The UK government has confirmed which benefits will be targeted first under its planned crackdown on fraud and error in the welfare system. As part of the Public Authorities (Fraud, Error and Recovery) Bill, due to come into force in 2026, the Department for Work and Pensions (DWP) aims to save £8.6 billion over five years by identifying overpayments and ineligible claims. This initiative was highlighted in recent government documents, as reported by The Mirror.
Universal Credit and Pension Credit Among First to Be Reviewed
The DWP has stated that the initial focus will be on Universal Credit, Pension Credit, and Employment and Support Allowance—the benefits with the highest levels of incorrect payments. These payments often result from either fraud or administrative error.
The DWP explained: “The measure will initially focus on benefits where incorrect payments are currently highest. These are Universal Credit, Pension Credit and Employment and Support Allowance.” Additional benefits could be included later through Parliament-approved regulations, though State Pension has been explicitly excluded and cannot be added in the future.
New Eligibility Verification System with Bank Cooperation
Under the new powers, banks and financial institutions will be required to cross-check claimants’ accounts against specific eligibility indicators. These include thresholds such as the £16,000 capital limit, which applies to means-tested benefits like Universal Credit, Income Support, and Housing Benefit for working-age claimants.
If an account is flagged, the bank must share relevant information with the DWP, including the account holder’s name, date of birth, sort code and account number, and the specific eligibility indicator triggered.
The government clarified that: “The powers will not give DWP access to any claimants’ bank accounts, nor any information on how claimants spend their money.”
Human Oversight in All Benefit Decisions
While the new system is data-driven, the DWP confirmed that human oversight will remain central. Any decision affecting a claimant’s benefit status will be reviewed and confirmed by a caseworker.
They added: “A human will always be involved in any decision which may affect benefit awards or eligibility.” This includes cases where one benefit affects eligibility for another—for example, a loss of entitlement to Pension Credit may trigger a reassessment of Housing Benefit status.
Background and Policy Context
The move is part of a broader welfare savings programme, which follows years of rising fraud and error levels. Government documents estimate that around £10 billion per year is lost through incorrect benefit payments, with a total of £35 billion misallocated since the pandemic.
“Outside the social security and tax system, at least £3 billion is being lost to fraud and error per year,” the documents add.
Last week, Chancellor Rachel Reeves reinforced the government’s commitment to tightening welfare rules during her spring statement, introducing additional cuts just days after Work and Pensions Secretary Liz Kendall outlined new proposals.
