Estimated £15m benefit overpaid due to error and fraud

An estimated £15m of Carers’ Allowance in Scotland has been overpaid due to error and fraud.

The agency Social Security Scotland is accountable for Carers’ Allowance but relies on the Department for Work and Pensions (DWP) to administer it and the DWP estimates that 5.2 per cent of the £284m paid out in Scotland in 2019/20, £14.8m, relates to error and fraud.

This has led to Audit Scotland qualifying Social Security Scotland’s accounts, or expressing reservations about them. Its report states: “Expenditure resulting from such overpayments was not incurred in accordance with the Social Security Contributions and Benefits Act 1992.”

Audit Scotland made clear that such a qualification is not unusual and that the National Audit Office has qualified the accounts of the DWP for the last 31 years because of the inherent risk in the social security system of error and fraud.

Benefits are driven by individual claims and the system is reliant on obtaining accurate information which may change over time.

Social Security Scotland is now accountable for benefits worth £3.5 billion. Many of them are still delivered by the DWP on the Scottish Government’s behalf, meaning that Social Security Scotland is reliant on DWP error and fraud estimates.

Audit Scotland has warned in its report that the COVID pandemic creates added uncertainty: “The continuing impact of the COVID-19 pandemic will increase uncertainty and financial risks in an already challenging environment.”

Social Security Scotland has strategies on tackling fraud and error, and the fraud team has more than doubled in size in the past year, with responsibility for risk analysis and control, external investigation of potential fraud, internal investigations and controls, and adjudications and recovery.

But Audit Scotland said that further development was required in key areas, including reporting on error and fraud levels and clearer guidance on determining residency.

Stephen Boyle, Auditor General for Scotland, said: "Social Security Scotland has strengthened its error and fraud arrangements and reacted quickly to the immediate challenges posed by the pandemic, but there's still a lot of key work to be done.

"It is now responsible for billions in complex benefits spending but remains heavily reliant on the DWP. Benefit spending may rise because of COVID-19, increasing the potential for greater error and fraud. And Social Security Scotland needs to think about what arrangements will be needed to manage that scenario."

Social Security Scotland is an executive agency of the Scottish Government, responsible for the delivery of the social security benefits devolved to Scotland from the UK Government under the Scotland Act (2016).