DWP Rejects Call for More Ambitious Fraud and Error Reduction Target

The Department for Work and Pensions has dismissed a recommendation from parliamentary watchdogs to establish a more demanding target for reducing the billions of pounds in benefit overpayments disbursed annually. The rejection comes despite mounting pressure to address systemic inefficiencies within the welfare system.

Members of Parliament’s Public Accounts Committee issued the recommendation in a February report examining DWP’s efforts to combat fraud and error in benefit expenditure, which totalled £9.5 billion during 2024-25 when state pension overpayments are included. The fraud and error rate currently stands at 3.3% of total benefit expenditure, with Universal Credit overpayments representing two-thirds of the aggregate figure.

The department’s existing target aims to reduce overpayments to 2.8% of total benefits expenditure by 2028-29. However, committee members argued that DWP should establish a more stretching objective that extends beyond current forecasts to a level demonstrating cost-effective controls over benefit spending.

The Treasury Minutes document published in April, which consolidates departmental responses to Public Accounts Committee recommendations, reveals DWP’s rejection of the proposal. The department characterised the proposed 2.8% reduction in fraud and error rates by 2028-29 as a remarkable achievement that substantially exceeds the committee’s previous expectations.

DWP officials noted that 2.8% would represent the lowest cross-welfare overpayment rate since the introduction of tax credits in 2003-04, falling below the pre-pandemic level of 3.1%. Fraud and error rates constitute the principal reason that DWP’s annual accounts have received only a qualified endorsement from the National Audit Office throughout the department’s existence.

The department added that ongoing discussions with the NAO to establish what constitutes a cost-effective control environment present a barrier to setting a new target until agreement is reached between the parties.

Regarding staff errors, MPs urged DWP to intensify efforts addressing the contribution that civil servant mistakes make to fraud and error rates within the benefits system. The February report indicated that errors by DWP or other government entities caused £1 billion of overpayments and £1.2 billion of underpayments in 2024-25.

DWP confirmed its agreement with this recommendation, stating that reporting on overpayments focuses on continuous improvement activities to enhance payment accuracy alongside Targeted Case Review teams that identify inaccuracies at the earliest opportunity. The department’s annual report and accounts also include chapters on correction exercises to address underpayments.

The department concurred with a Public Accounts Committee conclusion that insufficient data sharing with other government departments hampers the accuracy of benefit payments. DWP maintains that well-established cross-government mechanisms support data sharing, including regular engagement through its cross-government partnerships team.

Officials stated the department remains committed to strengthening data capabilities and exploring new opportunities for cross-government collaboration. 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 datasets from the Department of Education alongside other cross-government data sources to support fraud identification, prevention and detection.

DWP rejected a Public Accounts Committee request to provide additional information to individuals reporting concerns about potential fraud. The department explained that whilst people who report suspected benefit fraud through a Fraud Referral Form or the National Benefit Fraud Hotline receive acknowledgement confirming receipt, they are advised that no details about outcomes can be shared.

This policy exists because generally no lawful basis permits disclosure of investigation progress or results to third parties. The Data Protection Act 2018 and the General Data Protection Regulation impose strict duties on the department as a data controller, requiring protection of personal information. Providing updates could also risk prejudicing ongoing investigations.

Nevertheless, the department acknowledged that members of the public desire greater visibility of counter-fraud team activities. DWP continues to review and, where appropriate, publicise its counter-fraud activities. Increasing visibility of the department’s work will demonstrate 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 serve as a deterrent to individuals who might otherwise consider claiming benefits to which they are not entitled.