Record £8bn overpaid in welfare fraud and error

Fraud and error overpayments in the welfare system rose to record levels in 2020-21, according to the National Audit Office.

Of the £111.4 billion spent on benefits by the Department of Work and Pensions (DWP), it overpaid approximately £8.3 billion, an increase of £3.8 billion over the previous year, new data from the National Audit Office (NAO) has revealed.

The vast majority of the errors were made on Universal Credit payments, with the program accounting for £5.5 billion of the overspend. DWP estimates that it underpaid £540 million.

The dramatic increase in Universal Credit overpayments can be largely attributed to a surge in new claims brought on at the start of the COVID-19 pandemic, when the program saw applications double, from 3 million claimants to 6 million.

To add to the stress on the system, many of the new applications were more complex, with claimants seeking funding due to a loss of self-employed income, for example, which is more vulnerable to fraud.

In response to the influx, DWP relaxed certain controls and checks on those claiming Universal Credit in order to process the surge in claimants quickly. These factors accounted for roughly £3.8 billion of the Universal Credit overpayments, the department estimated in its recent financial statements.

Source: Financial Accountant click here to read more.