Fraud and error stocktake inquiry
Closed
What the inquiry looked at
“Benefits and tax credits support about 20 million households across the UK. The level of fraud and error has been a persistent concern for the Committee. In 2013-14, the Department for Work and Pensions and HM Revenue and Customs overpaid benefits and tax credit claimants by £4.6 billion because of fraud and error, and underpaid claimants by £1.6 billion. Overpayments increase costs to taxpayers and reduce public resources available for other purposes. Underpayments mean households are not getting the support they are entitled to. In October 2010 the departments published a joint strategy to tackle fraud and error in benefits and tax credits, which planned to reduce annual overpayments by one-quarter by March 2015, or around £1.4 billion. Based on current estimates, HMRC will meet its spending review target for fraud and error, while DWP is not on track. The departments have implemented some major changes that should help to reduce fraud and error in the future. For example, DWP is introducing Universal Credit and other changes to the welfare system. HMRC has changed tax credits rules and started a project with the private sector to increase the Department’s capacity. This inquiry examines how these opportunities make it easier to reduce some types of fraud and error, the remaining risks, and how both departments manage fraud and error during the long and complicated transition to Universal Credit.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
1. High levels of benefits and tax credits fraud and error remain unacceptable.
Overpayments cost every household in the UK around £200 a year and waste money that government could spend on other things. HM Revenue & Customs (HMRC) and the Department for Work & Pensions (DWP) have made some progress in tackling fraud and error, but both departments have shown a paucity of ambition. HMRC has reduced fraud and error, but does not fully understand how it has achieved this, or how much further it can go. DWP did not meet its 2014–15 target for reducing fraud and error, and is relying on welfare reforms to make future improvements. These reforms will not solve all the problems, and DWP expects fraud and error to still be £5.8 billion in 2020–21, once Universal Credit has been fully rolled-out. While the departments can recover some of the money overpaid, this can create huge difficulties for people as they struggle to pay back money paid to them in error. During the next few years both departments must improve their understanding of what reductions are possible, and increase their focus on preventing both underpayments and overpayments due to fraud and error. We intend to return to the issue often during this Parliament.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 10 August 2015 to 18 July 2016.
- Oral evidence 14 Sep 2015
- Report 28 Oct 2015
- Correspondence 2 letters
What it recommended
The committee's recommendations are not listed here yet. Read them in 4th Report - Fraud and Error Stocktake ↗ on parliament.uk.
Evidence
Oral evidence sessions 1
- 14 Sep 2015No witnesses recordedparliament.uk ↗