National Audit Office (NAO) analysis shows benefit overpayments and underpayments by the DWP have reached their highest levels since 2005-6, when the current method of estimation was introduced.
And the DWP expects the value of overpayments alone to rise as Universal Credit (UC) rolls out.
According to the NAO, the DWP annual accounts have overpayments up to £4bn (4.6%) in the last year – from £3.7bn (4.4%) over the previous period.
As such, NAO head Gareth Davies has issued a qualified opinion for the DWP’s annual accounts, the 31st time this has happened.
The NAO said that benefit payments are susceptible to both deliberate fraud and unintended error by claimants and the department.
Overpayment recovery leaves already struggling claimants facing income deductions, while underpayments can mean households do not get the support to which they are entitled.
“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,” Davies said.
“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.”
The NAO notes that the DWP expects the value of overpayments to continue to rise over the next six years, mainly due to the rollout of UC.
The estimated overpayment rate for UC 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 UC, where it accounts for 30% of overpayments.