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• Full report - Department for Work and Pensions: 2010-11 accounts 

The head of the National Audit Office, the Comptroller and Auditor General, has qualified the 2010-11 accounts of the Department for Work and Pensions. The Department’s accounts have been qualified every year since 1988-89. The latest accounts have been qualified because of the material level of fraud and error in expenditure on state benefits (except for the State Pension which has a low level of error). The total of overpayments made by DWP, due to fraud and error, is an estimated £3.3 billion (or 2.1 per cent of total expenditure on benefits administered by the DWP of £153.6 billion).

In 2010-11, the total overpaid breaks down into approximately £1.2 billion lost to fraud, £1.2 billion to customer error, and £800 million to official error. The total sum lost, £3.3 billion, is an increase on that in the previous year (2009-10: £3.1 billion) but constitutes the same proportion of overall benefit expenditure (2009-10: 2.1 per cent). Total underpayments in 2010-11 are estimated to be £1.3 billion.

Some benefits are prone to error and the Department faces significant challenges in administering a complex benefits system in a cost effective way. The Department has, however, refreshed the approach it intends to take in reducing fraud and error. The Government’s proposal to introduce a Universal Credit to replace some of the existing working-age benefits, which are the benefits which have historically suffered from the highest rates of fraud and error, is an opportunity to reduce fraud and error.

Amyas Morse, head of the National Audit Office, said today:

"Ever since the Department for Work and Pensions began measuring fraud and error, rates have consistently remained at a high level. This has been most notable in the case of means tested benefits where evidence of entitlement can be difficult to verify or easy to get wrong.

"No system to administer benefits can ever be perfect but I believe that there is scope for the Department to reduce fraud and error levels significantly. I therefore welcome its commitment to do so, as shown by the refreshed approach it intends to take to driving down incorrect payments."
 

Notes for Editors

1. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
2. The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 900 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.