Benefit fraud and overpayments hit a record high last year, after the Government relaxed checks on new Universal Credit claimants, an official report has found.

The Department for Work and Pensions estimates it overpaid by £8.3 billion of a total benefits bill of £111.4 billion in 2020/21, an increase of £3.8 billion on the previous year.

The 7.5 per cent proportion of fraud and erroneous payments is the highest since records started in 2005, according to the National Audit Office.

The body, which scrutinises government spending, said the coronavirus pandemic was the main cause of the increase after checks were relaxed to ensure a record number of new Universal Credit claims could be processed and paid promptly.

Impact of Covid-19

A surge in new claims at the start of the pandemic led to a doubling of the number of people claiming Universal Credit, from three million to six million.

Many new claimants had more complex claims, such as self-employed income, which are more vulnerable to fraud, the National Audit Office said.

“When the pandemic started, the department had to quickly respond to three million new Universal Credit claims, as well as adjusting its controls to operate in lockdown conditions without face-to-face contact with all claimants, bar the most vulnerable,” the report said.

“Quality assurance checks were significantly reduced as part of the annual sampling to estimate the monetary value of fraud and error were suspended.”

Fraudsters targeting UC

It also identified several organised criminal attacks during the pandemic, with fraudsters targeting Universal Credit by making claims in other people’s names.

The department is owed £5 billion in overpayments, placing additional strain on its resources and potentially causing uncertainty and hardship to claimants, the spending watchdog said.

Its report also found that an estimated 132,000 pensioners have been receiving less state pension than they are entitled to due to ongoing failings.

A £1 billion pot has been set aside to reimburse people who have been underpaid their state pension over the past 30 years.

A spokesman for the department said: “Our priority when the outbreak hit was to make sure money reached claimants – those most in need at a challenging time – as soon as possible and we are now reviewing suspicious cases.

“Those found to have claimed benefits to which they are not entitled face criminal investigation.”