§ Baroness Noakesasked Her Majesty's Government:
When the amount of fraud and error in benefit payments will be reduced to the 1 per cent of gross expenditure that would be necessary to avoid the qualification by the Comptroller and Auditor-General of the resource accounts of the Department for Work and Pensions; and what plans they have to achieve that. [HL1018]
§ The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)The department is committed to meeting the PSA targets to reduce fraud and error loss in income support and jobseeker's allowance by 33 per cent by 2004 and 50 per cent by 2006; housing benefit by 25 per cent by 2006; and pension credit by 20 per cent by 2006.
Further targets have been set for income support, jobseeker's allowance and housing benefit for subsequent years.
The department has already made significant progress in delivery against these targets. By March 2004 we had reduced fraud and error in income support and jobseeker's allowance by 37 per cent to 6.4 per cent compared with the 1998 baseline figure of 10.4 per cent, achieving the first stage of the target. We have achieved even more in reducing fraud. Compared to the 1998 baseline figure, by March 2004 we had reduced the level of fraud in working age income support and jobseeker's allowance by half. Since 1997 we have saved the equivalent of over £1 billion through our efforts in reducing fraud and error in income support and jobseeker's allowance.
However, even when these targets are achieved the level of loss cumulatively across departmental expenditure is likely to remain above 1 per cent. A reduction in overall loss below 1 per cent will remain very difficult to achieve given the necessary complexity of the benefit system, which seeks to tailor provision closely to individual needs.
The department remains committed to reducing loss from fraud and error wherever possible while ensuring that those who genuinely need financial support receive it.
121WA
§ Baroness Noakesasked Her Majesty's Government:
What is their estimate of the level of (a) fraud, and (b) error in relation to incapacity benefit payments for 2003–04; and what plans they have to reduce that level. [HL1019]
§ Baroness Hollis of HeighamThe level of fraud in incapacity benefit (IB) is very low, estimated at less than 3 per cent of expenditure when last measured.
Evidence of fraud in IB is investigated thoroughly. This resulted in 613 prosecutions in 2003–04. Additionally around 45 per cent of people receiving incapacity benefit also receive income support and are subject to the same fraud and customer error management as other income support recipients.
We are also working to reduce error as part of our overall strategy of more prevention and better detection. The incidence of error is continuously monitored and improvement targets have been set. Our emphasis is on working smarter and integrating control measures even more closely into our basic business processes. Key aspects include tackling complexity in benefit rules and tighter standard processes supported by better IT to reduce error, improved data-matching to identify misrepresentations and mistakes earlier, and more help for customers to keep claims right.
The department concentrates measurement of fraud and error on benefits with the highest levels of loss such as income support, jobseeker's allowance and housing benefit. Fraud and error in IB was last measured in 2001. The results are in the table.
Results of Incapacity Benefit Review 2001 Category Monetary Value (£ millions) Percentage of expenditure Fraud overpayments1 Up to £19 million Up to 0.3 Customer error overpayments2 £16 million 0.3 Customer error overpayments3 £15 million 0.2 Notes:
1 This is an upper limit, as insufficient cases of fraud were uncovered in the review to enable a robust central estimate to be made.
2 95 per cent confidence interval (£6 million to £32 million).
3 95 per cent confidence interval (£8 million to £24 million).
Official error is measured every year. The latest results are in the table
Official Error in Incapacity Benefit 2003–04 Category Monetary Value (£ millions) Percentage of expenditure Overpayments 52 0.8 Underpayments 13 0.2 Notes:
195 per cent confidence interval (£37 million to £69 million).
2 95 per cent confidence interval (£7 million to £19 million).
3 All estimates quoted arise from sampling exercises and are subject to margins of error. These are expressed by means of confidence intervals.
122WA4 In addition to the official error underpayments on incapacity benefit (IB) claims in payments, we estimate that there were approximately £6 million of underpayments for those receiving credits only.
5 For the purposes of estimating an IB contribution to our estimate of global fraud and error, we occasionally adjust the overpayment results from the 2001 IB review in line with the change in expenditure and combine the result with the latest IB official error estimate. In the most recent calculation this gave an IB contribution of £87 million.