Benefit fraud during pandemic cost taxpayers an ‘eye-watering’ £10.1bn

Universal credit pandemic fraud cost the taxpayer almost five times more than all other years put together, official figures show.

Over £10.1 billion was lost to scammers during 2021 and 2022 compared to a total of £2.1 billion for the previous five years, according to data published by the Department for Work and Pensions (DWP).

This means that during the past two years, 12.9 per cent of Universal Credit money was fraudulently claimed which equates to £1 out of every £8.

Jonathan Ashworth, Labour's shadow work and pensions secretary, accused the Government of costing the taxpayer “eye-watering” sums of money in benefit fraud.

“The Government has lost billions of pounds to fraud, at a time when families face a cost of living tsunami,” he said.

“During the pandemic, fraud and error in the Universal Credit system rose to over 25 per cent. The Conservatives effectively left the till open to organised crime.”

£8.3 billion overpaid

In 2022, the DWP lost £5.25 billion to universal credit fraud on top of £4.88 billion the previous year. This compares to a total of £2.113 billion that it lost between 2016, when the department’s records began, and 2020.

The number of Universal Credit claimants has increased over the period, but the proportion of fraud has also gone up, rising from 2.8 per cent in 2016 to 18.3 per cent in 2022.

Fraud is defined by DWP as cases where the conditions for receipt of benefit or the rate of benefit payment are not met, the claimant can reasonably be expected to be aware of this, and the benefit stops or reduces as a result of the review.

This week DWP is due to publish its accounts for the financial year 2021-22. These have been audited by the National Audit Office and will reveal the full scale of benefit fraud during the pandemic.

An official report published last year found that benefits fraud and overpayments hit a record high last year after the Government relaxed checks on new Universal Credit claimants.

The DWP estimates it overpaid by £8.3 billion of a total benefits bill of £111.4 billion in 2020/21, an increase of £3.8 billion on the previous year.

The 7.5 per cent proportion of fraud and erroneous payments is the highest since records started in 2005, according to the National Audit Office.

The body, which scrutinises government spending, said the coronavirus pandemic was the main cause of the increase after checks were relaxed to ensure a record number of new Universal Credit claims could be processed and paid promptly.

A surge in new claims at the start of the pandemic led to a doubling of the number of people claiming Universal Credit, from three million to six million.

Many new claimants had more complex claims, such as self-employed income, which are more vulnerable to fraud, the National Audit Office said.

It also identified several organised criminal attacks during the pandemic, with fraudsters targeting Universal Credit by making claims in other people’s names.

The department is owed £5 billion in overpayments, placing additional strain on its resources and potentially causing uncertainty and hardship to claimants, the spending watchdog said.

Its report also found that an estimated 132,000 pensioners have been receiving less state pension than they are entitled to due to ongoing failings.

A £1 billion pot has been set aside to reimburse people who have been underpaid their state pension over the past 30 years.

A DWP spokesperson said: “It’s unacceptable to see that fraud rose as a result of callous criminals exploiting measures to help those in need during the pandemic, when we rightly prioritised ensuring the welfare safety net reached those suddenly in difficulty. Our new fraud plan will root these crooks out of the system, while protecting it from new threats in the future.

“Work to address this challenge is well under way and we have already reviewed 900,000 cases in the past year.

“Under our fraud plan, we’ll add thousands of trained specialists to stop fraud in the benefit system, seek new powers to increase access to bank account data, and ensure we can directly arrest suspected fraudsters.”