Debt balance owed due to benefits overpayments ‘likely to grow before it falls’

The balance owed to the Government due to benefit fraud, erroneous overpayments and other debt is likely to grow before it falls, MPs have been told.

Peter Schofield, permanent secretary at the Department for Work and Pensions (DWP), said around 4% of benefit spending went on overpayments in the last financial year.

The DWP overpaid an estimated £8.6 billion in benefits in 2021-22, with £6.5 billion due to fraud, its latest annual report shows.

This was up from £8.2 billion the year before.

Across 2021-22, debt teams recovered around £2.7 billion – up from around £2.3 billion in 2020-21.

The sum includes repayment of advances, tax credit debt passed over from HM Revenue and Customs, overpayments and loans.

In March 2022, the DWP said it was owed a total of £7.6 billion for overpaid benefits, advances and tax credits by around five million claimants.

Asked how long it will take to recover the sum, and if the debt balance will ever fall, Mr Schofield said: “As we are successful at identifying fraud, as we’re successful at going through the targeted case review, so we will say to people, ‘actually, you owe us money’, and then that becomes a payment that is due to the department and that gets added to the debt balance.

“So a sense, I’m afraid, that the success of the targeted case review and our work on fraud, to the extent that it’s getting into that fraud that’s already in the system, it will lead to the need to recover overpayments and that then will add to debt balances.

“So I suspect that, because of tax credits coming in, but also because of the work of our anti-fraud activity, I suspect debt balances will go up before they start to come down.”

Mr Schofield added that staff tasked with recovering debts engage with claimants with compassion and empathy, and take individual circumstances into account when negotiating repayments.