Failure to stem benefit blunders costs the taxpayer £3m every day

MISTAKES by benefits claimants are costing the taxpayer £1.1 billion a year, a spending watchdog report has revealed.

Efforts to clamp down on the errors had failed to make an impact on the money - the equivalent of 3 million a day - being lost by the UK government's Department of Work and Pensions (DWP).

The report, by the National Audit Office (NAO), is published three years into a five-year initiative launched in 2007 to crack down on benefits mistakes.

However, the report finds that there was "no discernible decrease" in the amount of cash lost to customer errors.

Since 2007, Iain Duncan Smith's department has established a Fraud and Error Council and introduced other measures to reduce the volume of customer mistakes. But the NAO says the DWP does not have enough information to target these initiatives effectively.

The NAO acknowledges that mistakes made by customers are difficult for the Department to tackle because they often arise from a change in customers' circumstances, which customers may not realise they have to tell the department about.

The rate of error differs between benefits. Customer error has consistently been highest for Housing Benefit which in 2009-10 saw 420 million overpayments and 220m in underpayments.

Auditor General Amyas Morse said: "The benefits system is complicated and it is inevitable that mistakes occur. The DWP, therefore, faces a significant challenge in tackling error by claimants.

"The department has demonstrated a firm commitment to tackling administrative error, while its resolve to tackle customer error has so far been less evident.

"It now needs to bring its focus on customer error to the same level.

"The key to success in each area is a coherent strategy supported by good information on what works to deliver the best results."

The report said that the scale of overpayments and underpayments demonstrate a "clear imperative for improvement".It cautioned: "The NAO found little evidence that there has yet been sufficient attention paid to reducing losses due to customer mistakes.

Last night, Charlotte Linacre, campaign manager of the Taxpayers' Alliance, said: "This is a big bill for taxpayers to foot - whether claimants have made mistakes or knowingly made fraudulent claims. The benefits system is too complicated and this means that errors like these will continue to occur. The cost to taxpayers is eye-watering .

"It is crucial that we make the system much easier to understand and administer and put the right incentives in place for people to return to work. Only then will hard working families be relieved of these huge costs."

A spokeswoman for the DWP said: "We are absolutely committed to reducing customer error and our welfare reforms will simplify the benefits system making it easier to understand and less open to mistakes."

The 1.1bn annual loss was partially offset by 800m annual underpayments in 2009-10.Underpayments may help the DWP's budget balance, but they can cause hardship for families who do not receive benefits to which they are entitled.

But the difference between the two figures suggests that 300m is lost annually - the equivalent of 821,918 per day.