Government introduces fraud and error legislation

The Public Authorities (Fraud, Error and Recovery) Bill was introduced to Parliament in January 2025, the National Audit Office has said¹. The legislation sits alongside the Department for Work and Pensions' fraud and error work, which the NAO examined in a report published on 22 October 2025¹.

The NAO found that the estimated proportion of benefit expenditure overpaid by the DWP fell from 3.6% (£9.7 billion) in 2023-24 to 3.3% (£9.5 billion) in 2024-25, but had not returned to pre-pandemic levels¹. In 2019-20 the estimated overpayment rate was 2.4% on the National Statistic for fraud and error in the benefit system, and 3.1% on the 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% by 2028-29¹.

Universal Credit accounted for 67% of overpayments by value in 2024-25¹. Its estimated overpayment rate fell by 2.7 percentage points, from 12.4% in 2023-24 to 9.7% 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%¹.

The DWP's refreshed fraud and error strategy was approved in November 2024, after it assessed its commitments, progress and operating model¹. The NAO said the 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. The government has awarded the DWP £6.7 billion of dedicated funding for fraud and error activity over the nine years from 2020-21 to 2028-29, with 52% of the total (£3.5 billion) due in the three years from 2026-27¹.

The DWP paid £290.8 billion in benefits including State Pension in 2024-25 and spent £7.3 billion on running costs, making payments to more than 23 million people across Great Britain¹. It saved an estimated £4.5 billion in Annually Managed Expenditure through counter-fraud activities from April 2022 to March 2025, achieving £1.35 billion in 2023-24 against a target of £1.3 billion and £2.0 billion in 2024-25 against a target of £1.7 billion¹. Successive Comptroller and Auditor Generals have qualified their audit opinions on the regularity of the DWP's accounts, excluding State Pension, for 37 years because of material fraud and error¹.

Why it matters for households

The figures cover benefit payments made to more than 23 million people, so changes to verification and information-gathering powers affect claimants across Great Britain¹. Overpayments arise where a benefit is paid to someone not entitled to it, or at a rate different from the amount set in legislation; the NAO says such payments are irregular¹. The main causes of Universal Credit overpayments in 2024-25 were claimants, mainly self-employed, not declaring work income in full, not declaring that they lived with a partner, and not declaring all financial assets¹. The DWP has used a machine learning model since May 2022 to flag potentially fraudulent claims for Universal Credit advances, and has one model deployed with four others in development and testing¹. The NAO also found the DWP's IT systems are not fully integrated and do not let staff view all the information it holds about a claimant¹. The NAO's work did not cover benefit underpayments¹.

What happens next

The NAO reports that the DWP had started to develop implementation and evaluation plans for its strategy at the time of its work¹. Funding is backloaded, with the DWP due to receive 52% of the £6.7 billion total in the three years from 2026-27¹. The Spring Statement 2025 forecast overpayments falling to 3.1% by 2028-29¹. The NAO says the DWP is in the early stages of assessing its strategic controls framework¹.