PAC: Disability benefits claimants at increased risk of hardship as DWP underpayments rise

Disability benefits claimants receive an unacceptably poor level of service from the Department for Work and Pensions (DWP). In a report published today, the Public Accounts Committee (PAC) warns that the DWP's understanding of vulnerable customers' experience is not good enough, with how it provides customer service overall also falling short.

The report finds that benefit claimants received over £4bn less than they were entitled to in 2023-24. This increases the risk of financial hardship for the people losing out. This figure of underpayments has risen from £3.5bn in 2022-23. Underpayment rates are highest for disability benefits, such as Personal Independent Payment (PIP) and Employment and Support Allowance (ESA).

The inquiry heard that disabled peoples' experiences of the benefit system are often negative due to issues with the design of the system and how DWP communicates, with evidence that 43% of claimants with complex disabilities do not have their needs met through DWP's communications. Not informing DWP of a change in circumstances is the most common reason for underpayments - the report notes that many claimants need to call DWP to do so, but a significant proportion of calls go unanswered.

The PAC is warning that DWP does not understand well enough the experience of vulnerable customers and customers with additional or complex needs, and should gather the data it needs to gain this understanding. The DWP conceded to the PAC that, while it had been using artificial intelligence to help identify vulnerable customers at the time of the Committee's inquiry, it did not have a system to identify such customers on the telephone.* The report raises continuing concerns about the potential negative impact on protected groups and vulnerable customers of DWP's use of machine learning to identify potential fraud, and seeks reassurance from Government that claimants are not being treated unfairly through its use.

Recipients of PIP and ESA, the report finds, receive an unacceptably poor service from DWP. ESA claimants have to wait an average of nearly 30 minutes for DWP to answer their calls (compared to approximately 2 minutes for Universal Credit claimants). For new PIP claimants, only half of these are processed on time (as compared to 96% of new State Pension claims).

While benefits underpayments are climbing, the report also warns that overpayments are also on the rise, with £9.5bn of benefit expenditure (excluding State Pension) overpaid in 2023-24 – up from £8.2bn in 2022-23. The report calls out DWP's defence of its current performance: by referring to the challenge of working against a "headwind" of an increasing propensity for fraud in society. The PAC views this as a dangerous mindset, stressing that it is the DWP's job to improve its defences and ensure benefit claimants receive the right amount of money.

Sir Geoffrey Clifton-Brown MP, Chair of the Committee, said: “Our report's disheartening findings illustrate the stark disparity of experience between claimants for disability benefit and other users of the system. In some cases, claimants are literally calling for help and receiving no answer, resulting in increasing risks to their financial security. The British public would be forgiven for thinking the state is AWOL just when it needs it most. The DWP must do more to ensure that claimants are reunited with the money to which they are entitled, as well as to understand the needs of vulnerable claimants.

“Our Committee is closely scrutinising the use of AI in Government. While this Committee would welcome the use of AI for the benefit of the public, the onus is also on the DWP to prove it is using these powerful tools in a safe and fair manner. We are also as concerned at the picture of growing underpayments as we are with overpayments, and have little sympathy for the DWP's argument that this rise is driven by a growing propensity for fraud in society. This amounts to saying that the DWP's job is too hard to do well – not a defence that this Committee is prepared to accept.”

PAC report conclusions and recommendations  

It is unacceptable that ESA claimants are having to wait an average of nearly 30 minutes for DWP to answer their calls. Many customers rely on contacting DWP by telephone when they have general queries or need to report changes of circumstances. Taking its in-house and outsourced telephone lines together, in 2023-24 DWP answered 36.7 million calls and customers waited an average of 8 minutes and 34 seconds for their calls to be answered. However, people receive significantly different response times depending on the benefit they are calling about. In 2023-24, UC claimants waited an average of 2 minutes and 45 seconds for their calls to be answered, while ESA claimants waited an average of 26 minutes and 53 seconds. DWP acknowledges that some call response times have not lived up to its expected standards. Long waiting times are a source of frustration and stress for customers and, while they are not charged for calling DWP, it is costly in terms of the time they spend waiting on the line or calling back.

Recommendation 1. DWP should set out how it will improve its speed to answer calls from ESA claimants in 2025-26 and how it will judge its success.

DWP processes only around half of new PIP claims on time against a target for 75% of claims to be processed within 75 working days. DWP's performance in processing new claims on time varies significantly between benefits, with claimants of disability benefits receiving a worse service than recipients of UC and State Pension. For example, in 2023-24, DWP processed 96% of new State Pension claims within the expected timeframe of 10 working days. Due to the complexity of the assessment process for PIP, DWP allows itself much longer - 75 working days or well over three months - to process new claims. In 2021-22, just 7% of new PIP claims were processed within this timeframe and, although performance improved to 52% in 2023-24, it remained well short of DWP's standard for 75% of new claims to be processed on time. Written evidence from Sense highlights that disabled peoples' experiences of the benefit system are often negative due to issues with the design of the system and how DWP communicates, which can make the impacts of their condition or impairment worse. DWP points to the Health Transformation Programme as its long-term solution to providing a modern and timely service for disabled customers, but acknowledges that improvement will be a long process. In our view, it is unacceptable that some customers will have to wait years for DWP's service to improve.

Recommendation 2. DWP should set out when it expects to achieve its target for 75% of new PIP claims to be processed within 75 working days.

DWP does not understand well enough the experience of vulnerable customers and customers with additional or complex needs.DWP's customers have a wide range of vulnerabilities and additional or complex needs due to poverty, age, health problems and disabilities. DWP has some arrangements in place to support these customers, including 37 Advanced Customer Service Support Leads who provide specialist support and advice for customers at serious risk of harm, abuse or neglect. It is also using artificial intelligence to help identify vulnerable customers from the wording they use in their communications, but concedes it does not have a screening system to identify such customers on the telephone. DWP is planning to revamp its regular customer experience survey and wants to use the survey data to understand better the variation in satisfaction between different groups of customers.

Recommendation 3. DWP should gather the data it needs to develop a deeper understanding of the experiences of different customer groups and act to improve the support it provides in light of its customer experience survey and any wider research findings.

Realising the benefits of service modernisation will require strong leadership to embed cultural change within DWP and its outsourced providers. DWP's Service Modernisation Programme is an 11-year organisation-wide programme estimated to cost £312.1 million, running from 2022-23 to 2032-33, which is seeking to deliver benefits for customers, staff and taxpayers. However, the scale and complexity of the programme means delivery involves significant risk. Strong leadership is needed to make the necessary cultural changes within DWP and its outsourced providers who help to deliver services such as health assessments and telephony. DWP considers this cultural change is critical to realising the programme's benefits, but also acknowledges that cultural change can be the biggest challenge to successfully implementing any transformation programme. DWP's expected net return from the programme has fallen by almost £150 million over the past year, from £680 million to £531 million. By March 2024, just two years into the 11-year programme, DWP had already spent £211.5 million, two-thirds of the total estimated costs of £312.1 million.

Recommendation 4. DWP should set out how it will monitor and mitigate the risk that it does not achieve the cultural change necessary for successful service modernisation.

Benefit claimants received over £4 billion less than they were entitled to in 2023-24, increasing the risk of financial hardship for the people losing out. DWP estimates that claimants received 1.6% (£4.2 billion) less than they were eligible for in 2023-24, up from 1.5% (£3.5 billion) in 2022-23. These underpayments leave the claimants affected with less money than they should have, making their finances more precarious than they should be. Underpayment rates are highest for disability benefits, such as PIP and Disability Living Allowance, where the most common reason for underpayments is customers failing to inform DWP that their condition has worsened or their needs have increased, meaning they would have been entitled to more money. Many claimants need to call to notify DWP about changes of circumstances, but a significant proportion of calls go unanswered. DWP needs to do more to encourage people to report changes of circumstances, which hinges on making it easy for people to get in touch and on customers trusting that they will be treated fairly. Written evidence from Sense highlights that 43% of claimants with complex disabilities do not have their needs met through DWP's communications.

Recommendation 5. To help make sure people receive the full amounts they are entitled to, DWP should set out how it plans to build trust with claimants and make it easier for them to provide updates on changes of circumstances.

Excluding State Pension, £9.5 billion of benefit expenditure was overpaid in 2023-24 and DWP did not achieve its savings target from Targeted Case Reviews. Excluding State Pension, DWP estimates that it overpaid a total of 6.7% (£9.5 billion) in 2023-24, up from 6.6% (£8.2 billion) in 2022-23, meaning many claimants received more money than they were entitled to. DWP has a number of initiatives to tackle overpayments, including a programme of Targeted Case Reviews aimed at identifying fraud in existing UC claims. DWP is confident that the Targeted Case Reviews approach is working despite missing its savings target in 2023-24, achieving £90 million of savings against the target of £115 million. Overpayments have not come down as quickly as DWP had hoped, but DWP reports that it is on track for UC overpayments to return to below pre-pandemic levels over the period to 2030. In the 2024 Autumn Budget, the government increased funding for DWP's counter fraud activities by £110 million in 2025-26.

Recommendation 6: DWP should set out how it will use the extra £110 million it received in the Autumn Budget 2024 for counter fraud activities to reduce overpayment rates.

We remain concerned about the potential negative impact on protected groups and vulnerable customers of DWP's use of machine learning to identify potential fraud. The previous Public Accounts Committee repeatedly raised concerns about the impact of data analytics and machine learning on legitimate benefit claims being delayed or reduced, the number of people affected, and whether this is affecting specific groups of people. Written evidence from the Public Law Project raises a series of risks around DWP's use of machine learning to tackle fraud. In particular, it notes the risk of machine learning taking on human biases when it is trained on historical data and the potential for wide-scale detrimental impacts on claimants if there is a system-error. DWP has undertaken a fairness impact assessment on its use of data analytics, which it says raised no concerns about the impact on customers. However, it has not published the results because it says it wants to avoid releasing information that could assist fraudsters.

Recommendation 7: DWP should share with us - in confidence if necessary - the results of its 2024 fairness impact assessment in order to provide reassurance that its use of machine learning is not resulting in claimants being treated unfairly.

Notes to Editors: 

*The Committee's report was agreed prior to reports that a number of AI pilot programmes aimed at identifying vulnerable claimants are no longer in use.