http://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news/report-housing-benefit/

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said (13 Jan 2015):

“Billions of pounds have been lost to the taxpayer as a result of the Department for Work and Pensions’ failure to tackle Housing Benefit fraud and error effectively. Around £12.6 billion has been spent on Housing Benefit overpayments since 2000/01—money that could have been used to improve the system.

The size of overpayments is going up not down. In the last financial year £1.4bn of overpayments were made – 5.8% of Housing Benefit spending – up from £980 million (4.6%) in 2010/11. £900m of the £1.4bn was claimant error, £340m was claimant fraud and £150m was official error. Even after recoveries by local authorities, this is a huge cost to taxpayers.

The increase shows that the Department has still not effectively targeted the major sources of fraud and error – 16 years after this Committee first sounded the alarm.

We are also concerned that the Department is not doing anything to target underpayments, despite the hardship caused to those who miss out on the support they are entitled to.

It is completely nonsensical that the Department spends just 8% of its fraud and error funding on Housing Benefit, even though Housing Benefit overpayments account for 42% of overpayments across all benefits. The Department has also reduced its funding to local authorities, which as a result have cut back on wider work to identify undetected fraud, claimant error and underpayment.

The incentives provided by the Department for local authorities to tackle fraud and claimant error are not good enough. These weak incentives are exacerbated by pressures on local authority funding, including a 17% reduction since 2010–11 in the funding available for administering Housing Benefit.

The Department is expecting significant benefits from HMRC’s real-time information, but is doing little else to tackle Housing Benefit fraud and error in the still unclear and very long transition before Universal Credit.

The Department should review how it allocates money and resources to tackling Housing Benefit fraud and error. It must report back to us within 6 months on what measures it has introduced specifically to target underpayments and encourage legitimate take-up. The Department should also produce a proposal for how to strengthen incentives so that local authorities tackle Housing Benefit fraud and error more effectively.

Given the lack of evidence that the Department is getting to grips with fraud and error we view with scepticism the Department’s confidence that it will meet its target to reduce total fraud and error overpayments to 1.7% of benefit expenditure by March 2015.”