Benefit underpayments at record levels amid 'unacceptably high' fraud and error

Benefit underpayments were at record levels last year and fraud and error in the system remains "unacceptably high", according to a National Audit Office (NAO) report.

The estimated 2015/16 figure of £1.8 billion amounts to 1% of total forecast benefit spending and is up from £1.4 billion in the previous year.

Overpayments remain at the lowest recorded level at £3.1 billion of total forecast benefit expenditure - around 1.8%.

Sir Amyas Morse, the Comptroller and Auditor General, announced he could not sign off the accounts of the Department for Work and Pensions (DWP) because of the level of fraud and error.

He has qualified his audit opinion, a move which has been made every year since 1988/89.

The NAO also warned that the absence of up-to-date data for some benefits such as disability living allowance, which accounted for £13.3 billion of total expenditure and has not been measured for fraud and error since 2005, "creates a risk that the Department is making decisions based on out-of-date measurements".

Sir Amyas recognised the steps the DWP has taken with its fraud, error and debt strategy as well as improving its forecasting and modelling to make detection more accurate.

But the NAO stressed that "it remains essential that DWP continues to address fraud and error given overpayments increase costs to taxpayers and reduce public resources available for other purposes, while underpayments mean households are not getting the support they are entitled to".

Sir Amyas said: "Issuing an audit qualification is a serious matter, and the fact that this is another in a long line of qualifications does not make it any less serious.

"The value of fraud and error in benefit expenditure remains unacceptably high.

"The Department has made good progress in understanding causes of fraud and error to develop new strategies, but has some way to go to put these into effect and achieve sustainable reductions in fraud and error."

A DWP spokesman said: "The reality is fraud and error is at a record low, reflecting the work we are doing to improve detection, prevention and recovery, in order to protect taxpayers' money.

"Last year around £980 million was recovered in benefit overpayments - the highest amount ever - and our fraud investigators work tirelessly to bring those who cheat the system to justice."