13 Jan 2015

Housing benefit - fraud and error is rising

Fraud and false claims for the state benefit that is most often abused has amounted to an astonishing £12.6 billion since the turn of the Millennium, MPs reported yesterday.

The amount sucked out of Housing Benefit by welfare cheats, in exaggerated claims, and through straightforward bureaucratic blunders was the equivalent of around £1 billion a year for the first 13 years of the century.

The loss to the taxpayer would pay the price of policing Britain for a year or cover more than four fifths of the bill for the road improvements that David Cameron has promised over the next five years.

Or tax cuts

It would have paid the whole cost of four aircraft carriers instead of the two which have been developed for the Royal Navy since 2000.

Or tax cuts

And the influential Public Accounts Committee, which acts as a public spending watchdog, revealed the amount of fraud and error in Housing Benefit is still going up.

A report condemned the Department of Work and Pensions – which pays out for the benefit designed to cover the rent for people who cannot afford to pay their own – for failure to curb false claims, and added that MPs were sceptical of promises by civil servants to slash the losses by more than two thirds by this spring.

Chairman Margaret Hodge said:
Billions of pounds have been lost to the taxpayer as a result of the Department’s failure to tackle Housing Benefit fraud and error effectively. Around £12.6 billion has been spent on Housing Benefit overpayments since 2000, money that could have been used to improve the system. The size of overpayments is going up not down.
Curbing fraud and error in Housing Benefit has proved difficult for all governments over the past 20 years, partly because the benefit is handed out by local councils which have varying levels of efficiency in detecting dishonest or inflated claims.

In the last financial year, 2013/14, losses amounted to £1.4 billion, more than £400 million higher than in 2010/11. Of this, £340 million was outright fraud and £900 million was claimant error, for example when someone who has been unemployed gets a job but forgets to tell the council that they have an income. The line between fraud and error is often blurred.

Yes, they like to assume a claim is a mistake rather than dishonest.

Another £150 million was lost in mistakes by staff calculating and paying the benefit.

Housing Benefit losses account for more than £4 in every £10 of everything lost by the Government in all false benefit claims. Officials working for Work and Pensions Secretary Iain Duncan Smith have said they will cut the level of loss, currently 5.8 per cent of all the Housing Benefit paid out, to 1.7 per cent by this spring.

Mrs Hodge said: ‘Given the lack of evidence that the Department is getting to grips with fraud and error, we view with scepticism the Department’s confidence that it will meet its target.’

She said the Department was expecting ‘significant’ benefits from a switch to ‘real-time information’, under which HMRC will tell the DWP as soon as someone gets a job, rather than giving DWP officials updates on the earnings of claimants just once a year.

Mrs Hodge said officials were ‘doing little else to tackle Housing Benefit fraud and error’.


1 comment:

Anonymous said...

RTI is a step in the right direction but RBV is a step back. If an online claim is considered 'low risk', then proof of rent or earnings are not required.