The Public Accounts Committee has been highly critical of the DWP’s failure to deal with ‘fraud and error’ in Housing Benefit, estimated at £1.4 billion last year, 5.8% of total expenditure. The detailed figures came from a report by the Comptroller and Auditor General last October. Despite the tag, “fraud and error”, the biggest part of this is error: £900m is due to mistakes by claimants, £150m mistakes by officials and £340m in fraud. These figures don’t include the other side of error, which is underpayments: £370m of the benefit is underpaid, of which £290m is due to mistakes by claimants.
The biggest single source of the mistakes is the mis-statement of earnings, which accounts for a whopping £637m (46%) of the overpayments. This is what you get with a ‘flexible’ labour market: people don’t know what they’re being paid or when. The next main sources of the mistakes, 16% and 11% respectively, concern people living together – confusion about what makes a household – and residency, where people are no longer living in the property. In some cases, those run together. People who are forming relationships often occupy two properties for a period. They can’t give a definite answer about where they live and whether they are now a household.
We ought to be asking whether it makes sense to try to run a benefit scheme on this basis. The basic problem lies in the belief that it’s possible to ‘personalise’ benefits and to adjust them as individual circumstances change. It has never worked properly before, and there’s little reason to suppose it will work in the future.