No auditor sign-off for DWP account

The Whitehall spending auditor has declined to sign off in full the accounts of the Department for Work and Pensions (DWP) for the 24th year running because of the extent of fraud and error in the benefits system.

Some £3.2 billion is thought to have been lost through overpayments in 2011/12. Underpayments came to an estimated £1.3 billion.

Auditor general Amyas Morse said fraud and error was "unacceptably high" and qualified his opinion of the DWP's accounts, the 24th year consecutive year this has been the case for the department and its benefits-handling predecessors.

Labour MP Margaret Hodge, who chairs the Public Accounts Committee, said the DWP had failed to get a grip on fraud and error despite assurances that it would do so.

"This Department has the biggest budget in Whitehall and its inability, 24 years in a row, to administer its spending properly is just unacceptable," she said.

"With fraud and error of £4.5 billion in 2011-12, roughly the same as in previous years, huge sums of money are being lost to the public purse that could have been spent on our schools and hospitals. Government spending is at its tightest for over 50 years and it simply can't afford to carry on like this."

She said the Government was relying on the forthcoming introduction of the universal credit to "get its house in order", but the transition to the new benefit was "full of risks" and potentially off-schedule.

Mr Morse said: "The level of fraud and error in the welfare system remains unacceptably high.

"I recognise, however, the difficulty of administering in a cost-effective way a benefits system of such complexity. The department should use the development of universal credit as an opportunity to enhance its processes to demonstrate what a modern, effective and joined-up benefits system will look like."

The auditor general's qualified opinion did not apply to the state pension, which has a much lower level of fraud and error, with £0.1 billion of overpayments and £0.15 billion of underpayments last year. But he did also qualify his opinion of the separate social fund account - which includes cold weather payments, winter fuel payments, Sure Start maternity grants, crisis loans and community care grants - because of the extent of errors.