Source · Select Committees · Public Accounts Committee
Recommendation 5
5
The Department has made slower progress on some causes of fraud and error; this is...
Recommendation
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 harder to tackle fraud and error, in part due to the lack of access it has to timely, accurate data. In 2019–20, measured capital fraud and error across all measured benefits rose by £380 million (73%) to £910 million; the largest increase in value for any individual risk type. The Department is seeking to expand its use of data in this area and has performed some initial work on tackling capital risk using data from banks, which it says gave “really good results”. Although the Department has powers that allow it to ask for the information that it needs when it is doing an individual compliance investigation, 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 must balance tackling fraud and error risk against what is feasible within the legislation around data privacy. Recommendation: The Department should review the regulatory regime around its fraud and error activities and communicate to parliament where it believes additional powers or other changes to legislation would improve controls for specific fraud and error risks.
Government Response
Not Addressed
HM Government
Not Addressed
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 benefits. Despite the department’s best efforts this money is difficult and costly to identify if it is not declared. 5.3 The government Counter Fraud Function has explored options for new legislative powers to increase the effectiveness of counter fraud activity. The department has been closely involved in and supportive of this work. One of the main drivers of this cross-government approach is to consider the case for levelling up fraud capability and legislative powers across departments. 5.4 Levelling up powers, by raising the department’s investigatory powers to the same degree as other departments, and thereby enabling access to bulk tax information held by banks and financial institutions, would support investigations and/or compliance activity relating to capital fraud. 5.5 The department is at the same time developing non-legislative measures to improve counter fraud activity, including finding new ways to work with the banks and possible open banking opportunities, but it is this legislative solution that would potentially have the greatest effect on reducing capital loss. 5.6 The lockdown period has in addition shown that the department’s investigatory powers and penalties processes are reliant on face to face activity. Removing restrictions would help the department to deploy its penalties and investigative powers in a modern and digitalised way. 5.7 In each instance, the department would bring any proposed legislative change to Parliament for scrutiny in the usual way.