The Department for Work and Pensions (DWP) paid out an unnecessary £3.1bn due to fraud and error in 2009-10, according to qualified accounts from the National Audit Office (NAO).

The Comptroller and Auditor General has qualified the DWP’s accounts, which have been qualified every year since 1988-89, due to the material level of fraud and error in expenditure on state benefits. The State Pension has a low level of error, and therefore is not qualified.

The overpayments compare to 2008-09 accounts when £2.7bn was paid out in error.
Of the £148bn of benefits administered by the DWP, £1bn was lost to fraud, £1.1bn to customer error, and £1.1bn to official error. In addition, total underpayments in the year are estimated to be at £1.3bn.

The NAO said the benefits are prone to error, and the DWP faces ‘significant challenges in administering a complex benefits system in a cost effective way’. However, work has been done to reduce fraud and error within the system in recent years, but the economic downturn has worsened the levels, the NAO added.

“I have had to qualify my opinion on the Department for Work and Pensions accounts because of the levels of fraud and error: an estimated £3.1bn of overpayments and £1.3bn of underpayments,” commented Amyas Morse, head of the NAO. “Over the last year the Department has been under increased pressure, caused by the increase in benefits claimants because of the economic downturn, and this has led to a slight increase in the error rate.

“Although the processing of benefits will always be subject to some degree of fraud and error, the Department should continue to find ways of driving down the level of funds that are erroneously overpaid to benefits claimants.”

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