Nearly £1 in every £10 of Universal Credit was wrongly paid last year with an eye-watering £5.2bn lost to fraud as Labour faces demands to get a grip
The Department of Work and Pensions admitted £6.35billion was overpaid in Universal Credit in 2024-25.
This was almost 10 per cent of the £65.3billion of total expenditure on Universal Credit in the last financial year.
The amount that was wrongly paid in Universal Credit included an eye-watering £5.2billion in overpayments due to fraud.
The main cause of fraud overpayments was an under-declaration of income by claimants of Universal Credit, which is paid to those on low incomes or who are out of work.
The second largest source of fraud was claimants failing to declare living with a partner, while the third largest fraud reason was an under-declaration of financial assets.
The Labour Government is being urged to 'crack down ruthlessly' on those who defraud taxpayers, with the level of fraud and error in the benefits system branded 'a national scandal'.
The Department of Work and Pensions admitted £6.35billion was overpaid in Universal Credit in 2024-25. This was almost 10 per cent of the £65.3billion of total expenditure
Shimeon Lee, policy analyst of the TaxPayers' Alliance, said: 'The level of fraud and error in the benefits system, particularly Universal Credit, is a national scandal, yet time and again DWP fails to address it.
'The benefits bill would be soaring out of control even if every penny went to the right recipient.
'It is more vital than ever that the Government is cracking down ruthlessly on those that defraud taxpayers while ensuring internal processes are rigorous enough to minimise mistaken payments.'
Sir Keir Starmer recently saw his attempt to cut Britain's ballooning benefits bill derailed by a major rebellion among Labour MPs.
The Prime Minister was forced to scrap most of his planned welfare changes in the face of a huge Labour revolt.
He ditched Labour's proposed restrictions to Personal Independence Payment (PIP), which is the main disability payment in England, until after a review.
A humilated Sir Keir was instead left to push through slimmed-down legislation in the House of Commons, now only referred to as the Universal Credit Bill.
As part of the Bill, the basic Universal Credit standard allowance will rise at least in line with inflation until 2029-30.
But the health part of the benefit will be reduced for new claimants after April 2026, unless they had a severe or terminal condition, and the rate will be frozen until 2030.
The Covid pandemic saw a huge increase in fraud and error in benefit payments, as the then Tory government scrambled to protect Britons' incomes as they shut down large parts of the UK economy during lockdown.
The latest statistics published by the Department for Work and Pensions showed a total of £9.5billion was overpaid in benefits in 2024-25, at a rate of 3.3 per cent.
This compared with £9.7billion and 3.6 per cent in 2023-24.
Meanwhile, £1.2billion was underpaid in benefits in 2024-25 at a rate of 0.4 per cent, which was unchanged from 2023-24.
In 2024-25, the Universal Credit overpayment rate decreased to 9.7 per cent (£6.35billion) from 12.4 per cent (£6.41billion) in 2023-24.
Overpayments due to fraud decreased to 8 per cent (£5.2billion) in 2024-25, from 10.8 per cent (£5.62billion) in 2023-24.
The Department for Work and Pensions said these decreasse were 'statistically significant'.
Fraud due to under-declaration of income was measured at 2.2 per cent in 2024-5, compared with 2.6 per cent in 2023-24.
Fraud due to claimants failing to declare living with a partner was measured at 1.7 per cent in 2024-5, compared with 1.5 per cent in 2023-24.
And fraud due to under-declaration of financial assets was measured at 1.3 per cent in 2024-5, compared with 1.9 per cent in 2023-24.
Some £610million (0.9 per cent) of Universal Credit was wrongly paid in 2024-25 due to claimant error, compared with £410million (0.8 per cent) in 2023-24.
And £540million (0.8 per cent) of Universal Credit was wrongly paid in 2024-25 due to official error, compared with £390million (0.7 per cent) in 2023-24.
The proportion of claims overpaid was 21 in 100 claims in 2024-25, compared with 23 in 100 claims in 2023-24.
The proportion of claims underpaid increased to 2 in 100 claims in 2024-25, from 1 in 100 claims in 2023-24.
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