NAO publishes value for money report on DWP's tackling of benefit overpayments due to fraud and error

The National Audit Office published a value for money report on 22 October 2025 examining whether the Department for Work and Pensions has an effective approach to tackling benefit overpayments caused by fraud and error¹. The NAO concluded that the proportion of benefit expenditure overpaid remains too high, but that 2024-25 figures suggest overpayment levels are now moving in the right direction, including what it called a particularly welcome drop in the Universal Credit overpayment rate¹.

The DWP makes welfare payments to more than 23 million people across Great Britain¹. In 2024-25 it paid £290.8 billion in benefits, including State Pension, and spent £7.3 billion on running costs¹. The NAO notes that some of the department's customers are vulnerable or have complex needs, for example due to poverty, age, health problems or disabilities¹.

The report sets out the scale of the problem. For the past 37 years, successive Comptroller and Auditor Generals have qualified their audit opinions on the regularity of the DWP's accounts because of the material level of fraud and error in benefit expenditure, which the NAO describes as one of the department's most persistent and pressing risks¹. Where fraud or error results in a payment to someone not entitled to it, or at a rate differing from the amount set in legislation, the NAO says the overpayment or underpayment does not conform with Parliament's intention and is irregular¹.

The NAO assessed value for money against two criteria: whether the DWP has made the progress it expected in reducing overpayments, including achieving its objectives and implementing key initiatives effectively, and whether it is well placed to reduce overpayments going forwards, including whether it has set out a clear strategy and specified what success will look like¹.

The NAO said the DWP has successfully deployed a range of counter-fraud interventions in recent years, including making use of data analytics, and that these are generating savings and helping it to detect and correct overpayments¹. It said improving processes and controls to stop overpayments before they occur, and before debt builds up, is the best way to secure value for money in this area¹. The DWP has set an ambition to reduce overpayment rates to pre-pandemic levels, but the NAO said it will need to go further if the longstanding qualification on the regularity of benefit expenditure is to be removed¹.

The NAO described the DWP's new strategy as wisely incorporating a greater focus on prevention and an intention to address systemic challenges, including through better use of data and organisation-wide accountability for tackling fraud and error¹. It said the department must now put its high-level vision into practice and develop an effective approach to implementation, which it can use to guide its actions, track progress and manage risks, including the potential for adverse impacts on claimants¹.

Why it matters for households

Overpayments arise when someone is paid a benefit they are not entitled to, or at a rate different from the amount set in legislation¹. The report concerns the DWP's systems and controls rather than any individual claim, and it does not set out new rules for claimants. The figures cover 2024-25, the year in which the DWP paid £290.8 billion in benefits to more than 23 million people¹. The NAO's finding that the 2024-25 overpayment rate improved, including for Universal Credit, is a statement about the share of total spending paid in error, not about the position of any particular household¹. The NAO also flags the potential for adverse impacts on claimants as a risk the DWP should manage as it implements its approach¹. How overpayments are recovered and how deductions are taken from benefits is covered in our guide to benefit overpayments and deductions from benefits, with wider coverage under benefits and debt.

What happens next

The NAO said the next few years will be key to the DWP's success, and that extra funding available for fraud and error activity, together with lessons from interventions to date, presents opportunities to increase the scale and impact of its approach¹. It said the department must develop an effective approach to implementation to guide its actions, track progress and manage risks¹. No further dates or milestones are set out in the report.