Government pledges to reduce benefit payment errors

The government has promised to tackle waste in the benefit budget after figures revealed that errors led to billions of pounds being lost last year.

According to data obtained by the Telegraph, mistakes made either by claimants or the Department for Work and Pensions (DWP) led to the loss of £2.4bn from the benefit budget in 2023.

The newspaper, which disclosed the figures following a freedom of information request to DWP, said this means nearly £27m in benefits is being paid out in error every day.

Following the publication of the data, the government has said it will “not tolerate waste anywhere in public services, including in the social security system”. 

“We are determined to reduce error and are currently exploring all options on how best to achieve our goal,” a DWP spokesman commented 

Driving people into poverty

While we welcome the government taking steps to reduce error, it’s important that when mistakes are made this isn’t driving people deeper into debt.

Nearly one in three (30%) of the people we’ve helped over the past 12 months owe money to DWP. Of those, almost 10,000 are having to pay back benefit overpayments that occurred due to administrative errors completely beyond their control.

When someone is paid too much in benefits, DWP often recoups the overpayment by reducing that person’s award for the current year. As a result, people are struggling to pay for childcare, heat their homes and cover the cost of essentials like food.

The rate at which these errors are happening is increasing due to the managed migration of people from benefits that are being phased out onto universal credit.

What we want to see

This current state of affairs can’t be allowed to continue. We want:

• better communication and collection practices for benefit overpayment cases that are the result of official error to make sure people aren’t pushed deeper into poverty through no fault of their own
• a new hotline for debt advisers to contact DWP on behalf of claimants so that benefit issues don’t delay people getting the help they need
• a simplified benefit system so people don’t miss out on support they’re entitled to – currently, an estimated £23bn goes unclaimed because it is overly complicated and difficult to navigate

£329m of payment errors written off

On occasions where it is decided there is little or no chance of getting back overpaid benefits, debts may be written off.

Last year, a total of £329m worth of benefits that had been paid out by mistake were reportedly written off by DWP.

The Telegraph also noted that more than 500 people were allowed to keep at least £20,000 in benefits that had been paid to them in error.

But this is a drop in the ocean compared to the number of people being forced to pay back money they were given in error.

All eyes on benefits in budget

The issue of state benefits is high on the political agenda right now, following the government’s decision to means test winter fuel payments.

Ministers hope the move to restrict payments to those eligible to receive pension credit will save taxpayers £1.5bn and help plug a £22bn “black hole” in the public finances.

During the recent general election campaign, Labour repeatedly promised not to increase taxes on “working people”.

However, prime minister Keir Starmer and chancellor Rachel Reeves have both acknowledged that “painful” decisions need to be made to get the economy back on track.

As a result, it is likely that the benefits system could be one area that the chancellor looks at in next month’s budget to stimulate growth.

Speaking to BBC News, Reeves said: “I’ve been really clear that the budget on October 30 will require difficult decisions on tax, on spending, and on welfare.

“But the prize is economic growth, good jobs, paying decent wages in all parts of our country, to realise the huge potential that we have.”