Disability benefit fraud costs the DWP £80 million. Error costs the disabled/incapacitated £340 million.
Benefit fraud is classified as instances where all three of the following conditions are in evidence:
1) the basic conditions for receipt of benefit, or the rate of benefit in payment, are not being met;
2) the customer can reasonably be expected to be aware of the effect on entitlement; and
3) benefit stops or reduces as a result of the review.
During 2010-11, the fraud and error rate for disability living allowance was 1.9% (£220 million), of which fraud specifically accounted for 0.5% (£60 million). The fraud and error rate for Incapacity Benefit was 2.4% (£130 million), of which 0.3% (£20 million) was due to fraud. Put together, that’s £80 million. By contrast, official error costs £160 million.
However, Disability Living Allowance was underpaid by £300 million: £290 million of which was due to customer error; whilst incapacity benefit was underpaid by £40 million – all of which was due to official error.
So, in sum: fraud costs the DWP £80 million. Error costs the DWP £160 million, and costs the disabled/incapacitated £340 million.
So why isn’t this fact headline news?
Source: Fraud And Error In The Benefit System: 2010/11 Estimates