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Spending watchdog urges clearer plans for cutting benefit system fraud and error

Published 04/11/2016

HMRC announced its contract with Concentrix would not be renewed
HMRC announced its contract with Concentrix would not be renewed

Efforts to tackle fraud and error in the benefits system must be stepped up following the "meltdown" over Concentrix's role in the tax credit system, the Commons spending watchdog has said.

The cross-party Public Accounts Committee (PAC) said fraud and error remained a "significant problem" for the Department for Work and Pensions and HM Revenue and Customs (HMRC).

Outside contractor Concentrix was tasked with reducing fraud and error in the tax credits system but HMRC announced last month that its contract would not be renewed following complaints that claimants' payments were wrongly cut.

The PAC welcomed some of the action taken by DWP and HMRC to tackle the problems in the benefits and tax credits systems, but demanded more action.

The report said: "While it is encouraging to see the departments targeting the causes of losses, such as misreported income, they also need clearer plans to reduce fraud and error in other challenging areas such as cohabitation and claimants pretending to live in the UK who live abroad.

"Recent issues relating to HMRC's contract with Concentrix to investigate suspected fraud and error by tax credit claimants highlights the need to get these plans right.

"We remain disappointed by the absence of stretching targets for tackling fraud and error."

The committee also raised fresh concerns about the troubled Universal Credit programme, the Government's flagship welfare reform aimed at simplifying a series of separate benefits into one payment.

The MPs warned that "systems underpinning Universal Credit are still underdeveloped and there are signs of pressure on staff".

They also raised concerns that the "rigid" monthly assessment period could cause problems for claimants whose pay or rent were based on four-weekly cycles.

The committee's Labour chairwoman Meg Hillier said: " Introducing Universal Credit and tackling fraud and error are significant challenges for the Government, with serious implications for the lives of many people.

"Reviews like this are a vital tool in holding Government to account for progress on such complex projects.

"They also serve to focus the attention of officials on delivering results for service users.

"The recent meltdown in performance of HMRC's contractor Concentrix highlights just how important it is to keep progress in the spotlight."

She said HMRC's leadership had acknowledged a "fundamental failure of basic customer service" from Concentrix when they appeared before the committee on October 26.

"It is completely unacceptable that benefits claimants should be left in the position of being unable to pay for their daily needs," she said.

"At the same session, HMRC indicated it expected to make an announcement in 'the next few working days' about finishing the Concentrix contract, which we already know will not be renewed from May 2017.

"So far this announcement has not materialised.

"HMRC must do more to safeguard the interests of claimants as part of its strategy to address fraud and error and we will expect to see effective measures in place as a matter of urgency."

A Government spokesman said: "The reality is fraud and error in the benefits system is at a record low, reflecting the work we are doing to improve detection, prevention and recovery, in order to protect taxpayers' money.

"We took swift and decisive action as soon as it became apparent that the contract with Concentrix was not working and we apologise to those affected.

"Discussions with Concentrix on an early exit are now well advanced.

"Universal Credit has been successfully rolled out across the country to new single jobseekers and is already transforming people's lives - claimants are moving into work quicker and staying in work longer than under the old system."

Labour's shadow work and pensions secretary Debbie Abrahams said: "This report lays bare the Government's chaotic mismanagement of Universal Credit.

"We were promised a programme that would make work pay, but Tory cuts are leaving working people worse off. We were reassured that this programme would be delivered on time, but it has been delayed on seven occasions. We were told it would be a flexible system, yet it is still punishing people who are paid every four weeks instead of monthly."

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