From the TUC

Do ministers understand their own report?

22 Oct 2010, by in Society & Welfare

A couple of days ago I noted that the Chancellor’s statement on the Spending Review exagerated the amount of social security fraud that takes place. Today the DWP published Tackling fraud and error in the benefit and tax credits systems which suggests that other government ministers are prone to the same mistake.

One mysery is cleared up. Over the summer, the DWP reported to the National Audit Office that their best estimate of the level of fraud and error in the social security system is £3.1 billion a year. The Chancellor talked about “£5 billion” being lost to fraud. Today’s report makes it clearer – he must have been talking about the social security and tax credit systems together. Fraud and error in the tax credit system runs at £2.1 billion a year, so the total is £5.2 billion.

But another mystery is as perplexing as ever. Mr Osborne talked about £5 billion of fraud. Today’s report confirms the DWP’s previous statement that the £3.1 billion figure is made up of:

  • £1.1 billion due to official error,
  • £1.1 billion due to customer error,
  • £1 billion due to fraud.

It provides new information to show that, in the tax credits and benefits administered by HMRC, fraud and overpayment breaks down as follows:

  • £1.5 billion due to customer error,
  • £0.6 bn due to fraud.

It seems that HMRC do not accept that any of their overpayments are due to official error. The new report also estimates that DWP underpayments total £1.3 billion.

Error is not the same as fraud, and the total fraud in both systems is £1.6 billion, not £5 billion. Mr Osborne got the level of fraud wrong by a factor of three – this is a bit worrying, one does hope that the Chancellor of the Exchequer will be good at sums.

But what is even more surprising is that the Chancellor isn’t alone in making this error. The new report includes a foreword by David Freud, Minister for Welfare Reform at the DWP and David Gauke, Exchequer Secretary to the Treasury. They write:

This document sets out a radical new approach for addressing welfare fraud, which now costs the taxpayer £5.2 billion pounds every year, or £165 every second.

This is a first. Most Ministers eventually say something their own Department’s information disproves – that is pretty much unavoidable. But I’ve never seen one make a contentious claim that is disproved just nine pages later in the same document!

3 Responses to Do ministers understand their own report?

  1. Tweets that mention Do ministers understand their own report? | ToUChstone blog: A public policy blog from the TUC — Topsy.com
    Oct 22nd 2010, 6:17 pm

    […] This post was mentioned on Twitter by PCS union, Michael Hanley, ToUChstone blog, Abbas Premji, PCS GONW Branch and others. PCS GONW Branch said: RT @ns_mehdihasan: RT @touchstoneblog Do ministers understand their own report? http://bit.ly/cQAVmy >> Real benefit fraud figure … […]

  2. Alexis
    Oct 23rd 2010, 11:30 am

    Having volunteered at the CAB, I’ve seen the mistakes people can make in their forms. They are nonsensical at the best of times, badly written and people get confused. Then again, anything that eminates from the DWP in terms of paperwork generally does not make sense, is repetitive and is just plain wasteful. Quite simply, a lot of people just don’t understand the forms. There is a element out there who do and will commit fraud, but from my experience, they stick out like a sore thumb in most cases. A few quid could be saved getting these forms right – AND sending out letters which actually make sense.

    The problem with the paperwork is a long running one and I can’t see this government addressing the problem. To address it might actually make it easier for people to claim what they are entitled to, after all. If a major head of the controlling people sees a cure to unemployment as people “getting on their bikes” or “taking the bus” (who on benefits can afford a bike or exhorbitant public transport costs after all?) they’re not likely to put a little effort into clarifying a system riddled with errors. Fairness isn’t an issue as far as I can see. Throwing the poorest to the wolves and wrongly accusing them of being scroungers (of which there are some, but not all) seems to be a popular dish on the Coalition menu.

    Alexis

  3. Dave Jones
    Oct 23rd 2010, 12:15 pm

    In relation to the DWP calculations about the amount of fraud as opposed to error, I’d be interested to know whether the amount relates to the actual amount defrauded through proven cases or whether it is based on assumptions of amount supposedly defrauded. This was always a contentious issue in the past particularly in relation to the former Unemployment Benefit. The reason why I raise the question is that there is a tendency for those teams employed to investigate fraud exaggerating the amount of fraud in order to justify their existence and boost their own resources!