The National Audit Office (NAO) has once again qualified the accounts for the Department for Work and Pensions (DWP) because of 'unacceptably high' levels of fraud and error in spending on benefits, and criticised a £40m write-off related to the IT systems for Universal Credit.
In its latest report, the NAO is critical of DWP's spending on IT assets for the introduction of Universal Credit, which has already seen the department write off £40.1m of the total investment of £196.1m. A further £91m is now set to be written off by March 2018, because the system will only be able to support a limited service for five years.
The NAO says DWP has not to date achieved value for money in the development of Universal Credit and to do so in future it will need to learn the lessons of past failures. The report recommends that the department properly commissions and manages IT development; exercises effective financial control over the Universal Credit programme; and sets realistic expectations for the timescale for delivery.
The DWP and its predecessor departments have received qualified audit opinions in respect of benefits fraud and error every year since 1988-89. Current estimates put total overpayments due to fraud and error in 2012-13 at £3.5bn, up from £3.2bn the previous year. This equates to 2.1% of total benefit expenditure of £166.8bn, compared to 2% of £159bn expenditure in 2011-12.
The department estimates total underpayments in 2012-13 are £1.4bn compared to £1.3bn the year before, which equates to 0.9% of total benefit expenditure, compared to 0.8% in 2011-12.
The qualified opinion does not apply to the state pension where the level of fraud and error is lower. Overpayments for this benefit were £0.11bn, or 0.1% of related expenditure, and underpayments were £0.18bn or 0.2%, levels which are similar to the previous year.
NAO head Amyas Morse said: 'Issuing an audit qualification is a serious matter, and the fact that similar qualifications have followed one another over so many years does not lessen that seriousness. However, I note the department's new approach to reducing fraud and error. Only by developing an evidence-based framework will the department be able to show that its systems are good enough to lessen the gap between what it should and does achieve.'
