Department for Work and Pensions underpays benefit claimants by £2.6bn

Benefit claimants were underpaid to the tune of £2.6bn last year, new figures show.

The Department for Work and Pensions (DWP) said 1.2 per cent of total benefit expenditure was underpaid due to fraud and error in the financial year to April 2022.

Over the same period, the estimated value of overpayments was £8.6bn, some 4 per cent of the total benefit expenditure. That results in a net overpayment of £6bn.

The DWP said the underpayment rate had remained broadly steady since the previous year, though overpayments were occurring more frequently compared with the 12 months prior, up from £8.2bn in the financial year that ended in 2021.

For those receiving universal credit, the DWP underpaid by £410m, but overpaid by £5.9bn.

The total overpayment rate for the state pension was £110m, while underpayment totalled £540m.

Housing Benefit was overpaid by £860m, but underpaid by £210m.

Employment and Support Allowance underpayment amounted to £320m, while overpayment was £500m.

Pension Credit was overpaid by £350m, and there were £100m of underpayments.

The DWP states that claimants may have to pay back the benefit if they have been overpaid, though there is discretion for case officers when investigating discrepancies.

Charity Child Poverty Action Group warned in 2019 that Universal credit claimants were routinely “left in the dark” about how much they should receive and how they can challenge decisions, putting them at risk of being underpaid and falling into debt.

In one case, a working mother who had two part time jobs claimed universal credit and the award was much lower than she was expecting, but she couldn’t identify from her statement that there was anything wrong with it.

When she saw a welfare rights adviser, they picked up that there was no child element included for her daughter and no work allowance included for a working parent.

This meant they were approximately £400 worse off each month as a result of errors in their payment calculations.

If an individual has been underpaid, the DWP should recognise the issue and pay what is owed in a lump sum.

However, claimants can contact the DWP directly if they believe they have been underpaid and have not been informed by the department.