New IT systems add to massive benefits losses

New IT systems have increased the levels of benefit payments made in error by the Department for Work and Pensions (DWP).

According to a 2003-04 report from the Public Accounts Committee (PAC), the DWP lost £3bn due to fraud and error - comprising £2bn lost to fraud and £1bn to customer and official error.

The PAC report said losses due to errors are too high, and that a recent reorganisation to form Jobcentre Plus and the Pension Service has made the problem worse. "This is due to staff moving into unfamiliar roles and the introduction of new methods of working and IT systems," the report said.

It added: "The churn in the organisation and the disruption caused by the introduction of new techniques and improved IT systems had increased the level of official error."

The DWP should deal with the problem in future through additional staff training, according to the report. "In managing any future changes, the department should anticipate that levels of official error may rise and plan to deal with this through a comprehensive programme of training and support for staff making decisions on benefit awards," it said.

The report also said that to administer benefits fairly and accurately the department needs to be able to retrieve customers' records more efficiently. The DWP said "computer logging" of all new and existing files under the new storage contract will help with this.

But new technology will also help the DWP cut fraud - it is looking at using off-the-shelf IT and linking its systems up more effectively, including the creation of a better payments system. The department said it was also putting a lot more effort into cross-referencing data with other agencies to cut fraud.