Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
Assure integrity of National Insurance records and establish early warning system for underpayments.
Conclusion
DWP is not doing enough to assure itself or Parliament that it can rely on National Insurance records to pay State Pension accurately and that it will not find further historic underpayments. The £1.3 billion underpayment of State Pension relating to missing HRP is one of three ongoing historical issues reported by DWP. It is in addition to the previous underpayment of £1.2 billion affecting some 165,000 pensioners. DWP now also reports that people who claimed Universal Credit over the period 2017–18 to 2022–23 are missing National Insurance credits due to an IT issue, and that it is working to update records. These underpayments raise serious doubts about the accuracy and completeness of the NI records. There is a risk that similar errors may occur with other benefits, as DWP does not routinely check that claimants are receiving the National Insurance credits they are entitled to. DWP and HMRC told us that their internal audit teams are collaborating on a joint review to provide some assurance over the integrity of the National Insurance records. But is concerning that these issues were able to build up over many years before DWP was alerted to them. DWP also told us it was working towards responding to our previous recommendation that it does more to detect systemic underpayments early before they can have a serious impact on pensioners. Recommendation 5: a) DWP should work with HMRC to provide assurance to the Committee within the next twelve months over the integrity of the National Insurance records and how they interact with DWP’s benefit system. b) DWP should report as part of the Treasury Minute what is done to set up an ‘early warning system’ to detect issues before they grow into significant underpayments. This could involve performing more frequent and in-depth analysis of underpayments identified by frontline staff.
Government Response Summary
The government agrees and is strengthening its systems by piloting new approaches in selected services, aiming to improve feedback loops and target high-risk areas from 2024-25, with learnings informing future roll-out.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented The department uses existing quality checks, internal controls, and management information to identify and address issues with the accuracy of its welfare payments. The department is further strengthening the system by piloting new approaches in a small number of services, which aims to improve feedback loops, help target higher risk areas using root cause analysis as part of the quality assurance framework and allow corrective action to be taken quickly. Evaluation from the pilots will be undertaken and the department will use the learnings to inform future plans and potential roll-out from 2024-25, iterating as necessary.