Press release

New fraud, error and debt measures will save taxpayer £2.6 billion a year

A government report published today sets out how new measures to tackle fraud and error will save the taxpayer £2.6 billion a year.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

New fraud, error and debt measures will save taxpayer £2.6 billion a year

Measures include simplifying the benefit and tax credits system, more accurate monitoring of changes in income through Real Time Information (RTI) data, and improved detection of fraud and error through improved sharing of data across government.

The report – Tackling fraud, errror and debt in the benefits and tax credits system – published jointly by the Department for Work and Pensions (DWP) and HM Revenue & Customs (HMRC), explains how changes to the benefits and tax credits system including the full roll-out of Universal Credit with RTI will lead to the savings.

RTI enables DWP to adjust each monthly Universal Credit payments according to people’s actual earnings – preventing the risk of overpayment and reducing opportunities to commit fraud. This type of fraud and error accounts for around £1 billion of overpayments a year.

The publication of the report comes 5 years after the government launched the Fraud, Error and Debt Taskforce to co-ordinate efforts to combat fraud and support departments to undertake major reform in the benefits and tax credits system.

Mark Harper, Minister of State, Department for Work and Pensions, said:

While the overwhelming majority of people are honest and pay or claim what is due, a small minority are dishonest and try to cheat the system. Tackling levels of fraud, and progressively reducing error and debt in the system has therefore been a government priority.

Universal Credit is a single, simpler benefit which is reducing fraud and error and will further deliver huge savings once it is fully rolled out. Our reforms, together with innovative digital technologies and improved data sharing, will ensure that taxpayers’ money continues to support those who need it most.

David Gauke, Financial Secretary to the Treasury, said:

The progress this government has made on tackling fraud, error and debt in the benefits and tax credits system provides a solid foundation for future, sustained savings, while we take a zero tolerance approach to fraud.

Our reforms are making the welfare system simpler, fairer and more transparent.

Successes

Successes include:

  • Simplifying the benefits and tax credits system through Universal Credit – giving a clearer view of claimants’ income and reducing the risk that people are paid too much through fraud and error. In 2013/2014, DWP recovered £363 million of fraud and error-related debt, an increase of £100 million since 2009/2010.
  • Accurately cross-checking the most up-to-date information on income using Real Time Information (RTI) – to quickly and efficiently identify and correct errors, and reduce the opportunity for fraud. RTI will save £220 million through reduced tax credits overpayments, fraud and error in 2014/2015, with a further £410 million saved in the following 2 financial years.
  • Strengthening penalties for fraud and improving debt collection methods – tougher action sends a clear message that fraud will be detected and punished, and that overpayments will be pursued rigorously.
  • Introducing tougher checks on claimants who live outside the UK – using international data matching to verify identities and crack down on benefit fraud abroad.
  • Launching a new Single Fraud Investigation service – bringing together tax, benefits and local authority expertise to identify and address fraud more efficiently.

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Published 26 March 2015