A five year delay to a key system rollout has contributed to the Department for Work and Pensions losing nearly £2 billion annually in benefits paid to those who should not receive them.

The powerful Public Accounts Committee has said “weaknesses” in IT systems mean the DWP has been unable to routinely track fraud cases in court, including cases that attempt to recover benefits that should not have been made.

Lost benefits increased from £1 billion in 2001 to 2002, to £1.9 billion in 2006 to 2007. The losses were due to processing errors or problems with tracking court cases.

The DWP has also been “slow to improve its management information systems, hampering its ability to measure the cost effectiveness of counter-fraud activities”, the PAC said in its ‘Progress in Tackling Benefit Fraud’ report

Even though a similar report in 2003 had said management information was “inconsistent and poor”, the DWP took until February this year to start rolling out a new case management system, known as FRAIMS.

The system is still being rolled out, is expected to cost £65 million, and targets savings of £10 million annually over the next five to six years.

The PAC said the new system as “not sufficiently comprehensive” even after the five year delay. “The Department needs to assess the effectiveness of this management information system as it is rolled out, and evaluate the future impact on those counter-fraud activities which currently are not served by the system,” the Committee advised.

The new system does not address the DWP prosecution division. But the department expects it to improve management information “dramatically” and to streamline the handling of fraud cases.

But the DWP said it was tackling errors, including by implementing IT enhancements and training staff better, so that benefit payments to individuals are stopped as soon as their entitlement ends. It said the implementation of the new system was bringing about a “step change improvement”.

Related stories:

DWP restructures £3bn IT services contract

DWP CIO Joe Harley has never shied away from the cutting edge