Press release

Benefit fraud and error: Hard work must continue to cut £3.5bn loss

Latest figures on fraud and error in the benefits system in 2012/13.

Fraud and error in the benefit system stands at £3.5bn or 2.1% of total benefit expenditure, latest figures show.

Preliminary estimates for fraud and error in 2012/13 show £1.2bn of benefit spending is lost due to fraud, £1.6bn due to claimant error, and £0.7bn due to official error.

The figures show falls in official error covering pension credit and jobseekers allowance to their lowest levels ever. The percentage of benefits overpaid due to official error has fallen to 0.4%.

Last month Universal Credit was launched in Greater Manchester and Cheshire and the new benefit will reduce fraud by £200m a year when rolled out fully.

Over the last year, the DWP has increased its work to crack down on benefit fraud – although this investment is not captured by today’s figures.

Minister for Welfare Reform Lord Freud said:

Universal Credit will revolutionise the welfare state and ensure that the unacceptable levels of fraud in the benefit system are reduced considerably.

The Universal Credit system will be much easier for individuals to understand, less vulnerable to human error, and more difficult for people to play the system.

But our fraud investigation teams are also continuing their hard work – targeting areas of suspected high fraud, using the latest technology to investigate these criminals and going back over old claims to uncover people trying to swindle the taxpayer.

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

  • investigators are making greater use of Proceeds of Crime Act powers to take fraudsters back to court to confiscate assets, force them to repay stolen benefits or face prison.
  • targeted campaigns are focusing on areas of high suspected fraud
  • dedicated teams are checking old claims for potential fraud and error
  • new tougher penalties to deter fraudsters now include penalties of up to £2,000 without being taken to court.
  • extended loss of benefits for convicted benefit fraudsters for up to three years; an immediate three year loss of benefit for serious organised benefit fraud or identity fraud.
  • a £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.

Anyone with information covering suspected benefit fraud should call the National Benefit Fraud Hotline on 0800 854 440.

More information

Universal Credit is expected to lead to £2.2bn of savings due to reduced fraud, error and overpayments together with changes to the current earnings disregards in tax credits.

Preliminary estimates of Fraud and Error by type of error in 2012/13

  • 0.7%, or £1.2bn, of total benefit expenditure is overpaid due to fraud
  • 0.9%, or £1.6bn, of total benefit expenditure is overpaid due to claimant error
  • 0.4%, or £0.7bn, of total benefit expenditure is overpaid due to official error
  • 0.6%, or £0.9bn, of total benefit expenditure is underpaid due to claimant error
  • 0.3%, or £0.5bn, of total benefit expenditure is underpaid due to official error.

Preliminary estimates of Fraud and Error by individual benefits in 2012/13

Key findings for the individual benefits that are measured on a continuous basis are that:

  • 4.6%, or £250m, of Income Support expenditure (£5.5bn) was overpaid
  • 4.2%, or £220m, of Jobseeker’s Allowance expenditure (£5.3bn) was overpaid
  • 5.5%, or £420m, of Pension Credit expenditure (£7.6bn) was overpaid
  • 5.3%, or £1,270m, of Housing Benefit expenditure (£23.8bn) was overpaid.

  • 1.1%, or £60m, of Income Support expenditure (£5.5bn) was underpaid
  • 0.3%, or £10m, of Jobseeker’s Allowance expenditure (£5.3bn) was underpaid
  • 2.1%, or £160m, of Pension Credit expenditure (£7.6bn) was underpaid
  • 1.3%, or £300m, of Housing Benefit expenditure (£23.8bn) was underpaid.

The percentage overpaid due to fraud in the preliminary 2012/13 estimate is the same as the 2011/12 estimate, 0.7%.

The percentage overpaid due to claimant error in the preliminary 2012/13 estimates remained the same when compared with the 2011/12 estimate, 0.9%.

The percentage overpaid due to official error in the preliminary 2012/13 estimate is 0.4% which is a decrease compared to the 2011/12 estimate, 0.5%.

The full statistical release is available at: research.dwp.gov.uk/asd/asd2/index.php?page=fraud_error

Press Office

Caxton House
Tothill Street

London
SW1H 9NA

Media enquiries for this press release 0203 267 5125

Follow us on Twitter www.twitter.com/dwppressoffice

Help us improve GOV.UK

Please don't include any personal or financial information, for example your National Insurance or credit card numbers.