Spiralling fraud and overpayments in the benefits system now stand at the highest rate ever recorded, admits the Department of Work and Pensions (DWP), as it identifies housing payments as an area of concern.
Housing benefit fraud is particularly rife after the pandemic resulted in more relaxed checks to ensure a record number of new Universal Credit claims – up from three million to six million – could be processed and paid.
To help people with their housing costs, DWP administered some £30 billion of housing support through Housing Benefit and Universal Credit during 2020-21, with additional financial assistance paid through the Local Housing Allowance.
Excluding State Pension, DWP estimates it overpaid £8.3 billion of the £111.4 billion that it spent on benefits during 2020-21, an increase of £3.8 billion on the previous year.
Nearly all of the increase in fraud and error was on Universal Credit; DWP estimates it overpaid £5.5 billion of UC (14.5%) and underpaid £540 million (1.4%).
The DWP has identified four key fraud and error risks; it wants to improve controls over incorrectly reported self-employment earnings, savings, living arrangements and housing costs.
NAO boss Gareth Davies (pictured) says the issue has a real impact on public funds and on those who face deductions to their income due to overpayments.
He adds: “I recognise that the pandemic and the resulting surge in the number of claimants has increased DWP’s exposure to fraud and error.
“It must now review all cases that could have been subject to fraud during this time, whilst continuing to progress our past recommendations on how to reduce fraud and error.”