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Benefit fraud fell last year – but more action is needed to stop the £1.2bn cost to the taxpayer each year, Minister for Welfare Reform Lord Freud said today.

The Department for Work and Pensions (DWP) figures show total overpayments due to fraud and error stood at 2.1% of all benefit expenditure or £3.4bn over the last year.

Lord Freud said:

"We are fighting the battle against fraud and making advances, but fraud in the benefits system remains a huge problem.
"We have given our teams more resources and more powers so investigators are now actively tracking fraudsters, using a mixture of the latest technology and old-fashioned detective work.
"From next year, Universal Credit will also make fraud much harder to commit and easier to trace quickly."

With the introduction of Universal Credit in 2013, the benefits system will be made simpler and the opportunities for fraud and error will be greatly reduced.

Universal Credit will also substantially reduce overpayments due to claimant error – which rose to a record high of £1.4bn in the last year.

Lord Freud added:

"Clearly something is dramatically wrong with the current system when more money is lost because of mistakes by claimants than because of fraud.
"With Universal Credit bringing together six benefits into one, the system will be much easier for individuals to understand, and less vulnerable to human error."

Notes to Editors:

The 'Fraud and Error in the Benefit System: 2011/12 Estimates' are published here:
http://statistics.dwp.gov.uk/asd/asd2/index.php?page=fraud_error

The latest fraud and error estimates published today for 2011/12 show that out of a total benefit expenditure of £159.2 billion, £3.4 billion was overpaid due to fraud and error.

£1.2 billion has overpaid due to fraud
£1.4 billion has been overpaid due to claimant error
£0.8 billion has been overpaid due to official error
£1.1 billion has been overpaid due to Housing Benefit fraud and error;
£230 million has been overpaid due to Jobseekers Allowance fraud and error;
£310 million has been overpaid due to Income Support fraud and error
£460 million has been overpaid due to Pension Credit fraud and error

In the last year, a range of measures have put in place in the fight against fraud:

Investigators are making greater use of Proceeds of Crime Act powers to take fraudsters back to court to force them to repay ill-gotten gains or face prison;
Targeted campaigns are focusing on areas of high suspected fraud;
Dedicated teams are checking old claims for potential fraud.

New tougher penalties to deter fraudsters now include penalties of up to £2000 without being taken to court.

Further penalties coming into effect in the future to cut down on fraud and error include:

Extended loss of benefit for offences, which result in a conviction, of 13 weeks for a first offence, then 26 weeks for a second offence and three years for a third offence.
An immediate three year loss of benefit for serious organised benefit fraud or identity fraud.
A new £50 civil penalty in cases where claimants negligently give incorrect information on their claim or fail to report a change in circumstances which results in an overpayment.

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IRRV Alert - week ending 30th November 2012

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DWP: Benefit fraud bill is dropping - But more action is needed

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