Recommendation 24

During our examination of DWP’s 2021–22 Accounts, we were unconvinced that its control processes were adequate to detect underpayments before they build up into major issues.53 DWP has previously acknowledged “an inability to pick up patterns of underpayment, which had been going on for many years”.54 We asked DWP to explain its current approach to detecting systemic underpayments. DWP explained that it relies predominantly on manual sampling, including the annual exercise to produce its fraud and error statistics. Where issues are identified they are passed on to its wider counter- fraud teams who will investigate the underlying causes. It further explained that 2021–22 was the first year it had used an enhanced sampling methodology that involved contacting pensioners directly to discuss their claim, which is what enabled it to detect the HRP issue.55 We asked DWP what it is doing to make sure it is able to detect issues early in future. DWP acknowledged that while its manual sampling has been helpful, there is more that it can do to avoid systemic underpayments. It explained that, in response to recommendations by the NAO, it is working on bringing together a wider range of intelligence about underpayments. It added there is a lot of work to do in this space and that it would report back to us on this point.56 52 Qq 42–47 53 Committee of Public Accounts, The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefit system, Twenty-Sixth Report of Session 2022–23, HC 44, 9 November 2022 54 Committee of Public Accounts, Underpayments of the State Pension, Thirty-Third Report of Session 2021–22, HC 654, 12 January 2022 55 Qq 3–5, 7–10 56 Qq 3, 72 The Department for Work & Pensions Annual Report and Accounts 2022–23 17 3 Specific activities to reduce fraud and error