Fighting Fraud in the Welfare System

Jessica Kimbell, GovNet
March 30, 2023

The Department for Work and Pensions (DWP) plays a vital role in the nation’s wellbeing. Responsible for welfare, pensions and child maintenance policy, it administers the State Pension and a range of working-age, disability and ill-health benefits to around 20 million claimants and customers. The scale of its remit means that it is the UK’s most extensive public service department.


In the last financial year, over £211 billion was paid in benefits and pensions.


If money is lost to criminal activity, then the task of ensuring that eligible people receive support becomes more difficult.


The question is, how can fraud be prevented and detected?


DWP fraud: The landscape


A significant proportion of the population relies on the DWP for their income and security, and people must receive the support they need. 


Bozena Hillyer, DWP’s Director for Counter Fraud, Compliance and Debt, recognises the importance of the DWP’s work: “We have to make sure that we both support the vulnerable in our society and make it easy for them to get the money that they need, as well as protecting the taxpayer”.


If you consider the number of claimants, the momentous challenge is revealed. According to the official figures, in the year to August 2022, almost 12.6 million people were claiming the State Pension, over 5.6 million were receiving Universal Credit, plus in the region of 12.75 million were receiving other benefits such as Carers Allowance, Housing Benefits, Personal Independence Payments and Jobseeker’s Allowance.


There is a consensus that society should look after its vulnerable people. But fraud is always possible when funds are distributed in such large numbers to so many people. 


Such risks are heightened by the fact that payments need to be made quickly – after all, people need to eat and heat their homes, and unnecessary delays can be catastrophic. The DWP is required to make a first Universal Credit within five weeks of the application. These time constraints can make fraud detection more difficult.


Fraud prevention through digital design


Not too long ago, government departments and businesses were drowning in paperwork. Aside from the environmental impact of deforestation, the days of pen and paper created deep organisational problems. Claims were time-consuming, and processes were painfully bureaucratic. The potential for fraudulent activity was also much easier when checks and balances were so laborious and unwieldy. 


The digitalisation of processes has revolutionised working practices and added robust layers of security. 


A good example is cited in a 2022 DWP Policy Paper entitled Fighting Fraud in the Welfare System, also the title of the department’s presentation at the Counter Fraud 2023 conference. Looking at the example of the digital design of Universal Credit, the DWP notes that “using a direct real-time information feed from HM Revenue and Customs (HMRC) to accurately assess the earnings of claimants paid through the PAYE system has enabled us to tackle the biggest source of fraud by monetary value in DWP – false declarations about earnings for means-tested benefits.”


It is not the only example of how digital innovations have filled the gaps and reduced opportunistic and exaggerated claims.


The role of data analytics


While the voluminous numbers represent a logistical challenge, they offer an opportunity. With such rich data, it is possible to interpret trends and identify behaviour patterns. The DWP applies various data analysis methodologies, including statistical analysis, predictive modelling, and machine learning algorithms.


The data is instrumental in enhancing the applicant’s user experience and improving efficiencies. Data analysis also plays an invaluable role in flagging unusual or suspicious behaviour.


One of the ways that the analysis is directly applied is through data matching. This involves comparing data sets, such as a body’s payroll or benefits records, against other records held by the same or another body to see how far they match. The data matching allows potentially fraudulent claims and payments to be identified.


The Covid-19 Challenge


The unexpected must also be considered when making strategic plans and implementing procedures. But no one was prepared for the global pandemic and the rushed shutdown of society. When vast numbers of employees were suddenly unable to work, the benefits agencies inevitably faced an avalanche of urgent claims. As a result, the pressure was on to relax tried and tested protocols to expedite payments. 


Speaking at the Counter Fraud 2023 Conference, Bozena Hillyer, the DWP’s Director for Counter Fraud, Compliance and Debt, recounted those turbulent times: “We had the massive surge of new claimants coming in during COVID, and in order to give people the money they needed to literally put food on the table, we had to take some of the bumps out of the road. We had to make it easier for those payments to be made. We knew that with that would come more fraud and error coming into the system - and indeed that did happen.” 


For Hillyer and her team, the necessity was to innovate to mitigate the risks. One initiative was the formation of the Integrated Risk and Intelligence Service, comprising experts in monitoring risks who used data matching and analytical expertise to help identify fraudulent activity. This digital evidence was critical in assisting DWP professionals to make the right decisions on a case-by-case basis.


Updating legislation


The key primary powers used to gather information have not been substantially updated in 20 years, and the primary power to penalise fraudsters was last updated ten years ago. 


Hillyer believes this is having an impact: “We need to get some new legislation to modernise our powers. We need to ensure that our penalty regime is fit for purpose so that it has a proper deterrent effect… and importantly, we need to be able to get the data that will allow us to risk assess some of those claims that are coming in.”


The government has pledged to modernise and strengthen the legislative framework.


The human touch


With all the advances in machine learning and data analytics, the temptation is to automate the processes of benefit payments and fraud detection. 


While this may sound appealing, such a move will not happen. The DWP utilises and embraces technological solutions and invests heavily in data interpretations, but full automation is a step too far.


Another speaker at Counter Fraud 2023, Christine Caine, DWP’s Counter Fraud, Compliance & Debt Head of IRIS, extolled the importance of human input.


“We have pulled together expertise in fraud, cybersecurity, digital data and analytical expertise.


“We are using data and analytics to identify risks, but we aren’t automating decision-making on suspicious claims. This is because we want to make sure that we are holding ourselves to the highest standards and codes of ethics using data and analytics. We have skilled officers in DWP looking at the whole picture of risk in such claims and making the final decisions.”


Knowledge sharing and career development


Many professionals working in counter fraud did not have the luxury of a dedicated learning journey. Instead, they have had to seek out opportunities and make judgements on what suitable learning and development constituted. 


In August 2022, the government set up the new Public Sector Fraud Authority (PSFA). The Government Counter Fraud Profession (GCFP) is now within the Authority’s Practice, Standards and Capability Function. The GCFP is building structures that offer dedicated pathways and career development.


The profession has welcomed this move. Sharing the enthusiasm, knowledge and experience of professionals in the sector is vital for creative innovation and success in tackling fraud.


GovNet’s Counter Fraud Conferences


GovNet’s Counter Fraud conferences provide public sector counter fraud professionals and audit and finance leaders with the opportunity to network, learn and collaborate to eradicate the threat of public sector fraud. Register for GovNet’s Counter Fraud Conference 2024 here.