The Department for Work and Pensions (DWP) has confirmed that six benefits have been underpaid, dealing a blow to claimants amid the cost of living crisis. The latest DWP fraud and error report reveals that Universal Credit, Pension Credit, Disability Living Allowance (DLA), Personal Independence Payment (PIP), the State Pension, and Housing Benefit are all affected.
PIP Underpayment Remains Stable
The PIP underpayment rate stayed at 0.2% (£70 million) in the financial year ending (FYE) 2026, unchanged from 2025 (£40 million). The DWP explained that this rate is much smaller than the overpayment rate and has remained consistent since measurement restarted in FYE 2023. All underpayments in FYE 2026 were due to Award Determination errors, meaning the DWP incorrectly determined claimants' entitlement. Less than 1 in 100 PIP claims were underpaid.
Pension Credit Underpayment Rises
Pension Credit underpayment increased to 1.3% (£80 million) in FYE 2026, up from 1.2% (£70 million) in FYE 2025. This represents a slight rise in the proportion of claimants not receiving the correct amount.
Disability Living Allowance Sees Significant Increase
The DLA underpayment rate jumped to 2.3% (£190 million) in FYE 2026, compared to 1.0% (£70 million) in FYE 2024. This rise is statistically significant, highlighting growing errors in this benefit.
Housing Benefit Underpayment Declines
Housing Benefit underpayment decreased to 0.3% (£40 million) in FYE 2026, down from 0.4% (£60 million) in FYE 2025, showing improvement in accuracy.
State Pension Underpayment Unchanged
The State Pension underpayment rate remained at 0.3% (£390 million) in FYE 2026, the same as in FYE 2025 (£430 million). Despite the rate being stable, the monetary amount is substantial.
Universal Credit Underpayment Drops
Universal Credit underpayment fell to 0.4% (£350 million) in FYE 2026, compared to 0.6% (£390 million) in FYE 2025, indicating some progress in reducing errors.
Overpayments Also on the Rise
The report also highlights that overpayments are climbing. The Public Accounts Committee (PAC) warned that £9.5 billion of benefit expenditure (excluding State Pension) was overpaid in 2023-24, up from £8.2 billion in 2022-23. The PAC criticized the DWP's defense of its performance, which cited a 'headwind' of increasing fraud propensity in society. The committee deemed this a 'dangerous mindset', stressing that the DWP must improve its defenses to ensure claimants receive the correct amount.
