July 20, 2011 • 3:21 pm


The amount lost by the Department for Work and Pensions in benefit fraud and error has been a troubling issue for politicians of all political hues, and not just because of the damage done to the public purse.

Last year the Welfare Reform Minister himself Lord Freud was forced to apologise after he incorrectly described the £5 billion lost in fraud and error as the bill for benefit fraud alone.

Yesterday the National Audit Office published its latest assessment of the DWP’s accounts, sparking a fresh discussion of the cost of fraud and error to the taxpayer.

However this discussion hasn’t been without its own problems. The Daily Mail, for instance, stated that: “The report published last night showed £1.2 billion was written off because of fraud, while the same amount was lost due to ‘customer error’ – some of which would have been attempted fraud.”

On the face of it this is a strange claim for the Mail to make. If the DWP lost money as a result of someone knowingly “attempting” to claim money to which they are not entitled, then should it not be considered simply “fraud” rather than “attempted fraud”?

Certainly the National Audit Office itself contradicts the Mail’s assessment, saying: “Customer error occurs when customers make inadvertent mistakes with nofraudulent intent.”

The NAO does not therefore class attempted fraud as one of the reasons for money being lost through customer error. Instead, it highlights confusion over the complexities of the benefit system and changes to customer circumstances as the main reasons for customer error occurring.

The DWP did consider the issue of attempted fraud when it published a report of tackling benefit fraud and error back in October 2010. This noted that “under the current system it is very difficult to uncover cases of attempted fraud,” meaning that it may be under-reported in official estimates. However it does not impinge upon the Department’s estimate of customer error, which is explicitly limited to “non-fraudulent” cases.

In fact, the DWP has suggested that the complexities that contribute to customer error may also inflate the fraud figures. It noted in its report that: “The difficulty of reporting changes in circumstances, especially around short-term and casual work, can encourage people to ‘fall into’ fraud.”

So while the figures used to illustrate benefit fraud and error are Departmental estimates, and as such there may be some crossover between the two in reality, there is no official basis for the Mail’s claim that some of the money lost due to ‘customer error’ included cases of “attempted fraud”.


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