Do ministers understand their own report?
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!