Parliamentary Committees and Public Enquiries
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DWP must tackle its record benefit errors fairly

As numbers of claimants and incorrect payments skyrocket, the Public Accounts Committee report warns on destabilising debt collection practices and potential discrimination and bias in using artificial intelligence to tackle ongoing, record levels of benefit error and fraud.

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Benefit fraud and error overpayments

Even before COVID-19, benefit fraud and error overpayments were at their highest ever rates, with around £1 in every £10 of Universal Credit paid incorrectly. The estimated overpayment rate, excluding State Pension, now stands at 4.8% (£4.5 billion) out of a total benefit expenditure of £93.1 billion for 2019-20; this is the Department’s highest ever estimated overpayment rate and continues the record run of mis-payment that has seen the Department for Work and Pensions’ (DWP’s) accounts qualified every year since 1988-89.

Claimants affected by DWP errors are often the least able in our society to repay debts, including those incurred in the benefit system, or to absorb significant changes in their income.

The Department does not currently have a target rate of fraud and error to work toward fixing this, though it has now publicly committed to setting one.

The impact of the COVID-19 pandemic

DWP responded rapidly to the impact of the COVID-19 pandemic. As measures to address the virus affected people’s incomes, many turned to benefits for the first time. The number of people on Universal Credit rose from 2.9 million in February to 5.6 million in August, with a peak of over 100,000 new claims a day at the end of March.

The Committee recognises the hard work and commitment of the Department’s staff in ensuring that 89% of new claims from 1 March 2020 to 26 May 2020 were paid on time and in full. To manage this though, the Department made changes to benefit delivery, including turning off some controls that are ordinarily in place to mitigate the risk of fraud and error.

The large increase in caseload combined with this easing of controls mean that losses to the taxpayer through benefit fraud and error are expected to increase significantly in 2020-21. The Department will also need to be prepared for probable further increases in unemployment.

The Department’s recent efforts to improve controls have focused on investing in data analytics, which it hopes will allow it to prevent fraud and error before it enters the system. The impact of these technologies is still unproven: the Department’s Risk and Intelligence Service (RIS) was launched in April 2018, using ‘increasingly sophisticated data and analytical tools’ to tackle fraud and error – but the estimated rate of overpayments continues to rise, and the Committee warns of the potential for discrimination or bias caused by using artificial intelligence and machine learning on different claimant groups.

Chair's comments

Meg Hillier MP, Chair of the Public Accounts Committee, yesterday said:

“DWP staff are to be highly commended for the incredible job they have done getting benefits to millions of new claimants in a crisis, many of whom never expected to have to rely on the welfare safety net. 

“But the DWP’s system of fixing its errors can penalise the least secure with yet more debt and even lower incomes. A benefits system that can act to further reduce the stability of recipients is unlikely to be able to offer value for money.

“DWP has now finally committed to a target for reducing its levels of error, and levels of fraud – it must ensure that the means it uses to get there do not further marginalise and discriminate against those who have little or no financial resilience to deal with the income changes these mistakes lead to.”

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