandemic in May 2022 in Fighting Fraud in the Welfare System.57 This includes £895 million of additional investment in counter-fraud activities over the Spending Review period covering the three years to March 2025. Details of the plan now published …
Government response. The government agrees with the committee's observations on its counter-fraud plan and states the recommendation is implemented. It commits to developing and refining an experimental metric to report on full Annual Managed Expenditure savings in its 2023-24 Annual Report and …
HM Treasury
26
Conclusion
Fourth Report - The Department for Work…
Accepted
The most significant element of DWP’s counter-fraud plan is a project to cleanse the benefit system of incorrect payments by reviewing some 8 million live Universal Credit claims over five years. DWP expects this project—which it calls ‘Targeted Case Reviews’ (TCR)—to generate £6.4 billion of savings by 2027–28. DWP is …
Government response. The government agrees with the committee's observations regarding the Targeted Case Review (TCR) and confirms the recommendation has been implemented, stating the department will report on TCR in its 2023-24 Annual Report and Accounts.
HM Treasury
27
Conclusion
Fourth Report - The Department for Work…
Accepted
The NAO has reported that in 2027–28 alone DWP expects 2.5 million Universal Credit cases to be reviewed by some 5,900 staff. For comparison, in 2022–23 DWP reviewed around 3,600 Universal Credit claims to produce its fraud and error statistics.61 We challenged DWP to explain whether it has enough people …
Government response. The government agrees with the committee's observations regarding the Targeted Case Review (TCR) and confirms the recommendation has been implemented, stating the department will report on TCR in its 2023-24 Annual Report and Accounts.
HM Treasury
28
Conclusion
Fourth Report - The Department for Work…
Accepted
DWP told us it will take two years for TCR to have a measurable effect.63 We observed that TCR is an expensive intervention and questioned DWP on whether it has been under pressure to deliver the project faster in order to demonstrate a credible return on investment.64 DWP acknowledged that …
Government response. The government agrees with the committee's observations regarding the Targeted Case Review (TCR) and confirms the recommendation has been implemented, stating the department will report on TCR in its 2023-24 Annual Report and Accounts.
HM Treasury
29
Conclusion
Fourth Report - The Department for Work…
Rejected
DWP is investing some £70 million to March 2025 in expanding its use of advanced analytics to tackle fraud. This includes using machine learning algorithms to flag potentially fraudulent benefit claims. DWP has already piloted an algorithm to detect fraudulent Universal Credit advances claims.68 The NAO reports that DWP is …
Government response. The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, …
HM Treasury
30
Conclusion
Fourth Report - The Department for Work…
Rejected
We received written evidence from the Child Poverty Action Group and from the Public Law Project expressing concern about the potential unfairness of machine learning, particularly with regard to vulnerable claimants and people with protected characteristics.70 We asked DWP whether it understood the concerns of people who have warned of …
Government response. The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, …
HM Treasury
31
Conclusion
Fourth Report - The Department for Work…
Rejected
We challenged DWP to explain how it would address the risk that legitimate benefit claims are unfairly delayed or reduced as a result of an algorithms targeting innocent behaviour, such as frequent changes of circumstances. DWP acknowledged that some level of algorithmic bias is to be expected because of how …
Government response. The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, …
HM Treasury
32
Conclusion
Fourth Report - The Department for Work…
Rejected
DWP also told us it did not want to reveal when it planned to go live with machine learning on a large scale to avoid informing potential fraudsters, but added it was 65 Qq 84–90 66 Q 90; DWP ARA 2022–23, page 308 67 Qq 84–85 68 DWP ARA 2022–23, …
Government response. The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, …
HM Treasury
33
Conclusion
Fourth Report - The Department for Work…
Rejected
In our November 2022 report on DWP’s 2021–22 accounts we recommended that DWP should report annually to Parliament on its assessment of the impact of data analytics on protected groups and vulnerable claimants.77 DWP told us it thought the right way to do this would be to report annually in …
Government response. The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, …
HM Treasury