Page last updated at 10:34 GMT, Friday, 31 October 2008

Benefit fraud and error at 2.6bn

An estimated 380m was overpaid in Pension Credit

At least 2.6bn in UK benefits was lost to fraud and errors in the last financial year.

Official statistics confirmed that 2% of the total benefit bill was overpaid between April 2007 and March this year.

The figure, the same amount as in 2005-6, included a 380m overspend on Pension Credit - 5.1% of the total spending on that benefit.

Meanwhile, 1.1bn that should have been paid in benefits was not handed over - just under 1% of the total bill.

The underpayment covered people who were not paid as much as they were entitled to.

It did not include people who were entitled to benefits and failed to apply, or those whose benefits were incorrectly rejected.


The figures, collected from a sample of cases, might not paint the whole picture of fraud and errors in the benefits system, the Department for Work and Pensions (DWP) warned.

A good, effective child maintenance system is important for lifting children out of poverty
Kitty Ussher, DWP minister

"It is likely that some fraud and error would not have been uncovered, because fraud is, by its nature, a covert activity," a spokesman said.

The breakdown of the figures shows that 540m of Income Support and Jobseeker's Allowance was overpaid owing to fraud or error, 4.9% of the total budget.

Some 720m (4.6%) was also overpaid in housing benefit.

Child maintenance

Separate figures show that a growing amount of child maintenance payments is being collected or arranged by the Child Support Agency (CSA).

The figure reached 1.1bn in the 12 months to the end of September, up 147m on the previous year.

Some 778,000 children are benefiting from the payments, under a system that has been heavily criticised in the past.

The new Child Maintenance and Enforcement Commission will next week take over responsibility for ensuring absent parents pay what they owe.

"A good, effective child maintenance system is important for lifting children out of poverty," said DWP minister Kitty Ussher.

A change in the rules, which came into force on 27 October, means that parents with care of these children who are also claiming benefits are no longer compelled to use the CSA to collect or arrange maintenance payments.

Around 400,000 parents on benefits can now make private maintenance arrangements with the non-resident parent should they wish to.

This is aimed, in part, at easing pressure on the agency, the reform of which was described as one of the "greatest public administration disasters of recent times" by the Commons public accounts committee last July.

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