Recommendations & Conclusions
6 items
4
Recommendation
Twenty-Sixth Report - Department of Wor…
Not Addressed
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 …
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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 recent efforts to improve those controls have focused on using its technology and putting more investment into data and data analytics which it hopes will allow it to prevent fraud and error before it enters the system. The impact of these technologies is still unproven: the Department’s Risk and Intelligence Service (RIS) was launched in April 2018 and the Department reported that it was using ‘increasingly sophisticated data and analytical tools’ to tackle fraud and error; however, the estimated rate of overpayments continues to rise. The Department is investing in technology which will enable it to tailor its interventions based on its risk assessment of a claim. However, we are concerned about the potential for discrimination and bias against claimants based on their protected characteristics e.g. age, sex, race etc. Recommendations: The Department needs to be able to monitor and report on the impact and cost effectiveness of each of its fraud and error initiatives and in particular on the impact of its investment in new technology. The Department should monitor and report any discrimination or bias caused by using artificial intelligence and machine learning on different claimant groups.
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Government response AI summary
The government response does not address the recommendation to monitor and report on the impact and cost-effectiveness of fraud and error initiatives or potential discrimination from AI/machine learning.
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HM Treasury
10
Conclusion
Twenty-Sixth Report - Department of Wor…
Not Addressed
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 …
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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 of underpayments, excluding State Pension, decreased to 2.0% (£1.9 billion) in 2019–20, from its restated rate of 2.2% (£1.9 billion) in 2018–19.19
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Government response AI summary
The government response does not address this conclusion, instead providing a response to an unrelated recommendation (ID 21815) regarding setting annual targets for fraud and error.
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HM Treasury
12
Conclusion
Twenty-Sixth Report - Department of Wor…
Not Addressed
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 …
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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 Department told us that that is it “not happy” with the fraud and error figures for Universal Credit and that it is currently “well off” achieving the fraud and error savings targets in the Universal Credit business case (£1.3 billion a year in steady state).24 Despite its current performance, it reassured us that it is confident it will achieve the business case fraud and error savings in future.25
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Government response AI summary
The government response addresses a different committee recommendation regarding setting annual fraud and error targets for Universal Credit, rather than the provided conclusion about the current high overpayment rates.
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HM Treasury
16
Conclusion
Twenty-Sixth Report - Department of Wor…
Not Addressed
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 …
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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 of it closely monitoring the referrals that its staff make to its centralised Enhanced Checking Service.33 This is a new function, comprising 600 trained fraud investigators, to whom benefit processing staff can refer any suspicious cases for further investigation and additional verification.34 The Department told us that the portion of claims being referred to Enhanced Checking Service “peaked at one level at about 13%, but it has since fallen back to about 3% on average.” The Department explained that it also gets real time information to monitor the fraud and error impact of control easements from “predictive analytics”.35
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Government response AI summary
The government response addresses a different committee recommendation regarding reporting on fraud and error and easement impacts in the Annual Report, rather than the provided conclusion about current departmental monitoring of its Enhanced Checking Service.
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HM Treasury
32
Conclusion
Twenty-Sixth Report - Department of Wor…
Not Addressed
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 …
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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 has a record of acting slowly to identify and correct underpayments. NAO’s Investigation into errors in Employment and Support Allowance (ESA) in 2018 showed that the Department underpaid an estimated 70,000 claimants (at the time of reporting) who had transferred to ESA from other benefits; the error related to people who may have been entitled to income-related ESA but were instead only awarded contribution-based ESA, and therefore may have missed out on premium payments. Although the issue started in early 2011, it took until July 2017 for the Department to recognise that it had a legal responsibility to identify the people affected and develop a response.67 As at January 2020, the Department has had to repay £589 million to 112,000 claimants that had been underpaid as a result of this error.68
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Government response AI summary
The government's response, which is identical to a response to a different recommendation, acknowledges the opportunity to evaluate controls and commits to reporting the impact of the pandemic and easements on Universal Credit losses, but does not specifically address the committee's concerns about acting slowly …
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HM Treasury
33
Recommendation
Twenty-Sixth Report - Department of Wor…
Not Addressed
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 …
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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 63 Committee of Public Accounts, Universal Credit, Session 2017–19, HC 1183, 26 October 2018, recommendations 2 and 3 64 Gov.uk, Universal Credit guidance (eligibility) webpage, https://www.gov.uk/universal-credit/eligibility (accessed at 05/10/20) 65 C&AG’s Report, Universal Credit: getting to first payment, Session 2019–21, HC 376, 10 July 2020, pages 13, 29, 30 66 DWP ARAC 2019–20, page 76 67 C&AG’s Report, Investigation into errors in Employment and Support Allowance, Session 2017–19, HC 837, 21 March 2018, pages 6 and 8 68 Official Statistics, January 2020: ESA underpayments: Forecast numbers affected, forecast expenditure and progress on checking, https://www.gov.uk/government/publications/esa-underpayments-progress-on-checking- january-2020/january-2020-esa-underpayments-forecast-numbers-affected-forecast-expenditure-and-progress- on-checking, (accessed on 15/10/20). 69 DWP ARAC 2019–20, page 193 Department for Work and Pensions Accounts 2019–20 17 This found that the Department’s failure to commit sufficient resources to detecting overpayments and a backlog in referrals led some overpayments to not be detected for years, so that when they were detected, the claimant owed so much that they could not reasonably hope to repay it: for example, at the extreme end of this, 133 individuals owed over £20,000 which will take over 34 years to pay back if it is deducted from their benefits. The NAO also found that even when recovery plans were established, it took a significant period for the backlog to be managed back down to normal levels; in September 2017 the Department introduced its first recovery plan for new Carer’s Allowa
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Government response AI summary
The government response does not address the specific recommendation to be aware of lessons from the NAO's Carer's Allowance overpayment investigation; instead, it provides a generic response about evaluating control easements and reporting on pandemic impacts in the Annual Report.
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HM Treasury