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DWP identifies key causes of Universal Credit fraud losses | Personal Finance | Finance

Department For Work And Pensions

The Department for Work and Pensions is clamping down on benefit fraud. (Image: Getty)

The Department for Work and Pensions (DWP) has identified key contributors to the rampant Universal Credit fraud as it gears up for a renewed offensive against those gaming the system.

Startling figures released by the DWP reveal that Universal Credit fraud totalled a staggering £5.66 billion last fiscal year, marking an increase from £4.93 billion in the financial year 2022-2023.

The Public Accounts Committee last month voiced their alarm over the surging fraud levels within Universal Credit, which was initially rolled out to consolidate six older benefits into one integrated, robust, and supposedly tamper-proof system.

The committee lamented in their report: “The Department also intended that Universal Credit would generate significant benefits by reducing fraud and error, but cannot measure impact in this area.

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The DWP lost billions to fraud last financial year. (Image: Getty)

This Committee has been examining Universal Credit for more than a decade, tracking its implementation and impact. During that time we have regularly highlighted increasing levels of fraud and error and made recommendations for improvement.”

They continued with a critical tone: “However, rather than providing us with assurance about the actions it is taking, the Department fell back again on its explanation of a societal increase in the propensity to commit fraud.

“We are not convinced why this must inevitably lead to growing losses to the taxpayer. We encourage our successor Committee to keep a close eye on this issue and to continue to hold the Department to account for its progress.”

Released figures reveal an alarming increase in total Universal Credit overpayments, highlighting both claimant and DWP staff errors, along with fraud. The figure shot up to £6.46 billion in 2023-2024 from £5.5 billion the previous year, reports Birmingham Live.

Bank of England 10, 20 and 50 notes

DWP figures have shown where bogus claims are coming from. (Image: Getty)

Errors by claimants rose to £410 million from £290 million in 2022-2023, while DWP staff mistakes led to £380 million in overpayments, a rise from £270 million a year earlier.

The chief culprit for fraud in 2023/2024 was found to be “under-declaration of income from work” according to the DWP. While Universal Credit payments decrease by 55p for every £1 earned, advisors still insist people fare better economically through employment than completely relying on benefits.

Failure in providing evidence or engaging with the DWP was cited as the second most prevalent fraud factor, closely followed by under-reporting of financial assets. In an eye-opening revelation, a pilot scheme utilising DWP’s extended powers to examine claimants’ bank accounts spotted 60,000 recipients with an average of £50,000 saved, despite the Universal Credit stipulation capping eligibility at £16,000.

Other types of scams are failing to report a partner they live with, misrepresenting their ‘household composition’, inflating housing costs for larger rent contributions from the DWP, fraudulently claiming additional Universal Credit supplements, exceeding the rule limiting stays abroad to one month and concealing other income forms.

Notably, the ‘cohabitation’ fraud category has seen a significant dip, noted by the DWP as “statistically significant.”

Cabinet Meeting in Downing Street

Mel Stride has declared war on fraudsters. (Image: Getty)

More revealing data showed that the rate for overpaid Universal Credit slipped to 22 per 100 in 2023-2024, slightly better than 24 per 100 in the preceding year.

The DWP has released new schemes expected to stem benefit fraud losses, predicted to reach £9 billion by 2028. This includes introducing a fresh Fraud Bill, equipping it with powers equal to HMRC’s to combat benefit fraud, enabling arrests, searches, and seizures.

Boosting its stance on fraud, the DWP is hiring more than 2,500 extra agents for ‘targeted case reviews,’ aimed at detecting irregularities in Universal Credit claims. Coupled with the existing benefits review team, nearly 6,000 personnel will scrutinise people’s entitlements to benefits.

Work and Pensions Secretary Mel Stride has declared war on benefit fraudsters, stating: “We are scaling up the fight against those stealing from the taxpayer, building on our success in stopping £18 billion going into the wrong hands in 2022-23.

“With new legal powers, better data and thousands of additional staff, our comprehensive plan ensures we have the necessary tools to tackle the scourge of benefit fraud.”

The crackdown comes as the UK sees its largest ever benefit fraud case prosecuted, with a gang stealing over £50 million in Universal Credit through a small shop front in north London.

Bulgarian nationals Galina Nikolova, 38, Stoyan Stoyanov, 27, Tsvetka Todorova, 52, Gyunesh Ali, 33, and Patritsia Paneva, 26, all pleaded guilty to charges related to fraud and money laundering at Wood Green Crown Court for their roles in the colossal scam.

In brazen WhatsApp messages, they mocked the Department for Work and Pensions (DWP) for its naivety in approving thousands of fraudulent Universal Credit applications, using either real or stolen identities, from October 2016 to May 2021. Sentencing for the quintet is expected imminently.

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