Cracking down on fraud and error in the benefit system is one of my priorities as secretary of state. By working closely with local authorities to develop new methods for stopping fraud the Department for Work and Pensions is finding simple solutions that can have a huge impact.
Historically, housing benefit has been the area where most fraud and overpayments in the benefit system takes place, costing local authorities and taxpayers hundreds of millions of pounds each year. Now we have developed new technologies we are determined to clamp down on this.
People failing to declare their correct earnings and employment details is now the single biggest cause of loss of housing benefit, adding up to an estimated £643m last year. It’s true some of this will be recovered thanks to the hard work of local authorities and department fraud investigators – in the first six months of last year local authorities recovered £328m overpaid housing benefit – but this can be costly and time-consuming.
Clearly, the best way to tackle fraud is to stop it happening in the first place. As the old saying goes, prevention is better than the cure.
This is why we have developed the Verifying Earning and Pension (VEP) Service – a brand new technology that prevents fraud and error through the real-time identification of changes in claimants’ income. VEP provides instant automatic alerts for local authorities when claimants have a change of earnings that might affect their housing benefit claim.
By the end of September we will have rolled out the new system to nearly 380 local authorities, helping them crack down on housing benefit fraud and error – a move expected to save the taxpayer millions this year and each year going forward.
This innovative approach to sharing important earnings data automatically will prove revolutionary allowing benefit claims to be corrected at the earliest chance and ensuring the right amount of support is targeted at those who need it most.
Although claimants still have responsibility for declaring any change in their circumstances, the introduction of automatic alerts makes the process quicker and simpler. This could prevent thousands of people receiving overpayments each year.
In the autumn budget we announced £82m of funding to tackle housing benefit fraud and error, and VEP alerts are just one of the measures being introduced. We’ve also developed a new employer trace facility, which helps local authorities recover outstanding housing benefit debts from non-paying recipients by making it easier to identify where they work.
Most people receive the correct housing benefit payments – they make full and honest declarations about their earnings in a timely fashion. But by continuing to work closely with local authorities to develop simple and innovative solutions, we’re able to crack down on the tiny minority who try and cheat the system.
Esther McVey (Con), work and pensions secretary