The Department for Work and Pensions has rejected a call from watchdog MPs to set a “more stretching ambition” for reducing the billions of pounds in benefits overpayments that are made every year.
Members of parliament’s Public Accounts Committee made the recommendation in a February report on DWP’s work to tackle fraud and error in benefit spending, which amounted to £9.5bn in 2024-25, when state pension overpayments are included.
The fraud-and-error rate represents 3.3% of total benefit expenditure, with Universal Credit overpayments accounting for two-thirds of the total fraud-and-error figure.
DWP’s current target is to reduce overpayments to 2.8% of total benefits expenditure by 2028-29. But MPs said the department should set a more ambitious target that goes beyond what is forecast “to a level that indicates that it has cost-effective controls over benefit spending”.
April’s just-published Treasury Minutes document – which brings together the latest departmental responses to PAC recommendations – shows DWP dismissing the call.
It said the proposed 2.8% reduction in fraud and error rates by 2028-29 would be a “remarkable achievement” that is “well in excess of previous expectations of the committee”.
DWP said 2.8% would be the lowest cross-welfare overpayment rate since the introduction of tax credits in 2003-04 and below the pre-pandemic level of 3.1%.
Fraud-and-error rates are the principal reason that DWP’s annual accounts have only been given a “qualified” sign off from the National Audit Office for the entirety of the department’s existence.
DWP added that ongoing work with the NAO “to agree what constitutes a cost-effective control environment” was a barrier to setting a new target until agreement is reached.
Tackling staff error
In their February report, MPs also urged DWP to do more to address the contribution that mistakes made by civil servants have on the fraud-and-error rates in the benefits system. The report said that errors by DWP or other parts of government had caused £1bn of overpayments and £1.2bn of underpayments in 2024-25.
DWP said it agreed with the recommendation. “A core part of the department’s reporting on overpayments focusses on reporting continuous improvement activity to improve payment accuracy alongside its Targeted Case Review teams that target inaccuracies at the earliest opportunity,” it said.
The department added that its annual report and accounts also included a chapter on correction exercises to address underpayments.
Data improvements
Elsewhere, the department agreed with a PAC conclusion that it is not doing enough to share data with other government departments to improve the accuracy of benefit payments.
DWP said it has “well‑established cross‑government mechanisms” that support data sharing including regular engagement through its cross‑government partnerships team.
“The department remains committed to strengthening its data capabilities and exploring new opportunities for cross-government collaboration,”it said. “Following engagement with industry data experts, the department is enhancing the use of both internal and external data earlier in the claimant journey to support upfront eligibility verification. This includes assessing the potential value of data sets from the Department of Education alongside other cross government data sources to support fraud identification, prevention and detection.”
DWP rejected a request from PAC members to provide more information to people who report concerns about potential fraud to the department.
It said that people who report suspected benefit fraud through a Fraud Referral Form or via the National Benefit Fraud Hotline get an acknowledgement confirming receipt, but are advised that no details about the outcome can be shared.
“This is because there is generally no lawful basis to disclose investigation progress or results to third parties,” the department said. “The Data Protection Act 2018 and the General Data Protection Regulation place strict duties on the department as a data controller, and it must ensure that personal information is protected.
“Providing updates could also risk prejudicing any ongoing investigation.”
However, the department said it understood that members of the public wanted greater visibility of the work undertaken by counter-fraud teams.
“The department continues to review and where appropriate, publicise its counter fraud activities,” it said. “Increasing the visibility of the department’s work will help show the impact of fraud referrals and reinforce the role the public plays in protecting the integrity of the benefit system.
“Publicising successful outcomes will also act as a deterrent to individuals who may otherwise consider claiming benefits they are not entitled to.”