National Audit Office qualifies opinion on DWP accounts for 35th year running due to level of fraud and error in benefit expenditure
Issues highlighted include that a third of universal credit claims were incorrect in 2022/2023, benefits and state pension amounting to billions of pounds are being underpaid, and that the NI records of 10 million claimants have not been updated properly
The National Audit Office (NAO) Comptroller and Auditor General Gareth Davies has qualified his opinion on the DWP's Annual Report and Accounts for 2022/2023 due to the level of fraud and error.
Highlighting that this is the 35th consecutive year in which the DWP’s accounts have been qualified due to material fraud and error – in relation to total benefit spending of £234.8 billion in 2022/2023 – the Auditor General (from page 271 of the DWP Accounts) outlines key figures for the year, including –
- excluding state pension, but including cost of living payments, the DWP estimates it overpaid £8.2 billion (6.6 per cent) of spending on benefits in 2022/2023 (including £410 million of cost of living payment overpayments), down slightly from the peak in 2021/2022 of 8.6 billion (7.7 per cent) but still higher than before the Covid-19 pandemic;
- most of the fall in the amount the DWP overpaid related to fraud in universal credit, with overpayments falling from 14.7 per cent (£5.9 billion) of expenditure in 2021/2022 to 12.8 per cent (£5.5 billion) in 2022/2023; and
- the DWP estimates that it underpaid 2.1 per cent (£2.6 billion) of benefits (excluding state pension), which is a slightly higher rate than the 1.9 per cent (£2.1 billion) underpaid in 2021/2022.
Providing further details of changes in universal credit overpayment rates, the Auditor General says that –
‘Claims made at the height of the Covid-19 pandemic were overpaid by 28.4 per cent in 2020/2021, and DWP was still overpaying them by 21 per cent in 2022/2023. However, these are becoming a smaller proportion of the claims still in payment. DWP estimates that universal credit claims started after the Covid-19 peak (March to June 2020) were overpaid by 13.1 per cent in 2022/2023. This remains significantly higher than the 9.4 per cent that it overpaid all universal credit claims in 2019/2020.’
The Auditor General also highlights that –
'On average 33 per cent of universal credit claims were incorrect in 2022/2023, equivalent to 1.6 million claims. Most of these claims (24 per cent of all universal credit claims) were overpaid. DWP made at least one overpayment due to claimant fraud in 18 per cent of cases and there was at least one error by the claimant in their favour in 6 per cent. DWP made at least one overpayment error in 3 per cent of universal credit cases. These estimates exclude small over- and under-payments below 10p… '
Turning to consider underpayments of DWP benefits, the Auditor General highlights that –
- most of the rise in underpaid benefits was due to recipients of personal independence payment failing to update the DWP that their medical needs had increased – these underpayments increased to 5.1 per cent (£900 million) in 2022/2023 from 3.8 per cent (£570 million) in 2021/2022;
- the level of state pension underpaid by the DWP has been trending upward for six years to 0.6 per cent (£670 million) in 2022/2023 with most of these underpayments (£580 million) a result of official error;
- an estimated 165,000 state pensioners have been underpaid £1.2 billion due to historical official errors relating to married pensioners, widows and people aged over 80;
- the DWP also estimates that 210,000 people have been underpaid a further £1.3 billion of state pension due to historical issues relating to home responsibilities protection; and
- the national insurance records for 10 million people claiming universal credit have not been updated properly and a small proportion of these may have also been underpaid their state pension.
In relation to the Department's plans to tackle fraud and error more generally, the Auditor General notes that the DWP has committed to generate £1.3 billion of monetary savings through counter-fraud activities in 2023/2024, adding that –
'This is more than was achieved in 2022/2023 (£1.14 billion) but less than was achieved in 2021/2022 (£1.66 billion) when there were one-off savings from preventing a single large ID fraud attack. These savings would have to grow significantly year-on-year to achieve the reduction in fraud and error to pre-pandemic levels outlined in its forecasts, if DWP’s other assumptions prove to be accurate.'
NB – the DWP has confirmed separately today that it has set the new £1.3 billion target for 2023/2024.
As a result of his assessment of the Department's work to tackle error and fraud as summarised in the Annual Report and Accounts, the Auditor General says that the basis for qualifying his opinion on regularity –
- the estimated level of overpayments attributable to fraud and error where payments have not been made for the purposes intended by Parliament; and
- the estimated level of overpayments and underpayments in such benefit expenditure which do not conform to the relevant authorities.
For more information, see Department for Work and Pensions Accounts 2022/2023 from gov.uk