24 March 2005 - Fraud and Error in Income Support, Jobseeker’s Allowance and Pension Credit from April 2003 to March 2004
Further details of the levels of fraud and error occurring in claims for Income Support (IS) and Jobseeker's Allowance (JSA) over the period April 2003 to March 2004 are published as National Statistics today.
Figures for this period measuring progress towards the Public Service Agreement (PSA) target on fraud and error have already been published on 16th December 2004. These estimated that for the period April 2003 to March 2004, 6.4 per cent of the benefit paid on IS and JSA was overpaid due to fraud and error, equivalent to £840 million annually.
Also included are first estimates of fraud and error overpayments in Minimum Income Guarantee (MIG) and Pension Credit for the same period. MIG was replaced by Pension Credit in October 2003. Estimates are given for MIG for the period October 2002 to September 2003 and for MIG and Pension Credit for the period April 2003 to March 2004.
Both this report and the previous report can be read on the Department for Work and Pensions website at: www.dwp.gov.uk/asd/asd2/fraud.asp
Public Service Agreement Target
The Department for Work and Pensions has Public Service Agreement (PSA) targets to reduce fraud and error in IS and JSA by 33 per cent by March 2004 and by 50 per cent by March 2006. The PSA target measure is the estimated percentage of benefit overpaid due to fraud and error, including official error, in Income Support and Jobseeker's Allowance.
The baseline from which progress is measured, is the level over the 12 months from October 1997 to September 1998 published in a Government Statistical Service report in October 1999.
For the period April 2003 to March 2004, the estimated fraud and error overpayment on IS and JSA was 6.4 per cent of the benefit paid over the year. This is a 38 per cent reduction from the baseline figure of 10.4 per cent. The annual amount overpaid was £840 million.
Within the 38 per cent reduction, one percentage point results from a change in the methodology for recording fraud and error. The reduction arising from a real reduction in fraud and error is therefore estimated to be 37 per cent. Since this exceeds 33 per cent, the Department has achieved its target for March 2004.
Service Delivery Agreement Target
The Pension Service has a Service Delivery Agreement (SDA) target to reduce fraud and error overpayments to pensioners in MIG / Pension Credit by 20 per cent by March 2006. This is measured against a baseline level of 4.6 per cent of benefit overpaid in the year April 2001 to March 2002.
In the report, we mention concerns with the quality of the data collected for April 2003 to March 2004 and the adjustment applied to the figures to account for them. Not enough information is available for earlier years to determine the extent to which data quality problems would have affected our previous estimates.
It is more appropriate when making comparisons over time to use figures for April 2003 to March 2004 before the data quality adjustment was applied.
Between April 2003 and March 2004, the unadjusted estimate of fraud and error overpayment was 4.9 per cent of benefit paid during the year. Our best estimate of the change in overpayments over time is therefore a 7 per cent increase when compared to the baseline figure.
Between April 2003 and March 2004, the adjusted estimate of fraud and error overpayment in MIG and Pension Credit was 5.4 per cent of benefit paid during the year. This represents the best estimate of the overpayment of fraud and error in MIG and Pension Credit in this period.
Analysis of Results
As well as reporting the main national results and measurement for the PSA and SDA targets, this report gives a further breakdown of the results, with figures for distinct client groups and for each Government Office Region across the country.
For working age claimants, estimates indicate that the IS Lone Parents client group (followed by JSA) has the highest rate of fraud in terms of proportion of cases, monetary value and percentage of expenditure. JSA has the lowest occurrence of customer and official error, but has the largest proportion of expenditure overpaid due to these errors.
More customer mistakes are made in MIG and Pension Credit than in the working age benefits, costing the largest proportion of expenditure. The incidence and cost of fraud is lower in pensioners than in working age claimants.
Regional figures indicate that rates of fraud and error vary widely across the country.
Interpretation of Results
The results are derived from the analysis of a sample of IS, JSA, MIG and Pension Credit claims, rather than analysis of all IS, JSA, MIG and Pension Credit claims, so they are subject to statistical uncertainties. These uncertainties have been quantified and are presented in the results as 95 per cent confidence limits. As a result of adjustments to deal with data quality problems, these confidence limits are wider than in previous estimates. Further sources of uncertainty have not been quantified, but are not negligible.
Fraud is by its nature a covert activity, and it is possible that some frauds and errors on sample cases will not have been uncovered. In addition, there are instances where fraud was suspected but not admitted or otherwise proven.
Notes for editors
- "Fraud and Error in Income Support, Jobseeker’s Allowance and Pension Credit from April 2003 to March 2004" is a National Statistics publication and is produced to the high professional standards outlined in the National Statistics Code of Practice. National Statistics publications undergo regular quality assurance reviews to ensure that they meet customer needs.
- # is equivalent to pounds.
Press office media enquiries: please contact James Taverner
Press office: 020 7238 0643
Textphone: 020 7238 0788
Out of hours: 07659 108 883
Public enquiries: 020 7712 2171