Press release

Overpayment error in the benefit system falls by £100 million

Official and claimant error on benefit overpayments has fallen to the lowest ever – 1.3% of welfare expenditure – down £100m last year.

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

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The government expects the rate to drop even more with the introduction of Real Time Information (RTI), introduced in August.

This means benefit claims can now be cross-checked against earnings and pension income from HM Revenue & Customs (HMRC) immediately after each payment they make. Previously this data was submitted annually.

The statistics out today also show Jobseeker’s Allowance fraud and error overpayments dropped to their lowest recorded level, having fallen by £40 million in the last year.

Total fraud and error in the benefits system stands at £3.4 billion or 2.1% of overall welfare expenditure. Total overpayments due to claimant and official error fell from £2.3 billion (2012/13) to £2.2 billion (2013/14).

Work and Pensions Minister Mark Harper said:

Too much money has been needlessly wasted in the past on fraud and error, so it’s good news that we’ve brought down claim errors to a record low. Now thanks to our new IT advances, we will be able to track both fraud and error in record time.

But there’s more to do. We will use everything in our power to stop people who cheat the system stealing money from hardworking taxpayers, as part of our long-term economic plan to make a fairer welfare system.

The data for 2013/14 revealed that:

  • benefit fraud is at £1.2 billion or 0.7% of welfare expenditure
  • claimant error overpayments have fallen to 0.9% or £1.5 billion of spending
  • official error overpayments have dropped to their lowest rate of 0.4% of benefit expenditure or £0.7 billion

In 2013/14, the Department for Work and Pensions (DWP) recovered nearly £1 billion that had been overpaid due to benefit fraud and error across Great Britain, an increase of 30% over the last 3 years.

Ministers launched a major advertising campaign last month targeted at nearly 50 towns and cities across the country to bring down fraud and error. A range of television and radio adverts, posters, letters and Facebook ads are being used in each region to urge claimants to report changes in their circumstances or risk a jail sentence.

New rules were also announced this year to further deter claimants from committing benefit fraud and make sure stolen money is returned including:

  • introducing tough new rules so that 40% of individuals’ benefits can be taken to repay stolen cash – on top of any fine or custodial sentence handed out by the courts
  • increasing penalties that someone committing fraud can receive from £2,000 to £5,000, without taking them to court
  • using bailiffs to confiscate high-value possessions from convicted benefit fraudsters
  • continuing to roll out Universal Credit to more sites, which is expected to reduce fraud by £1 billion in 5 years when it is fully in place across the country
  • extending the 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 3 years for a third offence
  • issuing a new £50 civil penalty for claimants who negligently give incorrect information on their claim or fail to report a change in circumstances which results in an overpayment

Further analysis of individual benefits reveals fraud and error for:

  • Jobseeker’s Allowance fell to its lowest ever level – from 4.1% (£210 million) in 2012/13 to 3.9% (£170 million) of expenditure in 2013/14 – with claimant error reducing and fraud falling to its lowest rate since 2006/07
  • Pension Credit decreased to 5.9% (£430 million) of benefit expenditure in 2013/14, from 6.4% (£490 million) the year before – and fraud, claimant error and official error have fallen
  • Employment and Support Allowance is at 3% (£310 million) – this is the first financial year fraud and error has been reported
  • Income Support is at 4.5% (£170 million)
  • Housing Benefit – which is administered by local authorities – is at 6% (£1.4 million)

Report suspected benefit fraud

Call the National Benefit Fraud Hotline on 0800 854 440

Real Time Information

Real Time Information (RTI) is the new system for collecting Pay As You Earn tax information from employers and pension providers, who are now required to provide HMRC with income details immediately after each payment they make.

Fraud investigators have been using RTI since August for claims of Jobseeker’s Allowance, Employment and Support Allowance and Pension Credit where claimants have either failed to declare or under-declared earnings and occupational pensions. From this month it will be used to cut down on fraudulent claims of Housing Benefit.

Contact Press Office

Media enquiries for this press release – 020 3267 5116

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Published 6 November 2014