The Department for Work and Pensions (DWP) is to invest in data cleansing and new IT systems to avoid errors made by officials and a repeat of the £1.6 billion losses it incurred last year as a result.

A National Audit Office (NAO) report published today into the DWP’s finances found £2.7bn was lost in fraud and error over the last financial year. It said 60% of the lost finances were due to errors made in paying income support, jobseekers allowance, state pension credit and disability living allowance.

The report said: “Official error arises when the department incorrectly processes a new claim to benefit or takes incorrect action when processing a change of circumstance notified by a customer.”

It also said an “official error task force” had been established to reduce such errors in future, and that it would aim to “support a demonstrable and measurable reduction in benefit complexity and, by implication, official error rates” through “data cleansing, enhanced IT solutions, and raising the profile of accountability within benefit processing agencies”.