Recommendation 7

HMRC, DWP and BEIS are unable to justify the inconsistencies in their approaches to the consequences of fraud and error for different groups of debtors. Departments need to take steps to detect, pursue and recover the billions of pounds of fraud and error overpayments it has lost during the COVID-19 pandemic. However, we are concerned that Departments are taking different approaches to dealing with the consequences of fraud or errors of a similar nature, such as failing to disclose a change in circumstances. DWP applies a financial threshold when deciding whether to pursue criminal sanctions, whereas HMRC will only pursue criminal proceedings for the most serious crimes, focusing instead on disrupting criminal activity to make it unprofitable. Although BEIS is working with the police on criminal sanctions for loan scheme fraud, it maintains it is up to the bank to follow usual recovery procedures in the first instance. These differences in approaches results in penalties appearing unfair and inconsistent to the public. DWP is investing in making it easier for people inform it of changes in circumstances, for example through more online prompts in systems, rather than assuming fraudulent intent. We welcome the Cabinet Office’s commitment to, through the Counter Fraud Function, improving the consistency of sanctions applied for fraud and whether enforcement and recovery powers can be expanded across government. Recommendation: HMRC and DWP should write to the Committee within three months setting out how they will identify and address inconsistencies of sanctions for frauds that are similar in nature. BEIS should write to the Committee within three months setting out details of steps it will take to assess whether the recovery efforts of banks are reasonable, and the steps it will take to recover taxpayers’ money if deficiencies are identified. Fraud and Error 9 1 Government’s understanding of fraud and error risks and the resources needed to tackle them