Autumn statement provides backing for departments to tackle losses of billions of pounds year

Credit: Pxhere

Two of government’s biggest departments will be given hundreds of millions of ponds to recruit more than 6,000 extra staff in an effort to raise billions of pounds by tackling fraud, error and tax non-compliance – but will also be asked to find extra savings elsewhere.

The Department for Work and Pensions will be given £280m between now and 2024-25 to hire extra staff, which the government predicts will raise £2.2bn in savings per year until 2027-28.

HM Revenue and Customs will get £79m over the next five years to recruit more staff, with the government hoping to raise £725m of additional tax revenues in total from this investment in the same period.

Chancellor Jeremy Hunt announced the figures in yesterday’s Autumn Statement, which aims to raise £55bn through tax increases and spending cuts.

DWP’s extra funding will be used to expand staff focused on tackling fraud and error abuse in the benefits system.

“The expansion will better equip DWP to proactively review and correct [Universal Credit] claims that are at risk of fraud, and help prevent, detect and correct overpayments across the entire benefits system,” the document said.

The department’s latest accounts showed the department overpaid a record £8.5bn in benefits last year, excluding state pension.

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In a move that has been criticised over its lack of transparency, the department last year begun deploying automation tools to help detect fraud in claims for Universal Credit advances – but has stressed that all cases flagged by technology are subject to human review.

HMRC’s workforce boost, meanwhile, will allow it to tackle more cases of serious tax fraud and address tax-compliance risks among wealthy taxpayers, according to documents published alongside the Autumn Statement. Of the £725m this is expected to raise, £350m is from tax fraud and £375m from non-compliance.

However, the statement says both DWP and HMRC will be asked to continue to “make efficiencies”.

It also commits to ensuring both departments can maintain their performance levels.

The Office for Budget Responsibility, which delivered a forecast alongside the statement, said it had been concerned ahead of today’s announcement that wider cuts to government spending “might undermine” the two departments’ ability to achieve the performance it predicted in its “pre-measures” economic forecast five weeks ago.

The Autumn Statement confirms that “the government remains committed to ensuring” both departments “have sufficient funding to enable them to maintain their fraud, error, debt and compliance performance over time, while continuing to make efficiencies – both in this and future Spending Review periods”.

In its most recent annual report, the Public Accounts Committee named both HMRC and DWP among its “departments of concern” – in large part because of ongoing issues with fraud and error.

HMRC has been heavily criticised over the level of fraud and error in the support schemes administered by the department during the coronavirus crisis. An estimated £4.5bn was wrongly paid out across the Eat Out to Help Out initiative, the Self-Employment Income Support Scheme, and the Coronavirus Job Retention Scheme – commonly known as the furlough programme.