DWP overpays £3.3bn on benefits

The Department for Work and Pensions overpaid some £3.3bn on benefits last year due to fraud and error, its 2010/11 accounts show.

The accounts – qualified by the head of the National Audit Office, the Comptroller and Auditor General – revealed this amount represents 2.1% of the department’s total £156.3bn spent on benefits administered throughout the year.

The amount overpaid breaks down into about £1.2bn lost to fraud, £1.2bn to customer error, and £800m to official error.

It also represented a £200m increase on the previous year – 2009/10 – when £3.1bn was spent but this amount constituted the same proportion of overall benefit expenditure of 2.1%.

Meanwhile, total underpayments in 2010/11 are estimated to be £1.3bn.

The National Audit Office said some benefits are prone to error and the department faces significant challenges in administering a complex benefits system in a cost effective way.

However, it added the government’s proposal to introduce a Universal Credit to replace some of the existing working-age benefits – benefits which have historically suffered from the highest rates of fraud and error – is an opportunity to improve.

National Audit Office head Amyas Morse said: “Ever since the Department for Work and Pensions began measuring fraud and error, rates have consistently remained at a high level. This has been most notable in the case of means tested benefits where evidence of entitlement can be difficult to verify or easy to get wrong.

“No system to administer benefits can ever be perfect but I believe that there is scope for the department to reduce fraud and error levels significantly. I therefore welcome its commitment to do so, as shown by the refreshed approach it intends to take to driving down incorrect payments.”

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