DWP and HMRC set to jointly develop a data analytics hub for fraud prevention

The cost of the agreement could total £45m

The Department for Work and Pensions (DWP) and HM Revenue & Customs (HMRC) plans to create an integrated risk and intelligence service to tackle fraudulent activity and improve cost savings.

A tender has been put out by the departments to create a central hub which gathers, processes and analyses data and intelligence on fraud and error activities.

It is estimated that the contract will be worth up to £45m and last four years.

The new system will support performance improvements in fraud and debt recovery activities across DWP and HMRC, and it is hoped that it will also benefit the implementation and delivery of the Universal Credit system. This is a complicated IT system that will combine personal data from both departments with a view to simplifying the benefits system – it has a target completion date of 2013.

"It is expected that DWP will save £370m once the framework has been set up. However, the framework will also have the potential to create additional savings depending on how many other government departments make use of it once it is in place," said a spokesperson for DWP.

Information services firm Experian last year said £1bn of savings could potentially be made through the proper validation of individuals' personal data. It said up to £600m could come from eliminating social housing fraud and errors, £300m from tackling incapacity and benefit fraud and £17m from getting rid of housing benefit fraud.

Any increase in savings made as a result of the new system will "support the government's spending review commitments", according to the tender.