Credit fraud

Ministers “Lost Control of Universal Credit Fraud in Covid Crisis” | Universal credit

The Department for Work and Pensions has lost control over universal credit fraud, an influential all-party committee says after latest figures showed billions of pounds were lost to scams in the first year of the pandemic.

The Public Accounts Committee (PAC) said fraud and profit errors reached record levels in 2020-2021, when £ 8.3bn was overpaid, compared with £ 4.5bn the previous year. These overpayments represented 7.5% of the DWP’s non-pension benefit expenditure.

Most were linked to universal credit, including a £ 68million ‘mass identity theft’ carried out by organized crime groups who stole the identities of thousands of applicants to fraudulently obtain prepayments. Some 10,000 claimants have had their benefits withdrawn or have been wrongly asked to reimburse money as a result.

MPs accused the DWP of lacking ambition to recover overpayments, which have been on the rise in recent years and are now costing taxpayers billions of pounds a year. Although the DWP has warned that the pandemic increase in benefit claims will lead to fraud, MPs have said current levels are unacceptable.

The department does not seem equipped to properly administer our labyrinthine benefit system or to detect and correct years of errors in too many of our basic social rights, long before its current woes ”, said the president of the PAC, Dame Meg Hillier.

“This situation is untenable and taxpayers – who also include benefit claimants – are losing billions because of it. There has to be a dramatic shift in understanding the impact of benefit errors on people’s lives and restoring confidence because, as we have seen recently with pension underpayments, once an error in the system materializes, it may take years to resolve.

The DWP said the explosion in universal credit applications during the first Covid lockdown in March and April 2020, when at its peak 100,000 people a day were entering the benefit system, helped generate fraud and errors. The authorities relaxed some anti-fraud checks during this period, such as face-to-face identity checks, to focus on providing prompt support to applicants.

A government spokesperson said: “It is disappointing that the PAC has failed to recognize that in the midst of an unprecedented pandemic, we have prioritized supporting a record number of genuine applicants. With this decision, the universal credit system rose to the challenge of the pandemic so that people receive vital financial support when they need it. “

However, MEPs are concerned that the basic design of universal credit makes it prone to error and fraud. The initial business case for universal credit indicated it would reduce fraud, but overpayments have increased every year since 2015, when the DWP began measuring them. Last year, 14.5% of all universal credit payments were overpaid – the highest recorded fraud and error rate of any benefit for which records exist.

The expected five-week wait for a universal credit first payment means applicants often have to take a cash advance to pay for food and rent while the wait is done. About 1.5 million people received advances in 2020-2021. MPs said the advances were “particularly vulnerable to fraudulent claims.”

There has been a sharp increase in the number of people who have applied for universal credit while minimizing or not reporting personal savings levels. People who have saved over £ 16,000 are not eligible for universal credit, suggesting that many may have lied to gain financial support while protecting their private nest egg.