Statistical note: evolution of fraud and errors in the compensation system: estimates for the financial year 2021 to 2022

Introduction

This statistical notice is intended to inform in advance of a revision of fraud and error in the publication of the benefit system.

We are carrying out a review related to housing benefit (HB) as quality assurance of our statistics has resulted in the identification of an error in the figures for housing assistance expenditure, whereby Universal Credit (CPU) was wrongly treated as a benefit without a passport for HB. This error has become apparent as there are now more applicants receiving HB due to receipt of CPU.

This review will be carried out during the financial year ended (FYE) Publication 2022, to be published on May 26, 2022.

Revised figures for FYE 2020 and FYE 2021 using the revised methodology will also be published in the “Fraud and Error in the Benefits System: FYE 2022 estimates. This will allow a like-for-like comparison with the recently published figures for FYE 2022.

Due to the amount of resources required to apply methodology changes to all historical data, we are unable to provide an updated retroseries before FYE 2020.

Further details of this change will be set out in the Background Information and Methodology Note that will accompany Fraud and Error in the Benefits System: FYE 2022 estimates.

If you have any questions about these changes, please send them to: [email protected]

Background

The Department for Work and Pensions (DWP) uses a complex methodology to measure levels of fraud and error in the benefits system. Read more information on the methodology used.

In order to calculate the monetary value of fraud and error and the proportion of expenses overpaid, we use DWP expenditure figures. Within these numbers CPU was not considered a passport benefit for HB. We have now made adjustments to expenses to properly categorize CPU as a passport benefit.

This change affects the HB total and also working age HB The figures. retirement age HB figures are not affected due to CPU being a working age benefit.

Effect

Adopt the change of HB spending leads to small changes in overpayments and underpayments at the aggregate (global) level. For HB there is a slightly bigger change.

Due to the deployment of CPU and the jump in CPU claims due to COVID-19, the impact of this change has increased over time. This change reduces both the HB total overpayments and underpayments for FYE 2020 and further reduces these two figures by FYE 2021. This means that the trend of the past two years is now down instead of flat. Prior to FYE 2020, we estimate the impact on the HB the total numbers would have been negligible and would not have affected the trend.

Other Changes

We are making a number of other minor changes as part of our regular review of our methodology for consistency and accuracy. These are the following.

  • change to use the monetary difference between an applicant’s Housing Benefit award prior to the benefits review and the applicant’s award after the review; to capture the effect of multiple errors more accurately
  • change to remove additional grossing factors on Housing Benefit, Pension Credit and Employment and Support Allowance
  • changing the way we attribute the amount overpaid or underpaid to reasons of error on Housing Benefit, Employment Support Allowance and Pension Credit, to align with the universal credit and state pension

These other changes all have a negligible impact on overpayments and underpayments at the aggregate (global) level and a small impact at the benefit level.

Revised figures for FYE 2020 and FYE 2021 in fraud and error in the compensation system: FYE The 2022 estimates (to be released on May 26, 2022) will also include these changes. This will allow a like-for-like comparison with the figures recently published for FYE 2022.

Further information is available in the general and methodological information document (for 2021 to 2022) when it is published (along with the statistics) on May 26, 2022.

Issued by

Fraud and error measurement and analysis team, DWP

Press office: 0115 965 8781

Statistician: John Bilverstone

Fraud and Error Measurement and Analysis Team

Department of Work and Pensions

View of Benton Park

Benton Park Road

Newcastle-upon-Tyne

NE98 1YX

Email: [email protected]

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