Benefit fraud drops, but at a cost

Benefit fraud has fallen from £2 billion to £800 million a year since 2000, but the Government is spending more money identifying overpayments than the amount being tracked down, an official report has shown.

More than £154 million was spent in the last financial year to identify £106 million worth of overpayments due to fraud, said the National Audit Office (NAO).

An MP said the track record of the Department for Work and Pensions (DWP) in recovering money lost to fraud was "frankly embarrassing".

Edward Leigh, chairman of the public accounts committee, added it was "truly alarming" that the amount of benefit money lost because of errors by the department had doubled to £1.9 billion a year since 2001.

The Government announced new powers to target benefit fraudsters and reduced the "disgraceful and shameless theft".

The NAO said the DWP had made good progress in tackling benefit fraud over the past few years, but it added that the loss of so much money was still a "significant drain" on the public purse.

Despite the progress, the NAO made a number of recommendations to tackle fraud, including improved management information.

The NAO also complained that the DWP was unable to assess the costs and benefits of its counter fraud initiatives, adding that some were more cost effective than others.

Cases of suspected fraud found through the DWP's data matching service identified £24 of overpayment per £1 spent, compared with £16 on cases generated by a hotline, said the report.

Sir John Bourn, head of the NAO, said: "The Department for Work and Pensions has made tackling benefit fraud a priority and has made good progress in reducing fraud, which represents a substantial achievement by its staff.

“It is also ahead of other comparable countries in its measurement and understanding of benefit fraud."