Watchdog MPs have called on the Department for Work and Pensions to put more effort into reducing staff failings that contribute to fraud-and-error losses that run into billions of pounds every year.
A report from members of parliament’s Public Accounts Committee says that while DWP is clearly making progress in reducing fraud and error in the benefits system, its plans should be more “stretching” and do not focus enough on civil service mistakes.
As Civil Service World reported in July last year, overpayments in the benefits system amounted to £9.5bn in 2024-25, when state pension overpayments are included, down from £9.7bn the previous year.
The fraud-and-error rate represents 3.3% of total benefit expenditure. Universal Credit overpayments account for two-thirds of the total fraud-and-error figure.
In recent years, DWP has taken on thousands of additional staff to conduct so-called “targeted case review” work related to Universal Credit payouts, essentially checking that the information benefit recipients’ payments are based on is correct.
But in their report last week, PAC members said not enough work is being done to reduce staff errors at DWP and other parts of government – such as HM Revenue and Customs – which contribute to overpayments.
MPs said that government errors caused £1.0bn of overpayments and £1.2bn of underpayments in 2024-25. They noted that the overpayments figure was an increase of £200m on the previous year while the underpayments figure was an increase of £100m.
“The department has published information on some of the work it has done to identify and tackle the root causes of fraud and error, but this analysis focused on claimant error and fraud,” the report said. “We expect the department to take official error as seriously as it does claimant error and fraud, given the large amounts of money involved and the fact that reducing this error is largely within its own control.”
MPs also criticised DWP’s plans to reduce fraud and error as a proportion of the overall benefit and pensions bill from last year’s 3.3% to 2.8% by 2028-29. They said the aspired-to reduction is not ambitious enough.
DWP’s consistently high fraud-and-error rates are the principal reason that its annual report and accounts is routinely “qualified” by the National Audit Office.
Among their recommendations, PAC members called on DWP to set out what action it will take to address the root causes of official error and publish a “progress update” in its 2025-26 annual report and accounts.
They also said DWP should include a “more stretching ambition for reducing the overpayment rate” that shows it has “cost-effective controls over benefit spending” in its formal response to the report.
Committee chair Sir Geoffrey Clifton-Brown said DWP needed to set its sights higher.
“Our report finds beyond doubt that current ambitions to address unacceptable levels of benefit fraud and error are not stretching enough,” he said.
“More could be done on a cross-government basis to improve the accuracy of benefit payments, and the department has not yet taken a proper look in the mirror to address official error rather than focusing entirely on claimants.”
He added: “Our report marks the now 37th year in which the DWP has had its accounts qualified by the UK’s chief auditor due to material levels of fraud and error. As PAC chair, I would say to the department’s leadership directly: We are just three years away from what would be a sad and embarrassing milestone.
“Urgent action must be taken per our recommendations for the DWP to have something to celebrate in the years to come.”
A DWP spokesperson said: “We have introduced major reforms to ensure people are paid the correct benefits, to recover overpayments and to help save billions of pounds for the taxpayer.
“We are forecasting an ambitious reduction in fraud and error levels to 2.8% by 2028-29, the lowest level since tax credits were introduced in 2003-4.
“Only 0.4% of our overall benefit spend is overpaid due to official error.”