DWP approves refreshed fraud and error strategy

The Department for Work and Pensions (DWP) approved a refreshed strategy for tackling fraud and error in November 2024, according to the National Audit Office (NAO)¹. The strategy sets five strategic objectives focused on preventing inaccurate payments, including through improvements in accountability, decision-making and the use of customer data¹.

The NAO reports that DWP took a two-stage approach: it first assessed its fraud and error commitments, progress made and operating model, then used the findings to develop the refreshed strategy¹. At the time of the NAO's work, DWP had started to develop implementation and evaluation plans to support delivery of the strategy and to measure its success¹. Its current prevention activities focus on Universal Credit and Pension Credit, including continuous improvement initiatives intended to tackle the main causes of overpayments¹.

The NAO's report, published on 22 October 2025, sets out the scale of the problem the strategy addresses. The estimated proportion of benefit expenditure overpaid fell from 3.6 per cent (£9.7 billion) in 2023-24 to 3.3 per cent (£9.5 billion) in 2024-25, but has not returned to pre-pandemic levels¹. In 2019-20, the estimated overpayment rate was 2.4 per cent using the National Statistic for fraud and error in the benefit system, and 3.1 per cent using DWP's cross-welfare rate, which includes Tax Credit overpayments¹. The Spring Statement 2025 forecast that overpayments would fall to the pre-pandemic level of 3.1 per cent by 2028-29¹.

Universal Credit accounted for 67 per cent of overpayments by value in 2024-25¹. Its estimated overpayment rate fell by 2.7 percentage points, from 12.4 per cent in 2023-24 to 9.7 per cent in 2024-25¹. For the first time since Universal Credit was rolled out nationally in 2018, it did not have the highest overpayment rate across all benefit lines; Pension Credit had the highest estimated rate at 10.3 per cent¹. The NAO says the main reasons for Universal Credit overpayments in 2024-25 were claimants, mainly self-employed claimants, not declaring in full the income they received from work, claimants failing to declare that they lived with a partner, and claimants not declaring all their financial assets¹.

The government has awarded DWP £6.7 billion of dedicated funding for fraud and error activity over the nine years from 2020-21 to 2028-29¹. The funding is backloaded, with DWP due to receive 52 per cent of the total (£3.5 billion) in the three years from 2026-27¹. From April 2022 to March 2025, DWP saved an estimated £4.5 billion in total from its counter-fraud activities¹. It achieved savings of £1.35 billion in 2023-24 against a target of £1.3 billion, and savings of £2.0 billion in 2024-25 against a target of £1.7 billion¹.

The NAO also reports that DWP rated as 'red' the risk that its plans to reduce fraud and error are not successfully executed and/or cannot mitigate the increased propensity for fraud in society¹. It says DWP's IT systems are not fully integrated and do not allow staff to view all the information DWP holds about a claimant, and that a lack of common data standards within DWP and across government makes it more difficult to identify fraud and error¹. The NAO states that the success of the strategy will partly depend on DWP's ongoing Service Modernisation Programme¹.

Why it matters for households

DWP makes welfare payments to more than 23 million people across Great Britain, and paid £290.8 billion in benefits including State Pension in 2024-25, with £7.3 billion spent on running costs¹. Overpayments arise where fraud or error results in a benefit being paid to someone not entitled to it, or at a rate different from the amount specified in legislation; the NAO notes that some DWP customers are vulnerable or have complex needs, for example due to poverty, age, health problems or disabilities¹.

The overpayment rate is an estimate of the proportion of benefit spending paid incorrectly. It fell to 3.3 per cent in 2024-25 from 3.6 per cent in 2023-24, but remains above the 3.1 per cent cross-welfare rate recorded in 2019-20¹. For Universal Credit claimants specifically, the estimated overpayment rate fell from 12.4 per cent to 9.7 per cent over the same period¹. The NAO's work did not cover benefit underpayments¹.

For the past 37 years, successive Comptroller and Auditor Generals have qualified their audit opinions on the regularity of DWP's accounts, excluding State Pension, because of the material level of fraud and error in benefit expenditure¹. State Pension is excluded from the qualification because it has a significantly lower level of fraud and error¹.

What happens next

The government introduced the Public Authorities (Fraud, Error and Recovery) Bill to Parliament in January 2025¹. The NAO reports that DWP had started to develop implementation and evaluation plans for the strategy, and was in the early stages of assessing its strategic controls framework with a view to evaluating cost-effectiveness and strengthening controls where necessary¹. The Spring Statement 2025 forecast that overpayments would fall to the pre-pandemic level of 3.1 per cent by 2028-29¹. DWP is due to receive 52 per cent of its £6.7 billion fraud and error funding, £3.5 billion, in the three years from 2026-27¹.

More on benefits.