We are committed to ensuring an effective and accurate benefit system, as part of creating a welfare system which is fair to those who use it, and fair to the taxpayers who fund it. An important part of this is recovering money owed to the Government through overpayment of benefits.
Fraud and error in the DWP benefits system is historically low, and at 1.9% is lower than in 2010. Claimant error and official error are at their lowest level ever, and we are protecting taxpayers’ money by recovering a record amount in overpaid benefits. For 2015-16 around £1 billion was recovered jointly by the Department and local authorities, an increase of £70 million since 2014-15.
Using DWP powers to recover tax credits debt
In order to build on this success, today, I can announce that from April 2018 the Department for Work and Pensions (DWP) will recover a segment of HM Revenue and Customs (HMRC) tax credits debt associated with people whose tax credits claim has ended. This is debt that has been subject to recovery by HMRC but where repayment has not been secured.
The claimants who have these historic debts will have previously been contacted numerous times by HMRC and invited to start a voluntary repayment plan. They will also have had the opportunity to appeal and challenge the debt.
From April 2018 DWP will begin to try to recover this debt using a wider range of methods. Where people have not voluntarily made arrangements to repay, this may, as a last resort include recovery directly from earnings. DWP has greater powers than HMRC in this regard.
This initiative helps deliver the Government’s commitment to reform the benefits system and switch to universal credit. During transition HMRC will continue to administer financial support for those with ongoing entitlement to tax credits.
Using data and analytics to identify potential fraud and error
Many people rely on the benefit system for support—it provides a vital safety net for people who are out of work, people with disabilities, those who are carers, bringing up children, retired, or on low incomes. So it is vital that we protect it from the very small minority who try to claim taxpayers’ money they are not entitled to.
According to the most recent fraud and error national statistics around £110 million is lost annually to DWP as a result of fraud and error relating to undeclared partners. The most up to date information (financial year 13-14) suggests around 1.5% of income support (IS) expenditure is overpaid annually as a result of a partner not being declared appropriately.
We will engage with an external data provider to identify benefit claimants thought to be most likely to have an undeclared partner more effectively. We expect that this will provide more and better evidence to enable us to identify high risk cases. The data provider will not have any contact with claimants directly or any decision making authority. All cases will be progressed through the existing DWP fraud and compliance processes.
We expect to award a contract for around 18 months and will evaluate its effectiveness in order to inform decisions about whether this type of data matching provides a useful indication of undeclared partners for future use in the universal credit system.