Government department loses £1.5bn through IT

The Department for Work and Pensions is losing an estimated £1.5bn a year due to the introduction of new methods of working and IT systems, Parliament's Public Accounts Committee said on Tuesday.

According to its latest report, major organisational changes such as the formation of Jobcentre Plus and the Pension Service has led to "an increase in the level of errors by officials".

Particularly to blame is the "churn in the organisation" and the "disruption caused by the introduction of new techniques and improved IT systems", the report says.

Further disruption is likely at the department due to the job cuts demanded by the efficiency agenda. While making the cuts — around 30,000 jobs will be lost — the department should ensure that it retains enough staff to carry out data matching and intelligence analysis in order to prevent further fraud, says the report.

It calls upon the department to "communicate its intentions early and clearly to all staff to reduce uncertainty about their future".

In addition, the DWP is failing to locate worrying number of customer records.

"To administer benefits fairly and accurately the department needs to be able to retrieve their customers' records without undue effort," the report says. "The department has taken steps to improve document storage and retrieval, but improvements are needed beyond the current rate of 1.3 percent not being found. This should arise from activities such as computer logging of all new and existing files under the new storage contract."

The committee's chair, Edward Leigh, said that the amount of money lost through fraud and error is "astronomical".

"I recognise that the department has made progress in cutting losses in the highest risk benefits. But fraud and error are unlikely ever to be brought under proper control unless benefits systems for both staff and customers are simplified," he said.

"To address this the department must tackle a whole range of besetting difficulties. Progress must be made in tightening up the accuracy of its measurement of fraud and error which is at present full of uncertainty. The high level of error by staff making benefit payments, costing an estimated £1.5bn a year, must be reduced. And improvements must be made to the poor systems for storing and retrieving customer papers.

"Recent organisational change and the plan to shed a quarter of its workforce, possibly lowering morale and increasing turnover among the staff whose skills are most needed to combat fraud and error, will not make the department's job any easier. But it must not allow its focus on reducing fraud and error to waver.

"This is the demand of everyone who wants benefit payments to go to those who are genuinely entitled to them and not to cheats and the undeserving."