Is £1 billion a year lost through Disability Living Allowance overpayments?
"MORE than £1billion a year of disability benefits is wrongly paid to people who no longer qualify for them — or lost through fraud and error.
Ministers estimate £630million a year is going to claimants who no longer qualify. But official figures seen by The Sun reveal the true cost of "overpayments" could be up to £800MILLION a year. Another £220million a year is lost through fraud and error."
The Sun, 18 January 2012
For the second time this week the Sun has run a story on the cost of Disability Living Allowance to the UK tax payer.
On Monday the Sun warned that the number of Disability Living Allowance claimants will reach 3.5 million by 2015. Today it claimed that £1 billion is being wasted on people who no longer qualify for DLA or recieve paymenst due to fraud or error.
So how accurate is the Sun's claim?
Analysis
The newspaper breaks the costs down into two sets of figures. The figure for one element — fraud and error — is cited as £220 million.
The most recent fraud and error statistics appear to be those laid out in publication from the Department for Work and Pensions (DWP) which estimates the costs for July 2010 — July 2011. By studying the document the £220 million used in the Sun mirrors the estimate made by DWP:
DWP 'Fraud and Error in the Benefit System: Preliminary 2010/11 Estimates.'
Of this £220 million, £60 million is attributed to fraud, £90 million to customer error and £70 million to administrative error.
Therefore the Sun have correctly identified £220 million overpayed due to fraud and error, something it has not always done in the past.
However this calculation only considers the sums overpaid either fraudulently or in error, and not those underpaid by the Department. Looking at the official estimates of these, we can see that this sum is actually larger than the amount lost in error: underpayments stand at £300 million.
DWP 'Fraud and Error in the Benefit System: Preliminary 2010/11 Estimates.'
The Sun's claim that up to £800 million is wasted in payments to claimants who are no longer eligible seems more contentious.
In July 2005 the DWP published figures on DLA fraud which estimated that it cost the taxpayer £630 million, as correctly cited by the Sun. However the Department does note that it could be as high as £800 million.
DWP: Fraud, Error and other Incorrectness in Disability Living Allowance (July 2005)
The Sun's figure is therefore the upper-bound of an estimate that is now nearly seven years old.
Also, the Sun again only gives one side of the ledger. According to the 2005 estimates, some £190 million was expected to remain in the tax payer's pocket in underpayments due to the 'change in customer circumstances'. Therefore the net outlay on overpayments is estimated at £440 million with a ceiling cost of £610 million.
DWP: Fraud, Error and other Incorrectness in Disability Living Allowance (July 2005)
It should also be noted that the Sun also claimed that 21,340 alcoholics recieve DLA. This issue has been covered by Full Fact in a previous fact check.
Conclusion
The Sun has correctly reported official DWP data on current DLA overpayments accurately. However, its claims on changes in claimant status is more problematic, given that it relies on data that is nearly seven years old.
Furthermore, the newspaper gives only the gross figures for the sums lost due to overpayments, and does not consider the impact that including underpayments has on the calculations.