The Department for Work and Pensions accounts have been qualified by the government's public spending watchdog.

Sir John Bourn could not sign off on the accounts because an estimated £2.5bn shortfall. Across the benefit schemes operated by DWP a total of £690m was lost to fraud, £1.01bn to customer error, and £850m to official error, representing 2.1% of benefit expenditure.

Despite the qualification Sir John said that the DWP had made marked improvements in trying to resolve its continuing problems. Sir John highlighted the introduction of new systems and procedures that both reduce fraud and error and properly value and record identified debts.

The NAO chief said: 'Once again I have had to qualify my opinion on the Department for Work and Pensions accounts because of the significant sums lost to fraud and error: £2.5 bn or 2.1% in the last year.'

'At the same time I have been able to remove two aspects of the qualification of the Department’s accounts which is a clear tribute to the leadership evident within the department in tackling these issues.'