Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Rejected
Challenges in controlling Universal Credit fraud relating to household composition persist
Recommendation
We asked the Department about its controls to prevent fraud and error, particularly in relation to Universal Credit. It said that, because it was monitoring controls, it was able to identify where there were possible weaknesses and make continuous improvements. It noted that it was harder to have effective controls in some areas than in others.12 We pressed the Department about controls in key loss areas, such as fraud and 6 C&AG’s Report (overpayments), paras 7, 8 7 C&AG’s Report (overpayments), para 2.25 8 Letter from DWP to the Public Accounts Committee dated 1 December 2025 9 Q 3 10 Q 17 11 Committee of Public Accounts, DWP Customer Service and Accounts 2023–24, Sixth Report of Session 2024–25, HC 354, January 2025 12 Q 13 8 error relating to people living together.13 Written evidence we received highlighted that this is the second most common cause of Universal Credit overpayments, accounting for £1.2 billion in 2024–25.14 DWP acknowledged that family life was fluid in many cases and living together was difficult to define.15
Government Response Summary
The government disagrees with setting a more stretching ambition for reducing overpayment rate until it agrees with the NAO on what constitutes a cost-effective control environment, but aims to reduce fraud and error levels to 2.8% by 2028-29.
Government Response
Rejected
HM Government
Rejected
1. PAC conclusion: The department has started to make progress in bringing down the level of benefit overpayments, but the current rate is still too high. 1. PAC recommendation: The department should set out in its Treasury Minute response to this report a more stretching ambition for reducing the overpayment rate, going beyond what is forecast to a level that indicates that it has cost-effective controls over benefit spending. 1.1 The government disagrees with the Committee’s recommendation. 1.2 As part of a programme of work on lifting the Department for Work and Pension’s account qualification, alongside continued fraud and error reductions, the department is working with the National Audit Office (NAO) to agree what constitutes a cost-effective control environment. Until this position is agreed, the department is not yet able to accept this recommendation. 1.3 The department aims to reduce overall fraud and error levels to 2.8% by 2028-29. This represents an ambitious programme of work that has been scored by the Office for Budget 34 Responsibility (OBR). Achieving 2.8% would be the lowest cross-welfare overpayment rate since the introduction of tax credits in 2003-04 and is below the pre-pandemic level of 3.1%. This would be a remarkable achievement, well in excess of previous expectations of the Committee. 1.4 The department is committed to continuing to reduce fraud and error to deliver value for money for taxpayers within the policy framework and funding agreed by Parliament. The strategy is working, with the National Statistics of fraud and error in the benefit system showing the rate of fraud and error in Universal Credit falling by one fifth in 2024-25 over the previous year and total departmental fraud and error rate reduce from 3.6% to 3.3%. 1.5 The department will continue to track year-by-year progress towards 2.8% through the published fraud and error statistics and will report on the spring OBR-certified forecasts to demonstrate future deliverable reductions in fraud and error in the 2025-26 Annual Report and Accounts.