Benefit fraud costs £3bn a year

The government has lost £3bn in benefit fraud and mistakes over three years – half of which was down to staff error, according to a report by MPs.

The figures, for the three years up to 2003-4, have to be rounded to the nearest half billion because fraud and mistakes are so widespread, the House of Commons Public Accounts Committee (PAC) said.

In 2003-4 alone, £2bn was lost in fraud and another £1bn in mistakes by benefits staff and customers, the PAC report shows.

The MPs say there has been progress in reducing the losses but it wants the system to be simplified.

PAC chairman Edward Leigh said: “The astronomical scale of the amount of benefit money being lost through fraud and error is vividly brought home to taxpayers by the astonishing fact that the figures are rounded to the nearest half-a-billion pounds.”

He said there had been progress in cutting losses in the highest-risk benefits.

“But fraud and error are unlikely ever to be brought under proper control unless benefits systems for both staff and customers are simplified,” said Leigh.

The MPs are worried that an efficiency drive due to cut 30,000 DWP jobs – a quarter of its workforce – will damage morale, lose skilled staff and make tackling the problem harder.

James Plaskitt, anti-fraud minister at the Department for Work and Pensions, said fraud is now as it lowest level ever.

On errors, Plaskitt said the benefits system was a massive operation handling 36,000 work-focused interviews every day.

“Estimated error accounts for around 2% of all benefits paid,” he said. “This is still too high but we are working hard to drive it down.”


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