Sharon Cyrus
The Department for Work and Pensions (DWP) has issued its latest analysis on inaccuracies within the benefits system for the financial year 2024/25, unveiling startling figures on overpayments and underpayments.
This comprehensive ‘Fraud and Error in the Benefit System’ report serves to highlight the financial impact of both unintentional and fraudulent benefit claims.
Massive £9.5 Billion in Overpayments Uncovered
The DWP estimates that benefit claimants were overpaid by £9.5 billion, amounting to 3.3% of total benefits expenditure. Although this reflects a modest decline from £9.7 billion (3.6%) recorded in the previous financial year, it remains a major concern for the department.
In contrast, underpayments remained static at £1.2 billion, which equates to 0.4% of total benefits disbursed. These errors occur when claimants do not receive the full amount they are entitled to, often due to inaccurate or missing information.
Eligibility Relies on Accurate Information
Eligibility for DWP benefits depends on individual circumstances and meeting certain conditions. The amount paid varies accordingly.
The DWP emphasized the importance of accurate and timely communication from claimants:
“Sometimes people tell us the wrong information or fail to report changes in their circumstances. This can affect the benefits they’re entitled to—either underpaid or overpaid.”
The department stressed that unless claimants report accurate details, it cannot determine whether a person may qualify for increased benefits or if adjustments need to be made.
Six Benefits Under Review for 2025/26
For the current 2025/26 financial year, the DWP is conducting a detailed review to identify cases of ‘unfulfilled eligibility’ across six major benefits:
- Universal Credit
- Housing Benefit (for pension-age recipients, both passported and non-passported)
- Pension Credit
- State Pension
- Personal Independence Payment (PIP)
- Disability Living Allowance (DLA) for children
This review is aimed at ensuring proper entitlement and reducing fraud and error rates in future payments.
Clarifying Types of Errors
To enhance transparency, the DWP classifies discrepancies into three distinct categories:
1. Fraud
A claim is deemed fraudulent when:
- The claimant does not meet the eligibility criteria or receives more than they should.
- The claimant should reasonably be aware of this.
- The benefit payment stops or reduces as a result of the review.
2. Claimant Error
This refers to overpayments caused by inaccurate or incomplete information provided by the claimant or when they fail to notify the DWP of changes in their circumstances without intent to deceive.
3. Official Error
An administrative mistake made by the DWP, local authorities, or HMRC, resulting from delays, misjudgments, or inaction, without external contribution from the claimant.
Benefit Spending Sees £26 Billion Rise
Total DWP benefit expenditure rose sharply from £266.2 billion in 2023/24 to £292.2 billion in 2024/25, marking a £26 billion increase (9.8%). The rise was driven by:
| Benefit | 2023/24 Spending | 2024/25 Spending | Increase |
|---|---|---|---|
| State Pension | £123.9 billion | £142.0 billion | +£18.1 billion |
| Universal Credit | £51.9 billion | £65.3 billion | +£13.4 billion |
| PIP | £21.6 billion | £25.8 billion | +£4.2 billion |
However, a £10.2 billion reduction in Cost of Living Payments helped offset some of this growth.
The DWP’s latest report offers a sobering look at how errors, fraud, and inefficiencies impact the UK benefits system. While overpayments have slightly decreased, the figures remain significant.
With the DWP actively reviewing benefit claims and launching efforts to improve accuracy and fairness, claimants are strongly advised to keep their information up-to-date to avoid financial discrepancies.
The results of the 2025/26 financial year review will be published in May next year, shedding more light on ongoing improvements and challenges within the welfare system.
FAQs
What is the total amount overpaid by the DWP in 2024/25?
The DWP overpaid £9.5 billion, which is 3.3% of total benefit spending.
What are the main reasons for benefit overpayments and underpayments?
Overpayments often result from incorrect or outdated information provided by claimants. Underpayments occur when entitled benefits are missed due to reporting errors or delays.
Which benefits are under review by the DWP in 2025/26?
Six benefits are being reviewed: Universal Credit, Housing Benefit, Pension Credit, State Pension, PIP, and DLA for children.