The Labour government is pursuing a massive crackdown on fraud and error in the state benefits system with a fresh set of reforms to health and disability benefits coming early next year.
The crackdown is expected to save as much as £4.3bn in the 2029-30 financial year through a range of measures and controls including hiring thousands more staff and targeting claimants.
Across the five years from 2025-26 to 2029-30 the package of measures is expected to save a combined £7.5bn.
Labour has also committed to continuing the previous Conservative government’s overhaul of the Work Capability Assessment and the faster migration of claimants from Employment and Support Allowance (ESA) to Universal Credit (UC).
The details were revealed as part of the Budget which added that a new welfare cap will be introduced in 2029-30.
“The government will set out reforms to health and disability benefits early in 2025 to ensure the system supports people who can work to remain in or start employment, in a way that is fair and fiscally sustainable,” it said in the Budget documents.
“Fraud and error in the welfare system costs the government nearly £10bn a year. The government is committed to tackling this to fix the public finances and invest in public services.
“That is why the government is announcing the biggest welfare fraud and error budget package in recent history, saving £4.3bn in 2029-30.
“This package includes programmes that will prevent, detect, and correct fraud and error in the benefit system.”
Around 3,180 additional fraud and error staff will be hired across the Department for Work and Pensions (DWP) and HM Revenue & Customs (HMRC) which is estimated to save £800m in 2029-30.
This includes an additional 180 welfare counter-fraud staff in HMRC to tackle fraud and error in Child Benefit and Tax- Free Childcare from April.
There will be new investment to verify changes in UC claims saving £250m in 2029-30 and targeted case reviews will be extended to help spot incorrect UC claims saving £2.5bn that year.
The forthcoming Fraud, Error and Debt Bill will introduce new powers to check benefits are being paid correctly using data shared by banks and financial institutions, saving an estimated £475 m in 2029-30 along with debt recovery saving £260m.
On the transfer of claimants to UC, it added: “The government will accelerate the migration of claimants onto UC from ESA, bringing the start date forward from 2028 to September 2024.
“This move will bring more people into a modern benefit regime, continuing to ensure they are supported to look for and move into work.
“Around half of ESA claimants will receive more financial support on UC, while others will receive transitional protection to ensure nobody is worse off at the point at which they move over to UC.”
