The DWP confirmed £9.5 billion was overpaid to claimants over the last year
Reasons your Universal Credit may be cut by DWP
The Department for Work and Pensions (DWP) pays welfare benefits to around 23.7 million people across Great Britain. That figure includes 13m on the New or Basic State Pension – classed as a contributory benefit – and people claiming at least one DWP benefit.
The newly published annual ‘Fraud and error in the benefit system’ report, which estimates how much money the Department has incorrectly paid in the 2024/25 financial year, either through overpayments or underpayments, indicates that £9.5 billion was overpaid to claimants, 3.3 per cent of the total benefits expenditure.
This is down from £9.7bn (3.6%) in 2023/24. The total rate of benefit underpayments remained the same at £1.2bn (0.4%).
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To qualify for DWP benefits people need to meet certain eligibility criteria and the amount of money they receive depends on their circumstances.
DWP explained: “Sometimes people tell us the wrong information or do not tell us when their circumstances change. Reporting accurate information and providing evidence may change the amount of benefit people are eligible for and in some circumstances, they may be eligible for more money.
“However, we cannot calculate the correct amount unless people tell us accurately about their circumstances. This means that people are not eligible for increases in the amount of money they receive until we have the correct information.”
DWP fraud and error review for 2025/26 financial year
The DWP confirmed it will be measuring sample cases from six benefits for ‘unfulfilled eligibility’ over the current financial year.
These include:
- Universal Credit
- Housing Benefit (pension age, both passported and non-passported cases)
- Pension Credit
- State Pension
- Personal Independence Payment
- Disability Living Allowance for children
Definitions of Fraud, Claimant Error and Official Error
The DWP defines the three types of fraud and error.
Fraud
Claims where all three of the following conditions apply:
- the conditions for receipt of benefit, or the rate of benefit in payment, are not being met
- the claimant can reasonably be expected to be aware of the effect on their entitlement
- benefit payment stops or reduces as a result of the claim review
Claimant Error (unfulfilled eligibility)
An overpayment has occurred where the claimant has provided inaccurate or incomplete information, or failed to report a change in their circumstances, but there is no evidence of fraudulent intent on the claimant’s part.
Official Error
The benefit has been paid incorrectly due to a failure to act, a delay or a mistaken assessment by DWP, a local authority or HM Revenue and Customs (HMRC), to which no one outside of that department has materially contributed.
The DWP report also highlighted that total spending on benefits increased from £266.2bn in 2023/24 to £292.2bn last year.
This was an increase of £26.0bn (9.8%) which was mainly due to:
- State Pension – spending increasing from £123.9bn to £142.0bn
- Universal Credit spending increasing from £51.9bn to £65.3bn
- Personal Independence Payment (PIP) spending increasing from £21.6bn to £25.8bn
However, DWP said those increases are partially offset by a reduction of £10.2bn (100.0%) in Cost of Living Payments expenditure.
DWP plans to publish the 2025/26 findings in May next year.
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