Recommendation 7

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