DWP Errors Cost £1.7 Billion in 2018 Says Report

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The National Audit Office (NAO) has released its annual audit of the Department for Work and Pensions’ (DWP) accounts. The government spending watchdog has reported that benefit payment errors are at their highest since 2005/06 and that the DWP is losing more money through its own errors than it does by fraud. Universal Credit has also been criticised for having the worst level of errors and worse still, the DWP expects this to rise over the next few years.

The National Audit Office (NAO) is an independent body tasked with overseeing spending by government departments. Yesterday, June 27th, they released their annual report on the Department for Work and Pensions (DWP) spending in 2017/18.

The watchdog has found several areas of concern with Amber Rudd’s department which look likely to get worse in the next few years.

Over and Underpayment Levels Rise

DWP Benefit payment levels 2008 - 2019
DWP Benefit Over & Under payment levels 2008 – 2018/19

It was found that the estimated level of overpayments has increased to 4.6% (£4.0 billion) of estimated total amount spent on benefits (£86.6 billion). This is up from 4.4% (£3.7 billion) in 2017-18. The auditor noted;

“This is the highest rate since the Department introduced its current method for estimating fraud and error in 2005- 06 .”

Universal Credit over-payments sit at 8.6% representing the worst a benefit has performed since 2003/04. The DWP also expects this percentage to RISE as the roll-out of Universal Credit continues.

Benefit underpayments, excluding State Pension, are also at their highest estimated rates since records began. The estimated level of underpayments in 2018/19 increased to 2.2% (£1.9 billion) from 2.0% (£1.7 billion) in 2017-18.

The DWP forecasts that the value of overpayments across all benefits will increase from £4.1 billion in 2018-19 to £5.4 billion by 2024-25, an increase of £1.3 billion. The majority of this increase they predict will be related to overpayments of Universal Credit.

Those worst group affected by under payments is disabled people claiming Personal Independence Payment (PIP). 3.8% of the PIP budget was affected by PIP claimants not getting what they were due fro the DWP. The NAO found that the main cause for both over and under payments on PIP was;

“Claimants not reporting changes in functional need due to either deterioration or improvement in their medical condition.”

Despite being introduced in 2013, both PIP and Universal Credit continue to cause problems for both the DWP and claimants with some of the most vulnerable being affected.

The NAO found that the DWP made a net loss of £3 billion in the 2018/19 tax year. This was calculated after any recoveries had been made from claimants and local authorities. Given that claimants are struggling due to the benefit freeze, this figure will not increase confidence in the departments handling of its finances.

Some will say that if the DWP improved it’s processes, that money could be used to help out those most in need.

DWP Errors

Over £580 million worth of benefits were underpaid last year due to errors by the DWP themselves, this is up from £300 million in 2017/18.

The National Audit Office estimates that £1.4 billion of the total fraud and error is due to “official error”. Approximate £0.7 billion in overpayments, and £0.7 billion in underpayments is lost just due to staff errors. The report noted;

“The Department seeks to control official error through its quality assurance ‘tier’ checks. However there remains work to do here as these initiatives have not achieved a reduction in official error.”

In addition to the £1.4 billion of official errors, a further £321 million is lost due to DWP systems not being able to deal with any income fro other benefits such as Tax Credits. The department are said to be working to improve this but no timescale has been given on when a solution might be forthcoming.


Like last year, the main loss was due to DWP errors (1.2 bn). That figure has now risen to over £1.7 billion. While claimants are feeling the pinch and foodbank use is rising, the DWP continues to make more and more mistakes.

Disabled people are particularly hard hit. PIP claimants have been shown to be the most likely of any benefit claimant to be underpaid. Given the additional costs having a disability brings, this is simply unacceptable.

The conclusion that losses are only going to increase shows has inept the entire department is. Instead of trying to resolve these mistakes, they’ve just decided to accept them at claimants expense.

This report by the NAO shows that the Department for Work and Pensions (DWP) is not delivering value for money and therefore needs overhauling completely.