Ministers have ‘lost grip’ of the benefits system, MPs said last night after it emerged that billions of pounds had been lost to fraud following the relaxation of rules because of Covid-19.
A staggering £8.3billion was overpaid to claimants last year, with the overwhelming majority of this down to fraud rather than error.
It meant an astounding 7.5 per cent of Britain’s welfare budget was overpaid as a result of fraud or error – almost double the level the previous year.
A report from the Commons public account committee stated that the large increase in people receiving Universal Credit due to the pandemic is the main reason for the dramatic rise.
The Department for Work and Pensions (DWP) brought in certain ‘easements’ – relaxing or adapting usual fraud and error controls – to enable it to manage unprecedented numbers of new claims during the Covid crisis.
After the Covid pandemic, which led to an exclusion of some rules, fraud claimed billions of pounds.
The MPs said it opened the door to ‘organised criminals and dishonest opportunistic individuals’ to ‘steal from the taxpayer’. And they criticised the DWP for having no plan to recover most of the money – meaning ‘billions of taxpayers’ money is almost certainly lost’ – an amount which is ‘simply unacceptable’.
The DWP stated that the loss due to error and fraud would remain the same for the current fiscal year.
The report said: ‘The department has lost a grip of Universal Credit overpayments, which account for most of the £3.8billion increase in fraud and error and are now at the highest overpayment rate of any benefit.’
Dame Meg Hillier, the committee’s chairman, said: ‘This is a real-life waking nightmare for the huge numbers of people affected, from the most vulnerable in our society to the full-time working families who still struggle daily to make ends meet.
‘The department appears unequipped either to properly administer our labyrinthine benefits system or detect and correct years of mistakes across too many of our state welfare entitlements, far pre-dating its current woes.
‘This situation is untenable and taxpayers – who also include benefit claimants – are losing billions because of it. There needs to be a step change in understanding the impact of benefit errors on people’s lives and restoring trust.’
The pandemic saw fraud and error almost tripling in the system of benefits, compared to what had been the highest recorded rate ever.
Overpayments of benefits now stand at £8.3billion, 7.5 per cent of the DWP’s overall benefit expenditure (excluding state pension) of £111.4billion.
Ministers have ‘lost grip’ of the benefits system, parliamentarians said last night after it was revealed £8.3billion was overpaid to claimants last year, the majority fraudulently
Fraud and error were rising year-on-year before Covid-19 but the department’s response to the pandemic opened up new weaknesses in its systems.
Ministers promised to recruit 3,000 more staff to address years of payments errors, which were already discovered long before the pandemic.
But the committee said it ‘remains sceptical about whether its approach will result in a ‘real and sustained reduction in the levels of fraud and error’, and the DWP admitted in evidence that it will be unable to demonstrate any such improvements in 2021/22.