National Audit Office Press Releases
Department for Work and Pensions annual report and accounts 2018-19
Benefit overpayments and underpayments are at their highest levels since 2005-6, when the Department for Work and Pensions (the Department) introduced its current method for estimating these payments.1
Excluding State Pension, where the level of fraud and error is very low, the estimated level of overpayments has increased to 4.6% (£4.0 billion) of related benefit spending (£86.6 billion), from 4.4% (£3.7 billion) in 2017-18. Underpayments have increased to an estimated 2.2% (£1.9 billion) of benefit spending, from 2.0% (£1.7 billion) in 2017-18. The Department expects the value of overpayments to continue to rise over the next six years, mainly due to the roll-out of Universal Credit.
The Comptroller and Auditor General of the National Audit Office, Gareth Davies, has therefore qualified his opinion on the regularity of the Department for Work and Pensions’ 2018-19 financial statements. This is the 31st year that the Department’s accounts have received a qualified opinion.2
Benefit payments are susceptible to both deliberate fraud and unintended error by claimants and the Department. When overpayments are recovered by the Department, this can lead to problems for claimants who face deductions from their income. Underpayments can mean households do not get the support they are entitled to.
The estimated overpayment rate for Universal Credit is 8.6%, which is the highest for any continuously measured benefit since Tax Credits in 2003-04. Claimants failing to declare their income and earnings correctly was the largest cause of overpayments across the Department’s benefits, including for Universal Credit where it accounts for 30% of overpayments.
Personal Independence Payment (PIP) has the highest level of underpayments, at 3.8% of expenditure. The primary cause of both overpayments and underpayments in PIP is claimants not reporting changes in functional need due to either deterioration or improvement in their medical condition.
“The value of fraud and error in benefit spending is a longstanding and costly issue for the Department. I am concerned that this has reached its highest rate since the current estimation method was introduced, and that the Department expects overpayments to rise even further.
“I would like to see the Department make better use of its data to identify misreporting of benefit income and eradicate this cause of overpayments and underpayments. It should also work to understand the reasons for high fraud and error rates for Universal Credit, and explore how it can help PIP claimants provide accurate and timely information so that they are not underpaid their benefits.”
Gareth Davies, the Comptroller and Auditor General
Notes for Editors
- The Department estimates the level of fraud and error overpayments and underpayments in benefits by reviewing a sample of claimants’ cases. For some benefits it does this every year, other benefits are only considered periodically and earlier estimates of fraud and error in those benefits are rolled forward.
- The Department’s accounts have been qualified every year since 1988-89, due to a material level of irregular expenditure where fraud and error leads to overpayments and underpayments of benefits.
- Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
- The National Audit Office (NAO) helps Parliament hold government to account for the way it spends public money. It is independent of government and the civil service. The Comptroller and Auditor General (C&AG), Gareth Davies, is an Officer of the House of Commons and leads the NAO. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether government is delivering value for money on behalf of the public, concluding on whether resources have been used efficiently, effectively and with economy. The NAO identifies ways that government can make better use of public money to improve people's lives. It measures this impact annually. In 2018 the NAO's work led to a positive financial impact through reduced costs, improved service delivery, or other benefits to citizens, of £539 million.
NAO Press Office
+44 (0)20 7798 7400 or email email@example.com
Latest News from
National Audit Office Press Releases
Her Majesty’s Revenue & Customs annual accounts 2018-1922/07/2019 12:15:00
Personal Tax Credits overpayments have increased to 5.7% of tax credits spending (£1.46 billion), exceeding the HM Revenue & Customs’ (HMRC’s) target of 5%, while underpayments stood at 0.6% of expenditure (£170 million), based on estimates for 2017-18. HMRC expects levels of error and fraud in tax credits to rise further when estimated for 2018-19.
Tackling serious and organised crime01/07/2019 11:15:00
Serious and organised crime is evolving at a rapid rate. The government recognises the seriousness of this challenge and is responding, but there are still significant and avoidable shortcomings to its approach, according to the National Audit Office (NAO).
Investigation into NHS Property Services Limited27/06/2019 11:15:00
Yesterday’s report by the National Audit Office has found that NHS Property Services Limited (the Service) lacks the powers it needs to make its tenants sign lease agreements and pay their rent, which has contributed to increasing levels of outstanding debt.
Challenges in using data across government24/06/2019 09:15:00
The National Audit Office (NAO) recently published a report examining how government uses data to implement its policies and reform public services.
The effectiveness of Official Development Assistance expenditure21/06/2019 11:15:00
The government needs to do more to demonstrate its £14 billion of spending each year on Official Development Assistance (ODA)1 is effective across the full range of activities it supports, according to yesterday’s report by the National Audit Office.
Help to Buy: Equity Loan scheme – progress review14/06/2019 12:15:00
The Help to Buy Scheme has increased home ownership and housing supply. However, many of those using the scheme would have been able to buy a home anyway, according to yesterday’s report by the National Audit Office (NAO).
Ensuring food safety and standards13/06/2019 09:15:00
The Food Standards Agency (FSA) and other departments must work together to make food regulation financially sustainable and manage emerging risks such as climate change, population growth, crop disease, food fraud and potentially importing more food from non-EU countries, according to yesterday’s report by the National Audit Office (NAO).
Departments’ use of consultants to support preparations for EU Exit10/06/2019 11:15:00
The National Audit Office (NAO) recently published its investigation into the use of consultants by government departments to support preparations for EU Exit.
Early review of the new farming programme06/06/2019 11:15:00
The government’s new farming policy will be a significant change for farmers in England and the Department for Environment, Food & Rural Affairs (Defra) has a lot to do to prepare for its implementation at a time when its resources are already under immense pressure from its preparations for EU Exit.