Millions of universal credit claims checked for fraud after 8.4bn overpayments

According to the Department for Work and Pensions (DWP), £8.4bn was lost in 2020-21, up from £4.6bn the previous year.

Officials say the rise is almost entirely due to fraud.

The number of people on universal credit has doubled to six million since the start of the pandemic.

Officials say the increase in universal credit fraud is a product of more people applying for the benefit, and the value of each fraudulent case rising, rather than a higher proportion of people engaging in fraud.

The overall level of fraud and error across the benefits system increased by almost two-thirds, from 2.4% last year to 3.9%, the highest ever reported rate.

The fraud rate on the main benefit, universal credit, has increased by more than 50% over the past year, and now stands at 14.5%.

Fraud can be as simple as individuals claiming money to which they are not entitled, for example by not declaring income from other sources.

More complex cases involve criminal gangs stealing people’s details to apply for advance payments of universal credit.

The money is paid to them but the person whose identity has been stolen gets the bill.

As Covid-19 hit the UK last spring and the economy was effectively mothballed, the sheer demand for universal credit in March and April led the government to relax some welfare rules, which allowed criminal gangs to target the benefit and steal as much as £1.5bn.

Identity checks were processed online, for instance, rather than face-to-face and some information was taken on trust, such as the cost of rent.

Other factors in 2020 include confusion among many new claimants, who applied for both universal credit and the government’s Self Employment Income Support Scheme – income from the scheme can mean claimants should receive less universal credit.