Hundreds of millions of pounds in benefits have been paid to deceased claimants in a major administrative failure uncovered by The Telegraph.
In what is being described as a costly overpayment scandal, the Department for Work and Pensions (DWP) paid out an estimated £850 million in benefits after claimants had died.
It remains unclear exactly which benefits were involved, but the 2.6 million overpayment errors recorded since 2021 are believed to include a mixture of mental health-related support, out-of-work benefits, state pension payments and other welfare entitlements.
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As Secretary of State for Work and Pensions, Pat McFadden is expected to safeguard public funds and ensure overpayments are recovered wherever possible.
However, less than half of the £850 million has so far been recovered, adding further pressure to Britain’s already rising welfare bill, which costs taxpayers around £300 billion a year.
Prime Minister Sir Keir Starmer has faced repeated criticism over his handling of welfare spending, with opponents accusing him of taking a soft approach on benefits amid growing political pressure.
Pressure Over Benefits Reforms
Last year, Sir Keir reversed plans to tighten eligibility for Personal Independence Payments (PIP), despite growing concerns over a sharp increase in claims linked to anxiety, ADHD and other mental health conditions.
He also backed away from proposals to restrict winter fuel payments, a move that increased the welfare bill by around £1.25 billion. In addition, he agreed to lift the two-child benefit cap, a decision expected to cost a further £3 billion annually.
On Saturday, The Telegraph also revealed government plans to introduce an online self-service claims system for PIP. According to an official trial, the system could lead to a further surge in claims.
Fresh Embarrassment for Ministers
The latest disclosure is likely to create further embarrassment for Torsten Bell, the pensions minister, who recently dismissed the chief executive of National Savings and Investments (NS&I) over a separate “missing millions” controversy.
The Telegraph previously reported that NS&I had failed to pay £476 million owed to bereaved families of up to 37,500 deceased savers due to system failures dating back to 2008. The bank’s chief executive, Dax Harkins, was later forced out.
Now both Mr Bell and Mr McFadden are facing renewed criticism, with opponents claiming the DWP has “lost its grip on basic administration” and questioning why more is not being done to recover public money paid out in error.
Scale of the Overpayments
Official figures show that a total of £9.5 billion in benefits were overpaid in 2026 . More than two-thirds of this total was linked to fraud, while around 20 per cent resulted from claimant error.
However, the figures obtained by The Telegraph reveal for the first time the scale of official error involving payments made after claimants had died.
Political and Public Reaction
Lee Anderson, Reform UK’s spokesman for work and pensions, said:
“This is an absolutely appalling scandal that exposes just how badly broken the system has become.
Nearly a billion pounds of taxpayers’ money has been paid out to people who are no longer alive, and ministers have known about the problem for years yet failed to fix it. Both Labour and the Conservatives have shown time and again that they cannot be trusted with the public’s money.”
Shimeon Lee, of the TaxPayers’ Alliance, added:
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“These figures show a department that has lost its grip on basic administration.
Funnelling nearly a billion pounds to deceased claimants is a staggering waste of taxpayers’ money. The Government must simplify the welfare state and standardise eligibility so there is a streamlined system that prioritises accuracy.”
Why the Overpayments Happened
The overpayments are understood to have occurred when DWP staff received notifications of a claimant’s death too late to stop scheduled payments, or only at the point when money had already been issued.
Similar overpayments can also happen when benefit claimants are admitted to hospital or move into residential care.
These cases can affect payments such as PIP, Disability Living Allowance (DLA) and other related support.
In many cases, such benefits are suspended after a claimant has spent 28 days in hospital. While state pension payments usually continue, means-tested benefits such as Pension Credit or Jobseeker’s Allowance may be reduced or paused. Payments generally restart once a claimant is discharged.
Winter Fuel Payments Also Sent After Death
The figures for benefit overpayments do not include winter fuel payments. However, The Telegraph has also found that these payments were sent to the bank accounts of deceased claimants.
Since April 2023, around £27 million in winter fuel payments has reportedly been sent to nearly 83,000 dead people.
This is understood to happen because claimants qualify for the payment in September, but the money is only issued at the start of winter, by which time some recipients may already have died.
Recovery Costs and Official Response
In some cases, officials believe the cost of recovering overpaid money may actually exceed the value of the overpayment itself, especially where the sums involved are only a few hundred pounds.
A DWP spokesperson said:
“It is DWP policy to recover all debt where it is reasonable and cost effective to do so. We encourage anyone who has recently lost a loved one to use our Tell Us Once service, which makes it easy to notify us and other government services of a death in one simple step.
Once we’ve been notified, we act quickly to update our records and make sure benefits only go to those who are entitled to them.”
Key Figures at a Glance
| Category | Amount / Figure |
|---|---|
| Benefits paid after death | £850 million |
| Number of overpayment errors since 2021 | 2.6 million |
| Total benefits overpaid in 2026 | £9.5 billion |
| Annual UK welfare bill | £300 billion |
| Winter fuel payments sent to dead claimants | £27 million |
| Number of deceased winter fuel recipients | Nearly 83,000 |
| Cost of restoring winter fuel support | £1.25 billion |
| Estimated annual cost of lifting two-child cap | £3 billion |
Conclusion
The revelations have raised serious concerns about the DWP’s ability to manage welfare payments accurately and protect taxpayer money.
With ministers already under pressure over rising welfare spending, the discovery that hundreds of millions have been paid to dead claimants is likely to fuel further political criticism and calls for urgent reform.
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