The Department for Work and Pensions (DWP) is under fire for demanding that benefit claimants pay back staggering sums of overpayments due to its own errors. A state pensioner was asked to return £38,000 in Universal Credit despite being “repeatedly incorrectly” advised to claim it.

More than 30 organisations have now joined forces in a letter to DWP minister Liz Kendall to “address the injustice,” warning that “official error” Universal Credit overpayment debt is a scandal in the making. Official error overpayments are defined as when a claimant is paid too much benefit due to mistakes made by the DWP.

Freedom of Information data sourced by Public Law Project – the law firm that organised the letter – show that in 2023/2024, a staggering 686,756 new “official error” Universal Credit overpayment debts were entered on the department’s Debt Manager system. The DWP recovers these “overpaid” benefits by reducing future Universal Credit payments, which can result in some claimants’ benefits being cut by up to a quarter of their standard allowance.

For many, the letter argues that the recovery of these official error overpayments can put people – who have often relied in good faith on these payments – in “financially precarious situations”.

The letter shares a story about a man named Michael, a state pension-age member of a mixed-age couple caring for a disabled son. The letter reads: “Michael was repeatedly incorrectly advised to claim Universal Credit by DWP officials. When reporting a change to do with his partner’s earnings, the DWP noticed their official error and stopped the UC claim, issuing an overpayment debt of over £38,000.”

Another case presented by the Public Law Projects’ letter involved the DWP demanding a widow pay back more than £7,000 worth of Universal Credit despite the woman “proactively” and “honestly” informing the benefits office of her financial situation.

The letter read: “The DWP [failed] to take into account income from her Widow’s Pension. [She] proactively and honestly informed the DWP that she received this and was assured it would not affect her claim. She relied on this assurance in good faith and spent the money on daily living expenses.

“Four years later, the DWP told her they would be recovering the resulting overpayment of £7,258.08.”

Shameem Ahmad, CEO of Public Law Project, emphasised that “no one is expecting the DWP not to make any mistakes”. However, he argued: “It is incumbent on the Department to take responsibility for those mistakes, rather than pushing that burden onto people it should in fact be supporting.”

He added: “These official error overpayments have real and highly detrimental consequences for people – causing sudden financial pressures and anxieties, through no fault of their own.

The Public Law Project letter – which is co-signed by organisations including Child Poverty Action Group, Mencap and Age UK – is urging the Government to implement restrictions on overpayment recovery to align it with the test that applies to Housing Benefit.

Caroline Selman, senior research fellow at PLP, said: “We are urging the Government to restrict UC official error overpayment recovery by bringing the test for recovery into line with the test that applies to Housing Benefit. This would mean they could only be recovered where the claimant could reasonably have been expected to realise that they had been overpaid.”

Mr Ahmad added: “This is the Government’s chance to ensure it does not plunge hundreds of thousands of more people into debt, go some way in restoring public trust, and ultimately incentivise the DWP to not make errors in the first place.”

A DWP spokesperson said: “We always work with people who have been overpaid to ensure repayments are affordable. Overpayments by official error account for just 0.3% of our overall benefits spend. We have an obligation to protect public funds and to ensure money lost to fraud and error is recovered, which is why we are bringing forward the biggest fraud crackdown in a generation, saving the taxpayer £1.5billion over the next five years.”