Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Accepted
DWP assumes a 5% annual increase in societal fraud propensity based on external data.
Recommendation
We asked DWP to clarify why it assumes in its forecast that there is an ongoing increase in the general propensity to commit fraud in society. DWP explained that this is a judgement based on estimates produced by a range of other bodies. These include Cifas which has reported an 11% increase in fraud against organisations, the Public Sector Fraud Authority which identifies a 7% increase in fraud outside tax and welfare, and the Office for National Statistics that reports in its crime survey that 41% of all crimes are related to fraud. DWP told us it believes that, on the basis of these comparators, it is appropriate to assume that there will be a general increase in fraud of 5% per year. It also observed that the Office for Budget Responsibility was comfortable with building this assumption into its spring 2023 outlook.19
Government Response Summary
The government agrees and states the recommendation is implemented, providing detailed evidence from various sources including police recorded crime data, Cifas, and the British Social Attitudes Survey to support its assumption of a 5% annual increase in fraudulent behaviour.
Government Response
Accepted
HM Government
Accepted
1b. PAC recommendation: As part of its Treasury Minute response to this report, DWP should set out the evidence for its assumption that there will be a general increase in fraudulent behaviour of 5% per year. 1.5 The government agrees with the Committee’s recommendation. Recommendation implemented 1.6 The department has presented detailed evidence to the Office for Budget Responsibility (OBR), who have incorporated this within the overall forecast for fraud and error prevalence in the welfare system. The evidence comes from a range of sources that suggest a widespread upwards pressure on fraud across the economy, as well as related criminal behaviour such as shoplifting. 1.7 These sources include police recorded crime data for England and Wales, which shows shoplifting has been trending upwards since 2012, excluding a sharp drop during the pandemic, and that reported shoplifting reached record high levels in July 2023. 1.8 The latest Cross-Government Fraud Landscape Annual Report by the Public Sector Fraud Authority identified a 7% annual increase in detected fraud outside tax and welfare for financial year 2020-21, and the Office for National Statistics' 2022 crime survey reported that 41% of all crimes were fraud related. Additionally, social research was considered, particularly the 2022 British Social Attitudes Survey, which reports that attitudes towards benefit fraud have softened since 2016. 1.9 The 5% estimate comes from Home Office data for fraud offences referred to the National Fraud Intelligence Bureau by Cifas, who facilitate fraud data sharing between over 600 large public and private UK organisations. This data showed an average annual increase of 5% from 2015-16 to 2019-20. This period is chosen to represent a business as usual, pre-pandemic period. This data for 2022-23 shows an 11% annual increase. 1.10 As all sources show an ongoing and consistent upwards trend in fraudulent activity over time, the department expects these trends to continue. The department acknowledges that extrapolating the 5% figure is a judgment call – reasonable arguments could be made for a higher or a lower figure, but the department’s analysts concluded that this was the best attempt at a central assumption.