Margaret Hodge, who chairs the committee said that billions of pounds were being lost from the taxpayer as a result of a failure to tackle HB fraud effectively. She said today ‘Around £12.6 billion has been spent on housing benefit overpayments since 2000/01 — money that could have been used to improve the system.’

Last year alone it’s estimated that £1.4bn was overpaid in housing benefit, which is 5.8% of the total budget. This was due to claimant error which accounted for £900 million pounds and £340m where there was evidence of claimant fraud, however it was found that £150m of overpayments was due to official errors made by the Local Authorities and DWP. This was a rise of £600m from the figure of £980m when the current government took over in 2010/11. The DWP however expect the losses to be lower when local authorities manage to recoup some of the money that was paid out.

Commenting on the DWPs performance, Mrs Hodge said they had still not “effectively targeted” the major sources of fraud and error after the Public Accounts committee reported the over-spend  and ‘sounded the alarm’ years ago and said that it was ‘nonsensical’ that the department only spends 8% of its budget on fraud and errors on Housing Benefit even though HB overpayments account for 42% of the overall overpayments across all DWP benefits. She also criticised the government for the DWP failing to encourage legitimate take up of benefits and where claimants were,  in fact, underpaid which she said was due to the cutting of local authorities financial budgets when administering the Housing Benefit scheme which resulted in local authorities reducing their work in recovering overpayments as a result of reduced local authority budgets.

The committee reported local authorities faced disincentives in uncovering fraud, as the current system means they are penalised when higher levels of HB fraud is discovered.

Further information:

http://www.insidehousing.co.uk/journals/2015/01/13/n/t/k/HOUSING-BENEFIT-FRAUD-AND-ERROR.pdf