DWP announces new plans to tackle fraud and save £9bn within the next four years

The UK Government has announced it has saved the taxpayer over £1.3 billion from fraud and error in the benefits system over the past year, as it set out the latest version of its Fraud Plan. It follows a crackdown on thousands of people fraudulently claiming Universal Credit, including successful efforts by Department for Work and Pensions (DWP) investigators to smash Britain’s biggest-ever benefit fraud case - securing convictions for a £53.9 million Universal Credit scam.

DWP is also planning to save £9bn by 2028 in a sustained crackdown on benefit cheats. This includes hiring additional staff to check millions of Universal Credit claims for accuracy, modernising information-gathering powers, and introducing a new civil penalty to punish fraudsters.

DWP has also clarified how it will use new third party powers, such as banks, to identify claims that signal potential fraud and error.

This measure is expected to save the taxpayer £600 million over five years, on top of the £9 billion projected to be saved from the wider plan.

However, the DWP said it was important for claimants to be aware the powers within the Data Protection and Digital Information Bill only require third parties such as banks to provide relevant information to the DWP that may signal where claimants do not meet the eligibility criteria for the benefit they are receiving.

DWP clarified these measures will require third parties to “provide only limited, relevant information that may signal whether benefits are being improperly paid” and “does not give DWP access to anyone’s bank account or see how claimants are spending their money”.

The update follows on from the Prime Minister setting out sweeping reforms of the welfare system last month, including a new bill in the next Parliament to tackle benefit fraud head-on. DWP will commit to introducing legislation meaning its investigations mirror HM Revenue and Customs (HMRC) powers for tax, such as the ability to make arrests and conduct searches and seizures by warrant, and will also modernise information-gathering powers to help prove or disprove fraud more quickly.

Secretary of State for Work and Pensions, Mel Stride, said: “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.”

DWP has taken significant steps to crack down on fraud, including legislating for new powers and hiring thousands of staff to review Universal Credit claims for accuracy.

DWP is building on this by hiring over 2,500 external agents on a temporary basis as part of the Targeted Case Review to help spot incorrectness in Universal Credit claims. Combined with DWP’s own internal agents in the review, this will take the headcount to nearly 6,000 people.

The DWP is also exploring a new civil penalty to punish fraudsters, potentially broadening the scope of cases that can receive a penalty when the courts are not prosecuting, and increasing the value of the civil penalty.

On top of this, the DWP will also make changes to Universal Credit including new partly automated checks on self-employed income, new online prompts for claimants to re-declare their circumstances - such as if they have moved in with a partner - and increasing checks on capital when people claim the benefit to ensure they are eligible.

These measures will be backed up by advanced data analytics, using machine learning, to detect and prevent fraudulent claims. Final decisions on accepting or stopping any claim will continue to be made by a member of DWP staff.