The Department for Work and Pensions (DWP) has reported a significant reduction in benefit fraud and error, with figures for the 2024–25 financial year showing a drop in overpayments by £200 million.

The fraud and error rate across the benefits system fell to 3.3%, down from 3.6% in 2023–24, according to the department’s newly published Fraud and Error in the Benefit System report.

DWP Permanent Secretary Sir Peter Schofield hailed the figures as evidence that the department’s crackdown is “heading in the right direction,” noting a 20% reduction in overpayments for Universal Credit, the government’s flagship welfare benefit.

“We have continued to improve payment accuracy and deepen our understanding of the root causes of all types of fraud and error,” Schofield said. “We are making better use of data and addressing inaccuracy efficiently to minimise the impacts of debt on our claimants.”

Audit Watchdog Still Concerned

Despite the progress, the National Audit Office (NAO) has once again qualified the DWP’s accounts—effectively giving them a warning sign—due to the scale of mispayments.

NAO head Gareth Davies cited persistent issues with overpayments stemming from fraud, claimant error, and official error. These include inaccuracies by claimants and administrative mistakes by the DWP, HMRC, or local councils.

Breakdown of the Numbers

  • Total overpaid benefits (2024–25): £9.5 billion

  • Total underpaid benefits: £1.2 billion

  • Overpayment rate: 3.3% of total benefit spending

  • Underpayment rate: 0.4%

The underpayment rate—mostly caused by official error—remains unchanged from the previous year, despite the improved handling of overpayments.

Fraud Types and Tactics

Fraudulent claims remain a serious concern for DWP. Common abuses include:

  • Undeclared income or partners

  • Falsified housing or disability claims

  • Misuse of self-employment income reporting

  • Identity fraud through stolen or fake credentials

Officials say the department is increasingly reliant on data analytics and inter-agency cooperation to flag anomalies and detect abuse.

Passported Benefits & Account Warnings

In a separate development, DWP has warned millions of claimants about changes affecting benefits paid into bank accounts. It is also “reviewing” access to passported benefits—additional entitlements like free school meals or NHS cost exemptions that are linked to receiving PIP or Universal Credit.

No final decision has been made, but campaigners fear that tightening eligibility could affect thousands of vulnerable people.

Political and Public Reaction

Opposition MPs have accused the government of focusing on fraud to justify future benefit cuts. Meanwhile, supporters say the crackdown ensures taxpayer money is spent responsibly.“DWP is under pressure to prove it’s delivering value, especially with benefits bills rising,” said welfare policy analyst Fiona Reeves. “This is progress—but it’s not the full picture, especially when underpayments remain high and the poorest often bear the brunt of mistakes.”

The DWP fraud reduction drive forms part of the government’s wider effort to reduce public spending and regain control of its welfare budget, which has risen sharply post-pandemic due to inflation and economic uncertainty.