Department for Work and Pensions annual report and accounts published

By agency reporter
June 29, 2019

Gareth Davies, the Comptroller and Auditor General of the National Audit Office, has reported on the 2018-19 accounts of the Department for Work and Pensions. He has qualified his audit opinion because of the material level of fraud and error in benefit expenditure.

Benefit overpayments and underpayments are at their highest levels since 2005-6, when the Department for Work and Pensions (the Department) introduced its current method for estimating these payments.

Excluding State Pension, where the level of fraud and error is very low, the estimated level of overpayments has increased to 4.6 per cent (£4.0 billion) of related benefit spending (£86.6 billion), from 4.4 per cent (£3.7 billion) in 2017-18. Underpayments have increased to an estimated 2.2 per cent (£1.9 billion) of benefit spending, from 2.0 per cent (£1.7 billion) in 2017-18. The Department expects the value of overpayments to continue to rise over the next six years, mainly due to the roll-out of Universal Credit.

The Comptroller and Auditor General of the National Audit Office, Gareth Davies, has therefore qualified his opinion on the regularity of the Department for Work and Pensions’ 2018-19 financial statements. This is the 31st year that the Department’s accounts have received a qualified opinion.

Benefit payments are susceptible to both deliberate fraud and unintended error by claimants and the Department. When overpayments are recovered by the Department, this can lead to problems for claimants who face deductions from their income. Underpayments can mean households do not get the support they are entitled to.

The estimated overpayment rate for Universal Credit is 8.6 per cent, which is the highest for any continuously measured benefit since Tax Credits in 2003-04. Claimants failing to declare their income and earnings correctly was the largest cause of overpayments across the Department’s benefits, including for Universal Credit where it accounts for 30 per cent of overpayments.

Personal Independence Payment (PIP) has the highest level of underpayments, at 3.8 per cent of expenditure. The primary cause of both overpayments and underpayments in PIP is claimants not reporting changes in functional need due to either deterioration or improvement in their medical condition.

Gareth Davies, the Comptroller and Auditor General said: “The value of fraud and error in benefit spending is a longstanding and costly issue for the Department. I am concerned that this has reached its highest rate since the current estimation method was introduced, and that the Department expects overpayments to rise even further.

“I would like to see the Department make better use of its data to identify misreporting of benefit income and eradicate this cause of overpayments and underpayments. It should also work to understand the reasons for high fraud and error rates for Universal Credit, and explore how it can help PIP claimants provide accurate and timely information so that they are not underpaid their benefits.”

* Read the Department for Work and Pensions annual report and accounts here

* National Audit Office https://www.nao.org.uk/

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