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MPs warn of fraud uncertainties surrounding universal credit

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MPs warn of fraud uncertainties surrounding universal credit

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Published by Jon Land for 24dash.com in Universal Credit and also in Central Government

MPs warn of fraud uncertainties surrounding universal credit MPs warn of fraud uncertainties surrounding universal credit

It remains uncertain how the Department for Work and Pensions will manage the housing costs element of universal credit without increased risks of fraud and error, the Work and Pensions Committee has ruled.

The government claims that its Integrated Risk and Intelligence Service (IRIS) IT system will allow it to cross-check data and provide similar safeguards against fraudulent claims under UC as are currently operated by local authorities within the housing benefit system.

However, last year the National Audit Office found that the IRIS was 'missing' from the UC pathfinders - and it remains unclear how or when the DWP will achieve automated access to the range of property data currently available to local authorities.

The committee has concluded that such a system will need to be fully developed and tested before the national implementation of UC.

Dame Anne Begg MP (pictured), the committee's chair, said: “Through the use of RTI - real-time information on PAYE earnings - universal credit has the potential over the longer term to substantially reduce fraud and error in the benefits system. However, this could be seriously undermined because of the uncertainty about how DWP will administer the housing element of universal credit without increased risks of fraud and error.

"Under the current housing benefit system, local authorities can cross-check claims across a range of data relating to other council services. Unless DWP is able to cross-check universal credit claims in a similar way it may be less effective in tackling fraud and error.

"It is vital that a fully developed and tested IT system, which allows DWP to cross-check data, is in place before universal credit is implemented on a national scale. Worryingly, it appears that there is no automated system in use in the Pathfinders and is not clear when or how a system will be available.”

In a report released today, the committee makes a number of recommendations.

On reporting of official fraud and error estimates:

The official estimated benefit fraud rate is 0.7% of total benefits expenditure. The general public’s misperception is that it is some 34 times higher. To reduce the risk of confusion or conflation in media reporting, the DWP should publish statistics relating to the estimated level of benefit fraud on a separate day from those related to error in the benefits system.

On progress towards fraud and error reduction targets:

Fraud and error rates have plateaued from 2005/06 to 2012/13, despite an “uncompromising” and “zero tolerance” approach announced by the coalition. The DWP will only meet the target set in 2010, to reduce the estimated overpayment rate to no more than 1.7% by April 2015, if it employs innovative approaches which are aligned with the known risk factors associated with each benefit.

On innovative ways of tackling fraud and error:

The DWP and HMRC should explore, with the Payments Council and the banking sector, the feasibility of establishing a system which flags up potentially incorrect benefits and tax credit payments, using data held by payments systems operators and banks on the types of payments due to enter individual bank accounts.

In the longer term biometric identity systems could have an important role to play in identity verification processes across government. The Cabinet Office is working on a government-wide system; the government should evaluate the benefits of biometric identity verification in the social security system and more widely across public services.

On the implementation of the Single Fraud Investigation Service (SFIS):

The committee recommends that SFIS, a DWP-run service which will investigate all social security benefit fraud across DWP, HMRC and local authorities, be implemented, as far as is practicable, in line with the roll out of UC. The government’s current timetable for SFIS implementation would see responsibility for Housing Benefit fraud investigations transfer from local authorities to DWP before the department plans to take responsibility for housing costs support under UC across the country.

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