Benefit fraud battle proving expensive

The government spent £154 million countering benefit fraud in 2006/07 but only identified £106 million of overpaid benefits, a report has revealed.

Although acknowledging the unquantifiable deterrent effect of the Department for Work and Pensions’ (DWP) counter-fraud measures, the National Audit Office (NAO) believes more should be done to improve their cost-efficiency.

Some DWP initiatives are proving much more successful, its report notes. A customer compliance scheme is only recovering 62p for every £1 spent, but its data matching service identifies an average £24 for every £1 spent.

Today’s NAO report is largely praiseworthy of the DWP’s efforts in fighting benefit fraud, which has fallen from an estimated £2 billion in 2000/01 to £800 million in 2006/07.

This is a “substantial achievement” noted NAO head Sir John Bourn, who says Britain is ahead of other countries in measuring and understanding benefit fraud as a result.

The NAO believes the system’s integrity is well-protected through regular interviews of jobseekers, medical examinations of those claiming disability and incapacity benefits and other efforts to wipe out customer and official error.

But Sir John remained concerned about value-for-money, however, adding: “Although some of the department’s initiatives lead to earlier interception of overpayments and may deter potential fraudsters, I believe the department could do more to determine whether its activities are cost-effective.”

The report also found different parts of the DWP “do not operate in a fully streamlined way” and recommends it establishes targets for recovering overpayments from those customers who are no longer on benefit.

Work and pensions secretary Peter Hain announced DWP fraud investigators will use information held by credit reference agencies to help locate benefit cheats.

Responding to the NAO report Mr Hain said: “This is testament to our hard work especially since fraud wasn’t even measured before 1997.

“The new measures I am announcing today will ensure that even the most determined fraudsters will find the net closing in on them.”