Source · Select Committees · Public Accounts Committee

Twenty-Sixth Report - The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system

Public Accounts Committee HC 44 Published 9 November 2022

Report Status

Government responded

Conclusions & Recommendations

31 items (15 recs)

Source

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Government Response

AI assessment · 31 of 31 classified

Accepted 12

Acknowledged 5

Not Addressed 2

Rejected 12

Recommendations

9 results

4 Accepted

The Department has not set out in sufficient detail how it will assess whether it...

Recommendation

The Department has not set out in sufficient detail how it will assess whether it is achieving what it wants from its investment in fraud prevention measures. We have previously found that the Department lacks the ability to demonstrate that … Read more

Government Response Summary

The government agrees and reports savings of £2 billion achieved in 2021-22 through counter-fraud function. They acknowledge that the NAO has yet to endorse this framework but is committed to working together ahead of the 2022-23 ARA to ensure this agreement is in place.

HM Treasury

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6 Accepted

The Department’s efforts to correct the systemic underpayment of State Pension are too slow to...

Recommendation

The Department’s efforts to correct the systemic underpayment of State Pension are too slow to meaningfully put things right. The Department now estimates that 237,000 pensioners have been underpaid a total of £1.46 billion in their State Pension. Despite these … Read more The Department’s efforts to correct the systemic underpayment of State Pension are too slow to meaningfully put things right. The Department now estimates that 237,000 pensioners have been underpaid a total of £1.46 billion in their State Pension. Despite these underpayments going back as far as 1985, the Department’s overall exercise to correct this issue is delayed from the end of 2023 to the end of 2024. The Department cannot be certain that its plan to deliver the exercise on schedule is achievable, as it is dependent on assumptions around recruitment, retraining, and automation. We are not convinced that the Department has done enough to ensure its communications to potentially affected pensioners are sufficiently clear. We are concerned that this may leave many pensioners lacking reassurance that they will receive meaningful and timely redress. The Department does not yet know the full extent of the underpayment relating to Home Responsibilities Protection, and it is dependent on HMRC to evaluate the impact of these underpayments on pensioners. The Department cannot be certain that it has identified all the underpayments implied by the results of its annual measurement exercise. Overall, we remain unconvinced that the Department’s control systems are adequate to detect further underpayments before they build up into major issues in future. Recommendations: As part of its Treasury Minute response, the Department should set out a credible plan to deliver the exercise to correct State Pension underpayments on schedule and explain how it will update its communications to reassure pensioners that they will be meaningfully compensated. In addition to this, the Department should: 8 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system • as part of its Treasury Minute response, work with HMRC to fully evaluate the extent of the HRP underpayment as soon as possible and provide a timetable of when it expects each phase of this p Show less

Government Response Summary

The government agrees and states that work is underway in HMRC, supported by the department, to understand more about the scale, potential causes, and options to correct historical errors relating to Home Responsibilities Protection (HRP). They also mention a list of Treasury Minutes responses.

HM Treasury

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9 Accepted

We asked the Department when it expected to be able to set a target for...

Recommendation

We asked the Department when it expected to be able to set a target for reducing fraud and error. It referred to its letter to the Committee of May 2022 and reiterated it still did not believe that it was … Read more

Government Response Summary

The government agrees to set a target for reducing fraud and error and will work with the National Audit Office (NAO) to develop commentary.

HM Treasury

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13 Accepted

We asked the Department how it ensured that vulnerable claimants were taken into account, in...

Recommendation

We asked the Department how it ensured that vulnerable claimants were taken into account, in particular when it uses data analytics and machine learning. The Department told us that it was considering and testing for vulnerability “at every stage”.23 It … Read more We asked the Department how it ensured that vulnerable claimants were taken into account, in particular when it uses data analytics and machine learning. The Department told us that it was considering and testing for vulnerability “at every stage”.23 It acknowledged that that its data analytics tools focused on characteristics for fraud rather than vulnerability, but that it had other processes to identify and signpost support to claimants with complex needs before a claim would be suspended due to suspected fraud. It explained that this process started with the initial assessment of the claimant by a case worker, and that if evidence of vulnerability was suspected, there were markers within the Department’s systems that can be used to flag this in the claimant’s case. We asked whether this flagging process is automated, and the Department told us it was entirely manual and relied on the discretion of the case worker. It further explained that where there were suggestions of vulnerability, the next stage would be a ‘case conference’ in which a wider team, which it calls ‘Advanced Customer Support Leads’ would assess the case to help ensure the right decision was made about whether to suspend payment. In a case where the claimant had failed to engage with the Department’s processes, this wider team may contact people who might know the claimant—such as their landlord, Local Authority, or GP—to establish what is going on. The Department told us it has expanded the team that specialises in the assessment of these complex cases from 30 to 36. It added that it also had an automated ‘call listening’ service in place to detect key words and phrases associated with vulnerabilities, and that this covered 30% of claimant calls and was planned to expand to 100%.24 20 DWP ARA 2021–22, pages 64, 66, 223–224 21 Q 26 22 Qq 27–29, 78–80, 82–83 23 Q 61 24 Qq 61–65, 79–81 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system 13 Show less

Government Response Summary

The government is committed to ensuring that all the right assurances and governance is in place for its data and analytics functions, in relation to its fraud and error response and considering the best method on reporting this information to Parliament annually.

HM Treasury

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19 Accepted

We have previously found that the Department lacks the ability to demonstrate that its counter-fraud...

Recommendation

We have previously found that the Department lacks the ability to demonstrate that its counter-fraud activities are having the intended impact and are cost-effective. As part of our inquiry into the Department’s 2019–20 Accounts, we recommended that the Department needed … Read more

Government Response Summary

The government published an estimate of £2 billion in savings from counter fraud efforts in the 2021-22 ARA and is committed to working with the NAO to ensure agreement on the framework for the 2022-23 ARA.

HM Treasury

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24 Accepted

The Department explained that, in order to manage the risk of unintended bias in the...

Recommendation

The Department explained that, in order to manage the risk of unintended bias in the use of data analytics to identify fraud, it ensured that there was always meaningful human involvement in decision-making, and that it undertook ‘fairness analysis’ to … Read more

Government Response Summary

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27 Accepted

In January 2021 the Department launched an exercise to review around 400,000 cases ‘at risk’...

Recommendation

In January 2021 the Department launched an exercise to review around 400,000 cases ‘at risk’ of underpayment to confirm the extent of the issue and reimburse affected pensioners. The Department wrote to us in May 2022 explaining that it was … Read more In January 2021 the Department launched an exercise to review around 400,000 cases ‘at risk’ of underpayment to confirm the extent of the issue and reimburse affected pensioners. The Department wrote to us in May 2022 explaining that it was on track to conclude the review of the original 400,000 cases by the end of 2023.52 But it noted in its most recent Annual Report and Accounts that it was planning on the basis that completion would likely be delayed to the end of 2024 because of the potentially affected pensioners newly identified during 2021–22. The NAO reported that between January 2021 and March 2022, the Department reviewed an average of 4,000 cases per month, but 48 Committee of Public Accounts, Underpayments of the State Pension, Thirty-Third Report of Session 2021–22, HC 654, 12 January 2022 49 DWP ARA 2021–22, pages 234, 291 50 Qq 85, 91 51 DWP Follow up Correspondence to the Public Accounts Committee Hearing on DWP Annual Report & Accounts 2021–22 on 20 July, 6 September 2022 52 Correspondence from Peter Schofield CB, Permanent Secretary, Department for Work and Pensions, Re: State Pension Underpayments, 16 May 2022 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system 19 it will need to review around 19,000 cases per month going forward to achieve its target deadline.53 We asked the Department whether it genuinely believed that a 400% increase in workload would be achievable. It told us it was confident it could achieve its 2024 deadline by boosting staffing from 500 to 1,500, increasing the speed at which cases were reviewed, and deploying automation tools, which were still under development. We questioned the Department on whether the additional 1,000 staff would need to be compensated for in the wider headcount reductions. It explained that it did not expect this would be an issue because these reductions were planned for March 2025, and therefore would not affect its 2024 target completion date. We observed Show less

Government Response Summary

The government agrees and states that it already provides a range of awareness materials to assist those who may fall into the cohorts affected by the State Pension LEAP exercise, including information on Gov.UK and leaflets with annual uprating letters. They have also provided a more direct route for those enquiring about underpaid State Pension in respect of a deceased customer.

HM Treasury

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28 Accepted

In our January 2022 report we were concerned that the Department had not given people...

Recommendation

In our January 2022 report we were concerned that the Department had not given people who were worried that they had been underpaid enough information to find out what they should do, and that there was a risk that many … Read more In our January 2022 report we were concerned that the Department had not given people who were worried that they had been underpaid enough information to find out what they should do, and that there was a risk that many would still miss out on money they should receive.55 In May 2022, the Department wrote to us to say that it would consider the feasibility of doing more to understand the effectiveness of its communications to pensioners who are concerned they may have been underpaid.56 We asked the Department what steps it had taken toward this. It told us that it was reviewing and simplifying its communications with customers, but offered no specific details on the changes it had made as a result. It further explained that its generic message to pensioners who are concerned they may be affected was that “we will get to them” – and that it was being systematic and prioritising case review based on its assessment of claimants’ vulnerability. It said in practice this means it will contact the over-80s and widowed pensioners first.57 We responded that this messaging would not be reassuring to pensioners concerned about their entitlement. The Department reiterated that it encouraged people to wait to be contacted, unless they were in one of several groups: • someone already getting State Pension who got divorced or had their civil partnership dissolved; • a married woman whose husband reached State Pension age after them and who became entitled to his State Pension before 17 March 2008; • a husband, wife, or civil partner in a couple where both had reached State Pension age and the other person has died and not yet claimed their State Pension, or • Someone aged 80 and over who either has no State Pension or Graduated Retirement Benefit, as they need to make a claim to get any Category D State Pension.58 53 DWP ARA 2021–22, page 235 54 Qq 93–96 55 Committee of Public Accounts, Underpayments of the State Pension, Thirty-Third Report of Session 2021–22, HC 654, 12 January Show less

Government Response Summary

The government agrees to work with HMRC to fully evaluate the extent of the HRP underpayment as soon as possible and provide a timetable of when it expects each phase of this process will be completed.

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30 Accepted

The NAO reported that the Department cannot rule out that there may be further groups...

Recommendation

The NAO reported that the Department cannot rule out that there may be further groups of pensioners, as yet unidentified, that have been affected by a historic underpayment. It concluded that this was in large part because the Department had … Read more

Government Response Summary

The government agrees and plans to report the total value of arrears payments that arise due to underpayments in its next Annual Report & Accounts, and how it will review individual arrears payments to assess whether they are indicative of a systemic underpayment issue. They will also work with the NAO to identify potential errors within the State Pension system, assess the associated risk and take appropriate corrective action.

HM Treasury

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Conclusions (3)

Observations and findings

8 Conclusion Accepted

We have repeatedly recommended that the Department should set targets for fraud and error reduction across the benefits it administers, most recently as part of our examination of the Department’s 2021–22 Annual Report and Accounts.12 In its response the Department reconfirmed its intention to set an overall target for fraud …

Government Response Summary

The government agrees with the Committee’s recommendation, previously given, to set a target and work with the National Audit Office (NAO) to develop commentary, with a target implementation date of Summer 2023, and will keep the Committee up to date on the progress of this via the existing TM25 recommendation.

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20 Conclusion Accepted

We asked the Department how long it would be before it could set a target for fraud and error reduction. It told us that it could not say when it would have enough clarity 32 Qq 70–72 33 Committee of Public Accounts, Department for Work and Pensions Accounts 2020–21 – …

Government Response Summary

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31 Conclusion Accepted

We have previously concluded that the Department had been relying on a State Pension payment system that is not fit for purpose for decades, and recommended that it consider ways to upgrade its IT systems as a matter of urgency.66 The Department accepted 59 Q 101 60 Committee of Public …

Government Response Summary

The government agrees with the recommendation, but disagrees with the overall conclusion, given its previous detailed updates on the State Pensions Legal Entitlement and Administrative Practices exercise (the LEAP exercise) and provides details on the scope of the exercise, progress to date and plans to address outstanding work and aims to complete the exercise by the end of 2023 for Category BL and Category D cases and continually looking at its delivery plans and assessing risks to delivery as they arise.

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