Recommendations & Conclusions
33 items
2
Recommendation
Twenty-Sixth Report - Department of Wor…
Even before COVID-19, fraud and error overpayments were at their highest ever rates, with around £1 in £10 of Universal Credit paid incorrectly. The estimated overpayment rate, excluding State Pension, now stands at 4.8% (£4.5 billion) of benefit expenditure of £93.1 billion for 2019–20; this is the Department’s highest ever …
Government response. 2: PAC Conclusion: Even before COVID-19, fraud and error overpayments were at their highest ever rates, with around £1 in £10 of Universal Credit paid incorrectly. 2: PAC recommendation: The Department needs to show sustained progress in reducing fraud and …
HM Treasury
3
Conclusion
Twenty-Sixth Report - Department of Wor…
COVID-19 will lead to further increases in fraud and error. The Department has an opportunity to learn from the impacts of its control easements. In addition to 6 Department for Work and Pensions Accounts 2019–20 any rise in the level of fraud and error caused by an increase in benefit …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 3.2 The department accepts that its response to the COVID-19 pandemic has presented an opportunity to evaluate the controls it has in place and assess the impact of …
HM Treasury
4
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department cannot demonstrate that it is doing everything that is cost- effective to tackle fraud and error. The National Audit Office’s work in 2019–20 on the Department’s strategy to tackle fraud and error showed that the Department could do more to understand the cost-effectiveness of individual controls. The Department’s …
Government response. 2020. The department is revising the structures through which the contracts are managed to ensure that roles are more clearly defined and sufficiently resourced for all aspects of contract management to operate fully effectively. It is developing more robust operating …
HM Treasury
5
Recommendation
Twenty-Sixth Report - Department of Wor…
The Department has made slower progress on some causes of fraud and error; this is sometimes due to legislative and regulatory restrictions. There are specific risk areas such as capital, living together, self-reported and self-employed earnings Department for Work and Pensions Accounts 2019–20 7 where the Department admits it is …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 5.2 Latest figures for 2019-20 show that undeclared capital accounted for 22%, equating to £881 million, of all fraud and error loss across Department for Work and Pensions …
HM Treasury
6
Recommendation
Twenty-Sixth Report - Department of Wor…
As at 31 March 2020, the Department was owed £5.3 billion from benefit overpayments, benefit advances and Tax Credits debt. This number continues to increase rapidly. As at 31 March 2020, the Department was owed: benefit overpayments of £2.6 billion; benefit advances of £1.0 billion; and Tax Credits debt of …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 6.2 The department can recover debt in various ways, including directly from benefits, from earnings via a Direct Earnings Attachments, or ultimately, from a debtor’s estate. 6.3 Overall …
HM Treasury
7
Conclusion
Twenty-Sixth Report - Department of Wor…
The people that are being overpaid and underpaid are amongst those least likely in society to be able to pay the money back or absorb an underpayment. The nature of means tested benefits means people entitled to receive the benefits are already those in society with the lowest incomes and …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 7.2 The department agrees that it needs to recover money efficiently without disadvantaging customers. As part of the response to the COVID-19 pandemic, debt recovery was paused for …
HM Treasury
1
Conclusion
Twenty-Sixth Report - Department of Wor…
We took evidence from the Department for Work & Pensions (the Department) based on its 2019–20 Accounts, and the Comptroller and Auditor General’s audit certificate and report contained within that document.1
Government response. 1: PA C conclusion: In response to the COVID-19 pandemic, the Department successfully proces sed millions of new benefit claims and will need to be prepared for probable further increa ses in unemployment. 1: PAC recommendation: The Department should ensure …
HM Treasury
8
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department’s figures show that payment timeliness was maintained at around pre-COVID-19 levels. Its preliminary statistics show that 89% of new claims were paid on time and in full from 1 March 2020 to 26 May 2020.13 This followed the Department’s efforts to improve the portion of new claims paid …
HM Treasury
9
Conclusion
Twenty-Sixth Report - Department of Wor…
The Office for Budget Responsibility’s Fiscal Sustainability Report (July 2020) outlines that ‘unemployment is likely to be materially higher for several years’ and forecasts that unemployment will significantly increase from its current level (it assumes 15 per cent of people on the Coronavirus Job Retention Scheme will ‘move into unemployment’ …
HM Treasury
10
Conclusion
Twenty-Sixth Report - Department of Wor…
Benefit overpayments are at their highest estimated rates and have risen consistently since 2015–16. Excluding State Pension, the estimated rate of overpayments increased again to 4.8% (£4.5 billion) of estimated benefit expenditure of £93.1 billion for 2019–20, from a restated rate of 4.4% (£3.8 billion) in 2018–19. The estimated rate …
Government response. 2: PAC Conclusion: Even before COVID-19, fraud and error overpayments were at their highest ever rates, with around £1 in £10 of Universal Credit paid incorrectly. 2: PAC recommendation: The Department needs to show sustained progress in reducing fraud and …
HM Treasury
11
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department does not currently have a target rate of fraud and error for us to use to hold it to account. However, the Department does now “absolutely accept in principle” that it should have a target “given the level of public scrutiny and interest in the question of fraud …
Government response. 2: PAC Conclusion: Even before COVID-19, fraud and error overpayments were at their highest ever rates, with around £1 in £10 of Universal Credit paid incorrectly. 2: PAC recommendation: The Department needs to show sustained progress in reducing fraud and …
HM Treasury
12
Conclusion
Twenty-Sixth Report - Department of Wor…
Universal Credit has the highest estimated overpayment rate of all measured benefits—9.4% (£1.7 billion) for 2019–20—and it has an estimated underpayment rate of 1.1% (£0.2 billion). This is the highest recorded overpayment rate for any benefit other than Tax Credits (administered by HMRC), which peaked at 9.7% in 2003–04.23 The …
Government response. 2: PAC conclusion: Even before COVID-19, fraud and error overpayments were at their highest ever rates, with around £1 in £10 of Universal Credit paid incorrectly. 2: PAC recommendation: The Department needs to show sustained progress in reducing fraud and …
HM Treasury
13
Conclusion
Twenty-Sixth Report - Department of Wor…
Even before the impact of COVID-19 the Department had not yet delivered the value of savings on fraud and error on which the Business Case for Universal Credit was based.26 As these were intended to be annually recurring savings, every year of delay in achieving them represents a real and …
Government response. 2: PAC conclusion: Even before COVID-19, fraud and error overpayments were at their highest ever rates, with around £1 in £10 of Universal Credit paid incorrectly. 2: PAC recommendation: The Department needs to show sustained progress in reducing fraud and …
HM Treasury
14
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department informed us that “many more claims naturally means more fraud and error in the system”.29 The Department reported that the number of people on Universal Credit almost doubled from 2.9 million in February to 5.6 million in August and has continued to grow since.30 Fraud and error in …
Government response. 3: PAC conclusion: COVID-19 will lead to further increases in fraud and error. The Department has an opportunity to learn from the impacts of its control easements. 3: PAC recommendation: The Department should report both the total level of fraud …
HM Treasury
15
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department acknowledges that the easements to controls it has made to respond to the pandemic will increase fraud and error more than would otherwise be expected by the increase in claims. It has produced a range of estimates of the amounts potentially at risk which has been shared with …
Government response. 3: PAC conclusion: COVID-19 will lead to further increases in fraud and error. The Department has an opportunity to learn from the impacts of its control easements. 3: PAC recommendation: The Department should report both the total level of fraud …
HM Treasury
16
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department informed us that it has taken steps to mitigate the impact of these easements. It said it believes the key thing is to have a real-time data feed that enables it to check that the mitigations it has put in place are being effective. It provided an example …
Government response. 3: PAC conclusion: COVID-19 will lead to further increases in fraud and error. The Department has an opportunity to learn from the impacts of its control easements. 3: PAC recommendation: The Department should report both the total level of fraud …
HM Treasury
17
Conclusion
Twenty-Sixth Report - Department of Wor…
However, whether these detection activities are successful does not inform us about the impact on the underlying rate of fraud and error. The Department reported that due to the redeployment of its staff to tackle the surge of claims and the difficulties of performing its sampling exercise in lockdown, it …
Government response. 3: PAC conclusion: COVID-19 will lead to further increases in fraud and error. The Department has an opportunity to learn from the impacts of its control easements. 3: PAC recommendation: The Department should report both the total level of fraud …
HM Treasury
18
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department also informed us that as of July, after redeploying staff back into measurement activities, it has been measuring fraud and error on Universal Credit and it is also undertaking measurement work on other benefits such as Pension Credit and Employment Support Allowance. It told us that “it is …
Government response. 3: PAC conclusion: COVID-19 will lead to further increases in fraud and error. The Department has an opportunity to learn from the impacts of its control easements. 3: PAC recommendation: The Department should report both the total level of fraud …
HM Treasury
19
Conclusion
Twenty-Sixth Report - Department of Wor…
The National Audit Office’s (NAO’s) work in 2019–20 on the Department’s strategy to tackle fraud and error showed that the Department has a good understanding of the types of fraud and error that occur in the benefit system, but that it needs to do more to understand the cost-effectiveness of …
Government response. 4: PAC conclusion: The Department cannot demonstrate that it is doing everything that is cost- effective to tackle fraud and error. 4: PAC recommendation: The Department needs to be able to monitor and report on the impact and cost effectiveness …
HM Treasury
20
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department told us that it wants to get to the point where its accounts are no longer qualified. It acknowledged that it is not where it wants to be, but said it knows what it needs to do.40 It said that it is working with the NAO to understand …
Government response. 4: PAC conclusion: The Department cannot demonstrate that it is doing everything that is cost- effective to tackle fraud and error. 4: PAC recommendation: The Department needs to be able to monitor and report on the impact and cost effectiveness …
HM Treasury
21
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department’s fraud and error strategy relies on modernising its technology and putting more investment into data and data analytics. It told us that “we really do see that putting more investment into data, into data analytics and into that prevention space, is going to get us where we need …
Government response. 4: PAC conclusion: The Department cannot demonstrate that it is doing everything that is cost- effective to tackle fraud and error. 4: PAC recommendation: The Department needs to be able to monitor and report on the impact and cost effectiveness …
HM Treasury
22
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department launched its Risk and Intelligence Service (RIS) in April 2018 and reported that it was using ‘increasingly sophisticated data and analytical tools’ to tackle fraud and error.43 In response to COVID-19, the Department absorbed the work of RIS and other intelligence teams into its new Integrated Risk and …
Government response. 4: PAC conclusion: The Department cannot demonstrate that it is doing everything that is cost- effective to tackle fraud and error. 4: PAC recommendation: The Department needs to be able to monitor and report on the impact and cost effectiveness …
HM Treasury
23
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department told us that it is starting to build a system that is based on ‘transaction risking’; its vision is to be in a place where it can, in real time, or near real time, assess every claim as it is coming through and take a view of how …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 4.2 The department is able to track the effectiveness of new technologies. The department is also conscious of the need to address any potential for bias in its …
HM Treasury
24
Conclusion
Twenty-Sixth Report - Department of Wor…
There are specific risk areas such as capital, living together, self-reported and self- employed earnings where the Department admits it is harder to tackle fraud and error, in part due to the lack of access it has to timely, accurate data.46 In 2019–20, measured capital fraud and error rose by …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 5.2 Latest figures for 2019-20 show that undeclared capital accounted for 22%, equating to £881 million, of all fraud and error loss across Department for Work and Pensions …
HM Treasury
25
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department told us that the big fraud and error saving that it knew would come from Universal Credit is using real-time information (RTI) on earnings from HMRC in an automated way to calculate the award, and that it ‘knows’ it is “doing well on the RTI part”. However, the …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 4.2 The department is able to track the effectiveness of new technologies. The department is also conscious of the need to address any potential for bias in its …
HM Treasury
26
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department has powers that allow it to ask for the information that it needs when it is doing an individual compliance investigation, but it does not have legal access to the same level of information for the controls it uses to prevent and detect fraud and error. The Department …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 5.2 Latest figures for 2019-20 show that undeclared capital accounted for 22%, equating to £881 million, of all fraud and error loss across Department for Work and Pensions …
HM Treasury
27
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department’s accounts show that as at 31 March 2020, claimants owed it £5.3 billion from benefit overpayments (£2.6 billion), benefit advances (£1.0 billion) and Tax Credits (£1.8 billion). This represents a significant annual increase of 39% (£1.5 billion) on the £3.8 balance owed as at 31 March 2019. Other …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 6.2 The department can recover debt in various ways, including directly from benefits, from earnings via a Direct Earnings Attachments, or ultimately, from a debtor’s estate. 6.3 Overall …
HM Treasury
28
Conclusion
Twenty-Sixth Report - Department of Wor…
Evidence suggests that the amounts claimants owe from benefit overpayments, benefit advances and Tax Credits are all likely to increase further in 2020–21. The Department temporarily suspended most debt recovery in March 2020 and reintroduced the recovery of new overpayments in late September.55 With recovery action paused and a surge …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 6.2 The department can recover debt in various ways, including directly from benefits, from earnings via a Direct Earnings Attachments, or ultimately, from a debtor’s estate. 6.3 Overall …
HM Treasury
29
Conclusion
Twenty-Sixth Report - Department of Wor…
We are concerned about the risk associated with trying to reclaim an overpayment and the time it takes to recover an overpayment. The Department told us that it has “very good and wide-ranging powers in terms of debt recovery” and that “there are cases where things are written off, but …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 6.2 The department can recover debt in various ways, including directly from benefits, from earnings via a Direct Earnings Attachments, or ultimately, from a debtor’s estate. 6.3 Overall …
HM Treasury
30
Conclusion
Twenty-Sixth Report - Department of Wor…
Fraud and error have an impact on people’s lives; when the Department recovers overpayments, this can lead to problems for claimants who face deductions from their income, whereas underpayments mean that households do not get the support they are entitled to.61 The Department informed us that it ‘carefully considers’ whether …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 7.2 The department agrees that it needs to recover money efficiently without disadvantaging customers. As part of the response to the COVID-19 pandemic, debt recovery was paused for …
HM Treasury
31
Conclusion
Twenty-Sixth Report - Department of Wor…
For a means tested benefit such as Universal Credit, people entitled to receive the benefit will be those in society with lower incomes and savings.64 The National Audit Office’s (NAO’s) recent study on Universal Credit: getting to first payment found that ‘the Department does not have all the information it …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 7.2 The department agrees that it needs to recover money efficiently without disadvantaging customers. As part of the response to the COVID-19 pandemic, debt recovery was paused for …
HM Treasury
32
Conclusion
Twenty-Sixth Report - Department of Wor…
The Department reports that it is able to identify claims impacted by its temporary easements to controls, and that therefore it can revisit these claims to raise any resulting over (or under) payments that might have occurred; it reports that it will be starting this work in 2020–21.66 The Department …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 3.2 The department accepts that its response to the COVID-19 pandemic has presented an opportunity to evaluate the controls it has in place and assess the impact of …
HM Treasury
33
Conclusion
Twenty-Sixth Report - Department of Wor…
In response to COVID-19, many staff within the Department’s Counter Fraud and Compliance Directorate were redeployed, meaning the Department temporarily paused compliance work.69 As it restarts its compliance activity the Department should be aware of the lessons from NAO’s Investigation into overpayments of Carer’s Allowance in 2019. 62 Q 33 …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: July 2021 3.2 The department accepts that its response to the COVID-19 pandemic has presented an opportunity to evaluate the controls it has in place and assess the impact of …
HM Treasury