DWP Annual Report & Accounts 2022-23

Public Accounts Committee Closed Inquiry
Opened: 24 May 2023 Closed: 29 Apr 2024 Parliament page
In November 2022 the Committee reported that the Department for Work and Pensions’ “ excuses for unprecedented and unacceptable levels of benefit fraud and error don’t stand up ”. Based on the National Audit Office’s report on DWP’s Annual Accounts for 2022-23 the Committee will question senior officials at the … Read more
11 Recommendations
22 Conclusions
1 Report
1 Oral session
3 Letters
1 Event
Activity timeline 7 events
25 Mar
2024
Correspondence
8 Mar
2024
Report published
6 Dec
2023
Report published
9 Nov
2023
Correspondence
17 Oct
2023
Correspondence
18 Sep
2023
Oral evidence
18 Sep
2023
Formal meeting (oral evidence session) · Room 15, Palace of Westminster
Oral evidence sessions 1 session
18 Sep 2023
View on parliament.uk
DWP Annual Report & Accounts 2022-23
Bozena Hillyer · Department for Work and Pensions Catherine Vaughan · Department for Work and Pensions Neil Couling · Department for Work and Pensions Peter Schofield CB · Department for Work and Pensions Richard Hawthorn · His Majesty Revenue and Customs
Title HC No. Published Items Response
Fourth Report - The Department for Work & Pensions Annual Report… HC 290 6 Dec 2023 33 Responded
Recommendations & Conclusions
33 results
2 Conclusion Accepted
Fourth Report - The Department for…
Report annually on DWP savings from detecting overpayments and future forecast levels.
DWP expects the activities set out in its counter-fraud plan to generate £9.4 billion of additional savings over the next five years. In May 2022 DWP set out its high- level plan to tackle fraud and error following the pandemic … Read more
Government Response
The government agrees with the recommendation and states it is implemented. The Department for Work and Pensions will report on Annual Managed Expenditure savings in its Annual Report and Accounts 2023-24, continuing to develop and refine its experimental metric.
HM Treasury
View details
3 Recommendation Accepted
Fourth Report - The Department for…
Set out reporting plan for efficacy, quality, and customer service of Targeted Case Reviews.
The success of DWP’s plan to reduce fraud and error in Universal Credit is dependent on its ability to review 8 million live claims by 2027–28. The biggest element of DWP’s counter-fraud plan is a project to cleanse the benefit … Read more
Government Response
The government agrees with the recommendation and states it is implemented. The Department for Work and Pensions will report on Targeted Case Reviews in its Annual Report and Accounts 2023-24.
HM Treasury
View details
4 Conclusion Accepted
Fourth Report - The Department for…
Develop and publish plan with HMRC to correct State Pension underpayments and tax issues.
DWP and HMRC face a significant challenge in making back payments to people who have been underpaid State Pension due to missing Home Responsibilities Protection. In 2021–22, DWP identified underpayments of State Pension due to gaps in the National Insurance … Read more
Government Response
The government agrees and commits to publishing key management information on the exercise established between DWP and HMRC in the department’s Annual Report and Accounts.
HM Treasury
View details
5 Conclusion Accepted
Fourth Report - The Department for…
Assure integrity of National Insurance records and establish early warning system for underpayments.
DWP is not doing enough to assure itself or Parliament that it can rely on National Insurance records to pay State Pension accurately and that it will not find further historic underpayments. The £1.3 billion underpayment of State Pension relating … Read more
Government Response
The government agrees and is strengthening its systems by piloting new approaches in selected services, aiming to improve feedback loops and target high-risk areas from 2024-25, with learnings informing future roll-out.
HM Treasury
View details
6 Conclusion Rejected
Fourth Report - The Department for…
Assess impact of data analytics and machine learning on legitimate claims and specific groups.
DWP has not yet done enough to understand the impact of machine learning on customers and provide them with confidence that it will not result in unfair treatment. DWP is expanding its use of advanced data analytics to tackle fraud. … Read more
Government Response
The government disagrees with detailing specific metrics for publication, citing a need to avoid compromising fraud detection. However, it will report annually on the impact of data analytics on protected groups and vulnerable claimants, starting with the 2023-24 Annual Report.
HM Treasury
View details
1 Conclusion Rejected
Fourth Report - The Department for…
Committee took evidence from DWP and HMRC on fraud, error, and National Insurance records.
On the basis of a Report by the Comptroller & Auditor General (C&AG), we took evidence from the Department for Work & Pensions (DWP) on its 2022–23 Annual Report & Accounts and the level of fraud and error in the … Read more
Government Response
The government disagrees with an implied recommendation regarding a 5% assumption, stating it cannot be compared to official fraud and error statistics in isolation due to various influencing factors.
HM Treasury
View details
7 Conclusion Rejected
Fourth Report - The Department for…
Universal Credit overpayments remain high, with significant build-up from pandemic-era claims.
DWP estimates that it overpaid 12.8% (£5.5 billion) of all Universal Credit payments in 2022–23, which is much higher than any other benefit.10 We challenged DWP to explain why the fall in fraud and error promised in the Universal Credit … Read more
Government Response
The government rejects the committee's implied direction to explain the failure of fraud and error reduction, stating its commitment to a cost-effective control environment but highlighting external fraud trends beyond its direct control.
HM Treasury
View details
8 Conclusion Rejected
Fourth Report - The Department for…
Universal Credit system complexity contributes to incorrect claims despite ongoing simplification efforts.
We asked DWP to what extent the fact that 1 in 3 Universal Credit claims is incorrect is a result of the complexity of the system. DWP told us it is trying to make it easier for claimants to declare … Read more
Government Response
The government rejects the committee's implied criticism regarding system complexity, stating it is committed to reducing fraud and error but acknowledges external trends impacting fraud levels are not directly in its control.
HM Treasury
View details
9 Conclusion Rejected
Fourth Report - The Department for…
Universal Credit overpayment target of 6.5% now unachievable due to increased baseline fraud and error.
We challenged DWP to explain whether it still expects Universal Credit overpayments to fall to 6.5% as it had previously committed to. DWP explained that 6.5% was the level implied in the business case as a result of the expected … Read more
Government Response
The government rejects the committee's implied direction to explain how it will achieve the 6.5% overpayment target, stating it's committed to reducing fraud and error but external trends impact the level of fraud, which is outside its direct control.
HM Treasury
View details
10 Recommendation Accepted
Fourth Report - The Department for…
Benefit overpayments will not return to pre-pandemic levels until 2027-28 due to increased fraud.
We questioned DWP on whether it expects the impact of the pandemic on fraud and error to gradually fade or to remain elevated for some time. DWP told us that although it expects the impact of the pandemic to fall … Read more
Government Response
The government agrees and states the recommendation is implemented, providing detailed evidence from various sources, including crime data and Cifas, to justify its assumption of a 5% annual increase in fraudulent behaviour.
HM Treasury
View details
11 Recommendation Accepted
Fourth Report - The Department for…
DWP assumes a 5% annual increase in societal fraud propensity based on external data.
We asked DWP to clarify why it assumes in its forecast that there is an ongoing increase in the general propensity to commit fraud in society. DWP explained that this is a judgement based on estimates produced by a range … Read more
Government Response
The government agrees and states the recommendation is implemented, providing detailed evidence from various sources including police recorded crime data, Cifas, and the British Social Attitudes Survey to support its assumption of a 5% annual increase in fraudulent behaviour.
HM Treasury
View details
12 Conclusion Acknowledged
Fourth Report - The Department for…
HMRC's tax gap attributed to criminal attacks has significantly decreased over time.
We also asked HMRC if it is also seeing an increase to commit fraud among taxpayers as a whole. HMRC told us it does not forecast a propensity to fraud but that the tax gap, which might be considered an … Read more
Government Response
The government agrees with the Committee’s recommendation and states it has presented detailed evidence to the Office for Budget Responsibility (OBR), who have incorporated this within the overall forecast for fraud and error prevalence in the welfare system.
HM Treasury
View details
13 Recommendation Rejected
Fourth Report - The Department for…
DWP's new fraud and error measures are expected to improve accountability and transparency.
We have previously found that the DWP lacks the ability to demonstrate that its counter-fraud activities are having the intended impact and are cost-effective.22 Alongside its forecast that benefit overpayments will not return to pre-pandemic levels until 2027– 28, DWP … Read more
Government Response
The government rejects the recommendation, stating that while DWP is committed to reducing fraud and error, external trends impacting the level of fraud in the benefit system are not directly within its control.
HM Treasury
View details
14 Conclusion Accepted
Fourth Report - The Department for…
DWP revises down estimated State Pension underpayments impacting 165,000 pensioners by £260 million.
We have reported previously on the historical underpayment of State Pension due to errors by DWP affecting some pensioners who are married, widowed or over-80, most recently when we examined DWP’s 2021–22 Annual Report & Accounts. During that inquiry DWP … Read more
Government Response
The government agrees with the Committee’s recommendation and provided details of the scope of the exercise and plans to address outstanding work in its 2022-23 Annual Report and Accounts. It will provide updated details of its plans in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
15 Conclusion Accepted
Fourth Report - The Department for…
DWP is on track to complete corrections for married and over-80 State Pension underpayments.
In January 2021 DWP launched an exercise to identify affected pensioners and make any back payments. We asked DWP to provide an update on its progress in correcting these underpayments. DWP told us that it is on track to complete … Read more
Government Response
The government agrees with the Committee’s recommendation and provided details of the scope of the exercise and plans to address outstanding work in its 2022-23 Annual Report and Accounts. It will provide updated details of its plans in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
16 Recommendation Accepted
Fourth Report - The Department for…
Historical State Pension underpayments caused by missing Home Responsibilities Protection have re-emerged despite previous efforts.
When we examined DWP’s 2021–22 accounts, it told us about another category of historical State Pension underpayment caused by gaps in the National Insurance records of women who had previously claimed Child benefit.29 DWP and HMRC explained to us that … Read more
Government Response
The government agrees to the recommendation, stating the correction exercise for Home Responsibilities Protection underpayments began in Autumn 2023 and will continue to be refined by DWP and HMRC, providing clarity on tax treatment for arrears.
HM Treasury
View details
17 Recommendation Accepted
Fourth Report - The Department for…
HMRC faces significant challenges identifying individuals affected by missing Home Responsibilities Protection in records.
We asked HMRC what it is doing to correct the National Insurance record so that DWP can in turn make any back payments of State Pension. HMRC explained that it no longer holds the relevant records and that identifying all … Read more
Government Response
The government agrees to the recommendation, confirming the correction exercise for Home Responsibilities Protection underpayments started in Autumn 2023 and outlining how DWP and HMRC will continue to refine plans and address tax implications, with a target implementation date of Summer 2024.
HM Treasury
View details
18 Conclusion Accepted
Fourth Report - The Department for…
Identifying and compensating eligible next-of-kin for HRP underpayments poses significant challenges.
We asked HMRC how it can be sure that it will reach the right people and also avoid paying out any illegitimate claims. It told us that it would apply due diligence to all claims. HMRC also told us that … Read more
Government Response
The government agrees with the committee's implied concern and commits to working with HMRC by Winter 2024 to set out an approach for assuring the integrity of the National Insurance record, including engaging with a joint Internal Audit review.
HM Treasury
View details
19 Recommendation Accepted
Fourth Report - The Department for…
Significant uncertainty surrounds the estimated scale and demographics of Home Responsibilities Protection underpayments.
We asked DWP how much people could receive in back payments of State Pension. DWP told us it assumes an average back payment of £5,000 for people above State Pension age and £3,000 for the next-of-kin of those who are … Read more
Government Response
The government agrees to the recommendation, confirming the correction exercise for Home Responsibilities Protection underpayments began in Autumn 2023, and outlining how DWP and HMRC will continue to refine plans and address tax implications.
HM Treasury
View details
20 Recommendation Accepted
Fourth Report - The Department for…
No clear delivery plan exists for DWP to complete Home Responsibilities Protection back payments, aiming for 2027-28.
We asked HMRC and DWP when they expect to have a firmer idea of the scale of the issue and the timeframe for making back payments. HMRC told us it intends to send out the letters to potentially affected people … Read more
Government Response
The government agrees to the recommendation, stating the correction exercise began in Autumn 2023 and DWP will continue to refine its plans with HMRC, providing updates in its 2023-24 Annual Report and Accounts, along with specific rules for handling income tax on arrears.
HM Treasury
View details
21 Recommendation Accepted
Fourth Report - The Department for…
Lump sum back payments for Home Responsibilities Protection may incur tax liabilities for claimants.
We asked HMRC to confirm whether pensioners receiving lump sum back payments would be liable for a tax charge and whether it would take a sympathetic approach to handling any issues. HMRC confirmed that the tax charge could apply. It … Read more
Government Response
The government agrees to the recommendation and states DWP and HMRC are working together on the correction exercise, which began in Autumn 2023, and clarifies specific rules for how income tax on arrears payments will be calculated and collected.
HM Treasury
View details
22 Recommendation Accepted
Fourth Report - The Department for…
Widespread National Insurance record errors cause multiple underpayments, affecting 10 million Universal Credit claimants.
DWP now reports multiple underpayments relating to issues in the National Insurance record. In addition to the HRP underpayment, DWP has also identified that the National Insurance records for 10 million people claiming Universal Credit have not been updated properly. … Read more
Government Response
The government agrees and commits DWP and HMRC to work together, engaging with a joint internal audit review, to provide assurance on the integrity of National Insurance records and their interaction with the benefit system by Winter 2024.
HM Treasury
View details
23 Conclusion
Fourth Report - The Department for…
New National Insurance credit for Child Benefit opt-outs lacks commitment for automatic awarding.
DWP noted that the government has recently announced a new National Insurance credit for people subject to the High Income Child Benefit Charge.49 It explained that the charge applies when one parent in a household earns more than £50,000, and … Read more
HM Treasury
View details
24 Recommendation Accepted
Fourth Report - The Department for…
DWP's control processes remain inadequate to detect systemic benefit underpayments early.
During our examination of DWP’s 2021–22 Accounts, we were unconvinced that its control processes were adequate to detect underpayments before they build up into major issues.53 DWP has previously acknowledged “an inability to pick up patterns of underpayment, which had … Read more
Government Response
The government agrees with the recommendation and states it uses existing quality checks while piloting new approaches to strengthen early detection of underpayments, with evaluation and potential wider roll-out planned from 2024-25.
HM Treasury
View details
25 Conclusion Accepted
Fourth Report - The Department for…
DWP plans £895 million investment to reduce benefit fraud and error by 2027-28.
DWP set out its plan to tackle benefit fraud following the pandemic in May 2022 in Fighting Fraud in the Welfare System.57 This includes £895 million of additional investment in counter-fraud activities over the Spending Review period covering the three … Read more
Government Response
The government agrees with the committee's observations on its counter-fraud plan and states the recommendation is implemented. It commits to developing and refining an experimental metric to report on full Annual Managed Expenditure savings in its 2023-24 Annual Report and Accounts, while clarifying the distinction between forecasts and targets.
HM Treasury
View details
26 Conclusion Accepted
Fourth Report - The Department for…
DWP's 'Targeted Case Reviews' project aims for £6.4 billion savings from Universal Credit.
The most significant element of DWP’s counter-fraud plan is a project to cleanse the benefit system of incorrect payments by reviewing some 8 million live Universal Credit claims over five years. DWP expects this project—which it calls ‘Targeted Case Reviews’ … Read more
Government Response
The government agrees with the committee's observations regarding the Targeted Case Review (TCR) and confirms the recommendation has been implemented, stating the department will report on TCR in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
27 Conclusion Accepted
Fourth Report - The Department for…
DWP's ambitious Universal Credit review project relies on outsourcing to meet staffing targets.
The NAO has reported that in 2027–28 alone DWP expects 2.5 million Universal Credit cases to be reviewed by some 5,900 staff. For comparison, in 2022–23 DWP reviewed around 3,600 Universal Credit claims to produce its fraud and error statistics.61 … Read more
Government Response
The government agrees with the committee's observations regarding the Targeted Case Review (TCR) and confirms the recommendation has been implemented, stating the department will report on TCR in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
28 Conclusion Accepted
Fourth Report - The Department for…
Pressure to speed up Universal Credit reviews risks sacrificing quality for productivity targets.
DWP told us it will take two years for TCR to have a measurable effect.63 We observed that TCR is an expensive intervention and questioned DWP on whether it has been under pressure to deliver the project faster in order … Read more
Government Response
The government agrees with the committee's observations regarding the Targeted Case Review (TCR) and confirms the recommendation has been implemented, stating the department will report on TCR in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
29 Conclusion Rejected
Fourth Report - The Department for…
DWP invests £70 million to expand machine learning for detecting fraudulent benefit claims.
DWP is investing some £70 million to March 2025 in expanding its use of advanced analytics to tackle fraud. This includes using machine learning algorithms to flag potentially fraudulent benefit claims. DWP has already piloted an algorithm to detect fraudulent … Read more
Government Response
The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, with the first assessment in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
30 Conclusion Rejected
Fourth Report - The Department for…
Concerns persist regarding machine learning's potential unfairness and bias for vulnerable claimants.
We received written evidence from the Child Poverty Action Group and from the Public Law Project expressing concern about the potential unfairness of machine learning, particularly with regard to vulnerable claimants and people with protected characteristics.70 We asked DWP whether … Read more
Government Response
The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, with the first assessment in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
31 Conclusion Rejected
Fourth Report - The Department for…
Algorithmic bias in DWP systems acknowledged, but evidence of unfair impacts remains inconclusive.
We challenged DWP to explain how it would address the risk that legitimate benefit claims are unfairly delayed or reduced as a result of an algorithms targeting innocent behaviour, such as frequent changes of circumstances. DWP acknowledged that some level … Read more
Government Response
The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, with the first assessment in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
32 Conclusion Rejected
Fourth Report - The Department for…
DWP cautiously implementing machine learning for fraud detection due to initial accuracy issues.
DWP also told us it did not want to reveal when it planned to go live with machine learning on a large scale to avoid informing potential fraudsters, but added it was 65 Qq 84–90 66 Q 90; DWP ARA … Read more
Government Response
The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, with the first assessment in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
33 Conclusion Rejected
Fourth Report - The Department for…
DWP committed to annual reporting on data analytics impact on protected groups.
In our November 2022 report on DWP’s 2021–22 accounts we recommended that DWP should report annually to Parliament on its assessment of the impact of data analytics on protected groups and vulnerable claimants.77 DWP told us it thought the right … Read more
Government Response
The government rejects detailing specific metrics for publication on data analytics' impact, citing the need to avoid compromising fraud detection. However, it reaffirms its commitment to reporting annually on the impact of data analytics on protected groups and vulnerable claimants, with the first assessment in its 2023-24 Annual Report and Accounts.
HM Treasury
View details
Government Response AI assessment · 32 of 11 classified
Accepted 20
Acknowledged 1
Rejected 11
Total 11 recs + 22 conclusions
Correspondence 3 letters
25 Mar 2024 Correspondence from Dame Meg Hillier, Chair of the Committee of Public Accounts, to Peter Schofield CB, Permanent Secretary, Department for Work & Pensions, re Treasury Minute response – DWP Annual Report & Accounts 2022-23, dated 20 March 2024
Parliament page
9 Nov 2023 Correspondence from Peter Schofield CB, Permanent Secretary, Department for Work and Pensions, re DWP Report and Accounts 2022-23 – recommendation 5, dated 24 October 2023
Parliament page
17 Oct 2023 Correspondence from Richard Hawthorn, Director, Operational Excellence, HM Revenue and Customs, re update on Department for Work and Pensions’ Annual Report and Accounts, dated 28 September 2023
Parliament page