Monetary Value of Fraud and Error target – cutting fraud and error

Target: to reduce losses from Fraud and Error by 15%, by March 2010.

What is the target?

The aim is to reduce losses from Fraud and Error in Income Support and Jobseeker’s Allowance by 15%, by March 2010.

The causes of loss are:

• customer fraud;
• mistakes made by customers; and
• mistakes made by staff.

A new Public Service Agreement (PSA) target was introduced from April 2005, with an objective to reduce overpayments from fraud and error in Income Support and Jobseeker’s Allowance by 15% by March 2010.  The target, effective from April 2006, will be measured against a baseline to be set using measurement data obtained for the 2005-06 year.

A trajectory has been set for the period up until March 2010 for reductions in fraud and error based on performance from the previous year.  An interim annual target has been set for 2006-07 that by March 2007 losses from fraud and error in IS and JSA amount to no more than the March 2006 levels of loss or no more than 5.2% of the monetary value of these benefits paid during the year, whichever is the lower figure.

How does it work?

A random sample of IS and JSA claims are examined throughout the year by specialist teams. The teams record any errors made by staff and customers and any cases of fraud they find. This examination may include a home visit to establish the precise circumstances of the claim.

The results of these checks are used to estimate both the proportion and the cash value of fraud and error in the payment of IS and JSA.

The interim September 2006 loss estimate suggests losses are 5.3% (610m). DWP analysts advise caution in the interpretation of the data, as the change is not statistically significant and using six months from two different years gives rise to some volatility. We will have greater certainty when the full 2006/07 data is available early in 2008.