Nearly £50million of benefits payments in Scotland risks being lost to fraud and error just as an economic crisis unfolds, welfare bosses warn.
Scotland’s public spending watchdog raised the alarm and said there is “a lot of key work to be done” at benefits agencies.
The huge figure emerged in a report by Audit Scotland on last year’s spending on carers’ allowance.
It revealed how £14.8million was overpaid on that one benefit in Scotland, blamed on error and fraud.
Stephen Boyle, Auditor General for Scotland, said: "Social Security Scotland has strengthened its error and fraud arrangements and reacted quickly to the immediate challenges posed by the pandemic, but there's still a lot of key work to be done.
"It is now responsible for billions in complex benefits spending but remains heavily reliant on the DWP. Benefit spending may rise because of Covid-19, increasing the potential for greater error and fraud. And Social Security Scotland needs to think about what arrangements will be needed to manage that scenario."
Audit Scotland was forced to "qualify" the accounts of new benefits agency Social Security Scotland. The constant risk of error and fraud in social security systems means an audit qualification is “not unusual”, the report added.
The National Audit Office has qualified the annual accounts of the UK Department for Work and Pensions for the past 31 years.
Auditors said Scotland’s agency has improved but the DWP delivers much of the £3.5billion it spends on benefits - including the carer’s allowance - and oversees the estimates of error and fraud.
The amount of money delivered by Scotland’s new agency is expanding dramatically with new responsibilities taking its accountable expenditure to around £3.5billion next year.
More than £1.5billion of Personal Independence Payments are forecast next year, along with £719million of Disablity Living Allowance and £532million of Attendance Allowance.
Looking ahead, the DWP estimates £47.5million of overpayments due to error and fraud in forecast expenditure for Scotland in 2020-21.
That figure could be on top of the Carer’s Allowance irregular payments.
The DWP has been “significantly affected” by the pandemic, auditors warned, leading to even more work to manage complex payments including Universal Credit.
A Social Security Scotland spokesman said: "Audit Scotland’s qualification only relates to the regularity of Carer’s Allowance expenditure - this does not apply to the other benefits that we are directly administering.
"To enable the safe and secure transition of benefits, the DWP continues to deliver Carer’s Allowance on our behalf, following their existing processes. DWP have had their accounts qualified by the National Audit Office for the past 31 years.
"Under this agreement, the benefit is regulated by UK legislation which means we rely on the DWP’s error and fraud estimates. Once we take on full responsibility for this benefit, we will be able to manage error and fraud for Carer’s Allowance in Scotland directly."
