Labour has come under fire from Great British PAC after quietly abandoning part of its promised crackdown on welfare fraud, raising serious questions about the Government's commitment to protecting taxpayers' money as Britain's annual welfare bill heads towards a staggering £431 billion.
Chancellor John Healey has reversed plans introduced by his predecessor, Rachel Reeves, to strengthen checks on savings held by Universal Credit applicants before payments begin.
Rather than making a prominent announcement to Parliament explaining the change of direction, the Government disclosed the reversal in the technical policy costings accompanying the Budget.
The decision comes against a deeply troubling financial backdrop. Official Department for Work and Pensions figures show that benefit overpayments caused by fraud and error reached £9.9 billion in 2025–26, equivalent to 3.2 per cent of benefit expenditure.
And according to the Office for Budget Responsibility, the total annual welfare bill is forecast to increase from approximately £353 billion in 2026–27 to £431 billion by 2031–32.
Great British PAC says the Government owes taxpayers a far more convincing explanation for abandoning a preventative safeguard when billions of pounds are already being incorrectly paid out.
Claire Bullivant, Chief Executive Officer of Great British PAC, said:
“John Healey and this Labour Government seem to have forgotten whose money they are spending. It belongs to the British people, the millions who get up every morning, go to work, pay their taxes and expect their Government to spend that money responsibly.
“Labour promised to crack down on welfare fraud, then quietly abandoned part of its own preventative checks in the small print of the Budget. No proper public explanation, no published evidence to justify the U-turn, just another assurance that ministers know best.
“Meanwhile, benefit overpayments have reached £9.9 billion a year and the welfare bill is forecast to soar to an eye-watering £431 billion annually. Yet John Healey apparently expects taxpayers to take it on trust that Labour's replacement system will do a better job.
“Well, I'm sorry, but that simply isn't good enough. We are talking about billions of pounds of public money, not loose change down the back of a Treasury sofa.
“Every pound lost to fraud or avoidable error is a pound that cannot be spent on our hospitals, our Armed Forces, our police or reducing the burden on hardworking families.
“Of course we must protect people who genuinely need help. That is what a decent welfare system is for. But protecting vulnerable people and protecting taxpayers are not mutually exclusive. A responsible Government should be doing both.
“John Healey needs to stop hiding behind Treasury paperwork, publish the evidence and explain exactly how Labour intends to prevent taxpayers' money being wasted. The British public deserve accountability, not another expensive leap of faith.
“Labour promised to get a grip on the welfare system. Instead, it looks increasingly as though the welfare system has got a grip on Labour.”
A promised crackdown quietly reversed
The original measures were announced in Rachel Reeves's Spring Statement in 2025, with the Government promising stronger verification of savings and self-employed income declared by Universal Credit applicants.
The combined policy was forecast to generate £760 million in savings over five financial years, including £200 million in 2029–30.
However, the Government has now cancelled the capital verification element, which would have checked savings held in the bank account receiving Universal Credit at the beginning of a claim.
Crucially, the £760 million estimate covered both capital and self-employed income verification. The Treasury has not published a breakdown showing how much of the projected saving was attributable to the abandoned capital checks alone.
The latest Budget costings suggest that reversing the capital element has a relatively small net fiscal impact over the forecast period.
But Great British PAC argues that this makes transparency more important, not less.
If ministers believe the original scheme was ineffective or unnecessarily expensive, taxpayers deserve to see the evidence supporting that conclusion.
Instead, the Government has withdrawn a previously announced safeguard without publishing a clear operational assessment demonstrating why it should be abandoned.
Prevention replaced by detection
Labour insists that its replacement approach will be more effective.
The Department for Work and Pensions is now relying on the Eligibility Verification Measure, introduced under the Public Authorities (Fraud, Error and Recovery) Act 2025.
Under these powers, banks and other financial institutions must identify accounts receiving certain benefits that meet specified eligibility indicators, such as possible undeclared savings or excessive time spent abroad.
The DWP can then investigate whether payments are being made correctly.
The Government announced the first use of these powers on 26 October 2026, claiming the measure is expected to save taxpayers £1.2 billion over five years.
But there is a significant distinction between the scheme Labour has abandoned and the system it is now championing.
The original capital verification proposal was intended to identify discrepancies before a new claim was paid.
The replacement measure is designed to flag possible problems in accounts already receiving benefits, allowing officials to investigate and correct payments afterwards.
Although earlier detection can help limit losses, it is not necessarily equivalent to preventing incorrect payments in the first place.
That distinction matters when the Government is dealing with billions of pounds in annual overpayments.
The DWP has argued that the original Open Banking proposal relied on claimant consent and could not be applied consistently to every Universal Credit claim.
That may be a legitimate concern. But Great British PAC says the Government must publish the evidence showing how it reached that conclusion, including the likely refusal rate, expected financial consequences and any assessment of alternatives.
Billions lost through fraud and error
Official figures for 2025–26 show that £9.9 billion was overpaid across the benefits system through a combination of fraud, claimant error and official error.
Of that, approximately £6.8 billion was attributed to fraud, with the remaining overpayments arising from mistakes by claimants or government administration.
After recoveries, the estimated net loss was £8.6 billion.
These are not insignificant
