Will Universal Credit reduce error?

The DWP reports that benefit fraud is dropping. Lord Freud comments:

“Clearly something is dramatically wrong with the current system when more money is lost because of mistakes by claimants than because of fraud. With Universal Credit bringing together six benefits into one, the system will be much easier for individuals to understand, and less vulnerable to human error.”

What is there about Universal Credit, though, that will reduce error? Universal Credit will be a highly complex, tapered means-tested benefit, where claimants are unable to tell month by month exactly what they will be entitled to. That is the problem, for example, with Housing Benefit. Here are a few figures, taken from the DWP statistics.

Fraud Claimant error Official error
Housing Benefit 1.4% 2.8% 0.4%
JSA 3.4% 0.4% 2.3%
Incapacity Benefit 2.4% 0.9% 1.2%
Pension Credit 1.6% 2% 1.9%
Retirement Pension 0.1% 0% 0.1%

The first line shows the rates of fraud, claimant error and official error in Housing Benefit, which will be part of the UC system. So will the benefits in the next two lines, where claimant error is lower and both fraud and official error are higher. But while the rules for unemployment and sick people will still be there, the design of payments on UC follows Housing Benefit.

I’ve followed this with figures for two other benefits that won’t be part of Universal Credit: Pension Credit, and Retirement Pension. They are the only benefits where it’s possible to compare the impact of different benefit designs delivered to the same group of people – in this case, pensioners. And Pension Credit, which is the means-tested benefit, is at least sixteen times more likely to engender fraud and error than the National Insurance equivalent. If the government wants less fraud and error, it has to move away from means-testing.

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