The department estimates total overpayments due to fraud and error in 2015-16 to be 1.8%, which equates to £3.1bn of the total forecast benefit expenditure, maintaining the previous year’s lowest recorded level.

However, the department estimates the total underpayments in 2015-16 to be 1%, or £1.8bn of total benefit expenditure (increasing from 0.9%, or £1.4bn in 2014-15), the highest level to date.

State pension continues to demonstrate a very low level of fraud and error, while overpayments in other benefits decreased slightly to 3.6% but underpayments rose to a highest ever level of 1.8%. The NAO says the headline level of fraud and error overpayments across all benefits of 1.8% indicates that a step change and sustained reduction in fraud and error has not been realised.

The audit watchdog welcomes the department’s efforts to analyse its fraud and error rates, but is critical of progress, saying that in some it has been a long time since any measurements have been taken. For, example, Disability Living Allowance, which accounted for £13.3bn of expenditure in 2015-16, has not been measured for fraud and error since 2004-05.

It also warns that the DWP needs to develop and implement controls to tackle the inflow of fraud and error to Universal Credit claims, as well as removing the fraud and error already identified within claims.

Amyas Morse, NAO head, said: ‘Issuing an audit qualification is a serious matter, and the fact that this is another in a long line of qualifications does not make it any less serious. The value of fraud and error in benefit expenditure remains unacceptably high. The department has made good progress in understanding causes of fraud and error to develop new strategies, but has some way to go to put these into effect and achieve sustainable reductions fraud and error.’

NAO’s report, fraud and error in benefit expenditure, is here.