Local authorities administer housing benefit payments worth around £24bn a year.
With people’s circumstances changing frequently, local authorities face a constant challenge to make sure payments are accurate and reach people on time. Tackling fraud and error in housing benefit is particularly important given:
- it accounts for over 40% of overpayments in the Department for Work and Pensions’ (DWP) benefits (£1.4bn in 2013-14 compared to £3.3bn across all DWP’s benefits)
- it has increased over time; the Department’s central estimates of the rate of overpayments increasing from 4.6% in 2010-11 to 5.8% in 2013-14.
In our report, Housing Benefit Fraud and Error, we looked at how fraud and error has been managed. We found that responsibilities haven’t been clear and the DWP should have done more to tackle fraud and error sooner. Over the past few years the funding available for initiatives to tackle fraud and error has fallen and local authorities told us that they have had to scale back efforts in this area. So it is unsurprising that the scale of the problem has increased.
What did we think could be done? First of all we felt the DWP needed to set out responsibilities more clearly, recognising that the incentives created by the current subsidy regime (for reimbursing local authorities for housing benefit payments) weren’t designed to tackle all types of fraud and error. We also recommended that the DWP needs to match its efforts more clearly against the big areas of risk, targeting major causes like changes in earnings and improving the effectiveness of its data-sharing initiatives.
The DWP recognises it needs to do more to tackle fraud and error and has developed a new draft strategy specifically looking at the issue in housing benefit. We’ll have to wait and see how any new initiatives will work and whether they will have an impact on levels of over- or underpayments. It will be interesting to hear more from DWP and other witnesses at the Public Accounts Committee hearing in a couple of weeks.
During our work on housing benefit we heard again about local authorities’ concerns about funding services more generally. As part of our broader work on financial sustainability in local government we’re starting a comparative assessment of how Whitehall departments estimate the financial impact on local authorities of new duties, powers and policies; and whether they do so in a consistent and transparent way. We expect to publish our findings on new burdens in early 2015.
Sue Higgins is executive leader of the National Audit Office