Bogus benefit claimants pocket £27m
Published 05/11/2013 | 03:00
Fraudulent benefit claimants in Northern Ireland pocketed almost £27 million they were not entitled to last year, auditors have found.
The annual figure, which has soared by more than £11 million in five years, represents an "historic high", Auditor General Kieran Donnelly has warned.
Mr Donnelly, in a report on the accounting performance of all Stormont's departments, said the main factor behind the rise from £22.7 million in 2011 was due to a multimillion-pound increase in fraud in Housing Benefit claims.
While a total £26.9 million was wrongly paid out as a result of fraudulent claims across the benefits system, it was not the only money lost through overpayment.
The total overpaid in 2012 stood at £67.6 million, with customer and official error accounting for the remainder of the loss. The total overpaid in 2008 was £57.2 million.
The increase in the amount overpaid should be viewed in the context of an accompanying increase in the total expenditure on benefits - rising from £4.257 billion in 2008 to £5.335 billion last year.
Nevertheless the proportion of funds lost through overpayment is still on the up - increasing from 1.1% in 2011 to 1.3% last year.
Mistakes do not always result in loss, with auditors finding that official error saw £15.3 million underpaid to claimants in 2012.
Stormont's Department of Social Development (DSD) has overall responsibility for benefits payment in Northern Ireland, with three public bodies administering the claims - the Social Security Agency (88% of expenditure), the Housing Executive (11%) and the Land and Property Services (approx 1%).
Mr Donnelly noted that the rate of fraud and error within the SSA was actually standing at an historic low of 1.2%.
But he found that within the Housing Executive the rate had almost doubled in 2012 - from 2.4% to 4.2% - and within LPS the rate also rose - from 11.8% to 14.9%.
"From an overall DSD point of view the estimated levels of overpayments and underpayments due to fraud and error this year are 1.6%," explained Mr Donnelly.
"This is lower than the same figure in the (UK's) Department for Work and Pensions (DWP) of 2.0% for the year to March 31, 2012.
"I was, however, disappointed that the overall estimated fraud and error levels have increased from 2011 when they were 1.4%."
Explaining the £6.5 million rise in Housing Benefit fraud in 2012, the DSD told auditors that a major factor was an increase in Housing Executive workload required to process benefit changes notified by the DWP.
This, the department explained, led to the suspension of some other activities within the body, among them an annual exercise to obtain information about claimants' earnings.
Mr Donnelly noted that the exercise has now been reinstated.
The auditor general "qualified" the accounts of the DSD as result of the issues identified. He applied the same qualification to three other Stormont departments - education; culture, arts and leisure; and agriculture and rural development (DARD) - and 12 arm's-length public bodies.
Among the other issues noted was a £12 million bill DARD had to pay back to the European Commission for costs including disallowed farm payments.
The Audit Office report also examined the performance of the public sector in paying invoices promptly.
It noted an improvement across the sector, however said health and education bodies and other arm's-length organisations continued to lag well behind central Government departments, which now pay 90% of invoices within a 10-day target.
"The Executive has reiterated its commitment to paying suppliers within 10 days during 2013 and it is important that all public bodies ensure that steps are taken to identify efficiencies and approve and release valid invoices for payment without delay," said Mr Donnelly.
The report also assessed the current cost of providing student loans in Northern Ireland. It said the value of loans at March 31, 2013 stood at £1.3 billion - an increase of £663 million from 2007/08.
The money is financed through the Treasury and does not affect the Northern Ireland block grant.