The Department for Work and Pensions (DWP) has announced "significant changes" to six benefits following the release of its latest Fraud and Error in the Benefit System report. The report, published by the Labour government, estimates that 3.2 per cent of benefit expenditure was overpaid in the financial year ending 2026, equating to approximately £9.9 billion.
Benefits Affected
The DWP has identified "statistically significant changes at the benefit level" for Universal Credit, Pension Credit, Housing Benefit, Personal Independence Payment (PIP), the State Pension, and Disability Living Allowance (DLA). The department pays welfare benefits to around 24.3 million people.
Universal Credit
Overpayments due to Earnings/Employment (under-declaration of income from work) decreased to 1.8 per cent from 2.5 per cent. The majority of these errors were due to Earnings/Employment Fraud, which fell to 1.5 per cent from 2.2 per cent. Self-Reported Earnings Fraud dropped to 0.2 per cent from 0.4 per cent.
Pension Credit
The proportion of claims that were either overpaid or underpaid increased to 37 in 100 claims from 31 in 100 claims. This was driven by a sharp rise in overpaid claims (33 in 100 claims from 28 in 100 claims). Overpayments due to Capital Claimant Error (under-declaration of financial assets) increased to 2.5 per cent from 1.8 per cent.
State Pension
No statistically significant changes were measured. The overpayment rate remained at 0.2 per cent (£230 million), consistently the lowest of all DWP benefits. Underpayments stayed at 0.3 per cent (£390 million), with National Insurance contribution errors being the largest reason, including issues with historic Home Responsibilities Protection.
Housing Benefit
The proportion of incorrect claims dropped to 18 in 100 from 20 in 100, driven by a decrease in overpaid claims to 15 in 100 from 17 in 100. The total overpayment rate decreased to 6.2 per cent (£800 million) from 7.2 per cent (£1,100 million). Overpayments due to Earnings/Employment fell to 0.9 per cent from 1.2 per cent, and those due to Income from Occupational and Personal Pensions decreased to 0.1 per cent.
Personal Independence Payment (PIP)
The proportion of incorrect claims increased to 4 in 100 from 2 in 100, driven by a rise in overpaid claims. The total overpayment rate increased to 2.3 per cent (£660 million) from 1.3 per cent (£330 million). Functional Needs (claimants failing to report improvement) remained the largest reason, rising to 1.7 per cent from 0.8 per cent. The increase was almost exclusively due to Fraud, which rose to 1.4 per cent from 0.4 per cent.
Disability Living Allowance (DLA)
Incorrectness increased to 9 in 100 claims in FYE 2026 (2 overpaid, 7 underpaid), up from 4 in 100 claims in FYE 2024 (1 overpaid, 3 underpaid).
