Fraud and errors related to payments made by the Department for Work and Pensions have reached record highs and are set to grow due to universal credit.
The spending watchdog says the department’s annual accounts showed overpayments related to benefits have increased to £4bn (4.6%) in the last year – up from £3.7bn (4.4%)
The National Audit Office analysis indicates that overpayments and underpayments reached their highest levels since 2005-6, when the current method for estimating these payments was introduced.
Gareth Davies, head of the NAO, has issued a qualified opinion – signifying weaknesses – for the DWP’s annual accounts, the 31st time this has happened.
The NAO said that benefit payments are susceptible to both deliberate fraud and unintended error by claimants and the department.
When overpayments are recovered by the department, this can lead to problems for claimants who face deductions from their income. Underpayments can mean households do not get the support they are entitled to.
Davies said: “The value of fraud and error in benefit spending is a longstanding and costly issue for the department.
“I am concerned that this has reached its highest rate since the current estimation method was introduced, and that the department expects overpayments to rise even further.
“I would like to see the department make better use of its data to identify misreporting of benefit income and eradicate this cause of overpayments and underpayments.”
The NAO noted that the DWP expects the value of overpayments to continue to rise over the next six years mainly due to the roll out of universal credit.
The estimated overpayment rate for universal credit is 8.6%, which is the highest for any continuously measured benefit since tax credits in 2003–04.
Claimants failing to declare their income and earnings correctly was the largest cause of overpayments across the department’s benefits, including universal credit where it accounts for 30% of overpayments.
The DWP has been approached for comment.
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