£1.4bn wasted in housing benefit mishandling

Ministers at the Department for Work and Pensions have been told the amount of waste has actually increased under their watch, even as the Prime Minister admits another £12bn needs to be cut from welfare budgets.

The influential Commons public account committee has revealed the DWP is failing to control spending on housing benefit.

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.

In Yorkshire some £1.3bn is spent on housing benefit, suggesting millions of pounds could be better spent in the region.

Committee chairman Margaret Hodge said incentives provided by the DWP for local authorities to tackle fraud and claimant error are not good enough.

The MP said: “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.”

Mrs Hodge added: 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.”

Last night a DWP spokesman said: “Money lost through fraud and error is falling overall and we are recovering more of it than before 2010 – recouping £1.3 billion last year.

“But we want to do more to make sure this money goes to those who need it most, which is why we’re incentivising local authorities to identify overpayments and bring fraudsters to justice.

“Last year we brought in a new detection system that will cross-check all claims against up-to-the-minute information on earnings and pension income. We expect the on-going introduction of Universal Credit to cut fraud and error by a further £1.5bn.”