The problem with tackling benefit fraud


by Rumbold
18th October, 2010 at 12:01 pm    

George Osborne has compared benefit fraudsters to muggers in a recent speech:

“Frankly, a welfare cheat is no different from someone who comes up and robs you in the street. It’s your money. “You’re leaving the house at seven in the morning or whatever to go to work and paying your taxes – and then the person down the street is defrauding the welfare system.

The comparison seems somewhat tenuous, as often muggings are violent and can leave the victim traumatised (presumably the comparison holds for everyone who has defrauded the taxpayer).

That aside, there are some problems cracking down on benefit fraud. Some fraud is unintentional; the system can be monstrously complex and people often find themselves receiving benefits without realising the precise rules. Take somebody who is receiving Employment and Support Allowance (ESA) for a damaged spleen, as well as Council Tax Benefit and Housing Benefit, who then goes back to work. If she works under sixteen hours a week, and earns under £94 a week, all her benefits will continue for a year, then will be reviewed. If she earns over £94 a week or work over sixteen hours, she will lose her ESA and have her Housing Benefit and Council Tax pro-rated depending on income. She may be entitled to Working Tax Credit (a varied sum) depending on her previous year’s income and expected income for the next year. She could also get Return to Work Credit of £40 a week for a year if she earns under £15,000 a year, unless she is a lone parent, which will see her net £60 a week in the form of an in-work credit instead (in that case her Child Tax Credit will also be affected too).

That’s the straightforward bit. The real difficulty is letting everyone know. Once a person goes back to work, all the relevant divisions have to be contacted. The benefits delivery centre needs to be contacted (and they can only be accessed by telephone, not face to face) to inform them about going back to work. The Return to Work/In Work Credit form should be completed via the job centre; the Working Tax Credit office needs to be phoned, and it is very difficult to get through to them. the local council’s housing department needs to be told too. All this should be done in the first couple of weeks of returning to work, during office hours, which can be rather difficult if a person is working full time. Any of the divisions may be tardy in getting back to her, leaving her without an income from that particular source (even if it is backdated later). And woe betide if her circumstances change (such as her earnings rising to £15,000+) and she doesn’t inform everyone quickly enough. She may have her future benefits/tax credits docked to repay any overpayment (even if it was not her fault); she may even be prosecuted for benefit fraud.


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  1. sunny hundal

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  5. Dominic

    RT @sunny_hundal: The problem with tackling benefit fraud http://bit.ly/cPS6n9 Working in benefits myself, you have no idea how true this is




  1. Kismet Hardy — on 18th October, 2010 at 12:08 pm  

    The most obviously unfair example that I can think of that effects many people I know – single mother, gets some money from the father, but not enough for her to be able to go off and get a job that pays enough for the home and babysitting fees, so she doesn’t mention the money coming in from the father and thereby claiming fraudulently. Hardly the same as someone that pulls a knife to a grandmother for crack now is it?

  2. Andy — on 18th October, 2010 at 12:11 pm  

    Unfortunately, you’ve fallen into the same error that the government and Daily Mail falls into repeatedly; counting unintentional error as fraud.

    Even cases of unintentional error by claimants can be a criminal offence if there was not a ‘reasonable excuse’. In any other sphere this would remain a civil matter but if a benefit claimant forgets to report a change in their circumstances they can end up with a criminal record.

    Not fraud (which must be intentional) by any means but what’s the betting these cases get lumped in with the ‘fraud’ stats instead of ‘error’ when the govt bothers to make a difference?

  3. Lydia Forsyth — on 18th October, 2010 at 12:11 pm  

    The government need to ensure their own house in order regarding fraud before they take action on others. Certain Peers have diddled the system for years and it seems they only warrant a suspension.

  4. earwicga — on 18th October, 2010 at 12:19 pm  

    Kismet – the rules have changed on maintenance. They don’t count when claiming tax credits or many other benefits now.

    Rumbold – you have forgotten to state how rare benefit fraud actually is.

  5. Rumbold — on 18th October, 2010 at 12:24 pm  

    Kismet Hardy:

    Well, the Child Tax Credit does include a component for approved childcare (up to £175 p/w for a child or up to £300 p/w for more than one child) if a parent goes back into work.

    Andy:

    Unfortunately, you’ve fallen into the same error that the government and Daily Mail falls into repeatedly; counting unintentional error as fraud.

    Even cases of unintentional error by claimants can be a criminal offence if there was not a ‘reasonable excuse’. In any other sphere this would remain a civil matter but if a benefit claimant forgets to report a change in their circumstances they can end up with a criminal record.

    That is the point I was making Andy- that unintentional error may be viewed as fraud and prosecuted as such, and people often make these errors because of the complexity of the system. Apologies if I did not explain this clearly enough.

  6. Rumbold — on 18th October, 2010 at 12:27 pm  

    Earwiga:

    It is pretty rare. The far bigger problem is the structure and complexity of the system, and the disincentives to work (high marginal tax rates, penalisation of temporary work, etc.).

  7. Kismet Hardy — on 18th October, 2010 at 1:10 pm  

    That’s interesting. I pay £700 maintenance a month (I know it’s much higher than the law says but I love ‘em) but my ex (who signs on) still seems to be skint all the time. Hm.

  8. earwicga — on 18th October, 2010 at 1:27 pm  

    It changed last year Kismet. Child Benefit is no longer taken into account when calculating entitlement to housing and council tax benefit either.

  9. MaidMarian — on 18th October, 2010 at 1:52 pm  

    Rumbold – to a point, I agree with this.

    The complexity is a problem but, like immigration and its wild overcomplexity, one does need to look at the why.

    We can make a system of benefits as generous or as tight as we like. At the end of it, some minister has to go and aske the public for £X for Y and Z. There have to be criteria and when there are criteria there is as sure as night follows day a gaming of the system.

    The system then responds to close loopholes and so on and what happens is that those who do best are those who are able to meet the criteria rather per se than those in need. I’m sure that if I looked at Abu Hamza’s benefit claims he meets every exacting criteria.

    It is back to the old problem – the need to attempt to legislate for motive. Benefit is one of the very, very few areas where legislation for motive is almost necessary. Benefits show up the problems of legislating for motive. Osbourne is trying to be motive-blind in a system where motives are all.

    That’s the problem here.

  10. earwicga — on 18th October, 2010 at 1:55 pm  

    IT’s not that hard MaidMarian. Give JobCentrePlus back the functions that they used to have. Stop all the stupid private companies like A4E. There would then be a lot less error.

  11. Skiamakhos — on 18th October, 2010 at 2:01 pm  

    As Mark Thomas said, if benefit fraudsters are muggers, the 40bn tax evaders are Raoul Moat.

  12. Rumbold — on 18th October, 2010 at 2:30 pm  

    MaidMarian:

    I agree that legislating for motive is very difficult. There will never, as you say, be a perfect benefits systems. IDS’ reforms go some way to tackling this, but they will have downsides too (what if the money is all spent on video games for example? Will the recepients still be entitled to council houses? etc).

    Earwiga:

    Give JobCentrePlus back the functions that they used to have. Stop all the stupid private companies like A4E. There would then be a lot less error.

    That would not have any effect at all, since ‘welfare to work’ companies like A4E don’t actually decide who gets what benefit, nor manage their delivery, and therefore have no impact. The are issues with councils who contract out HB/CTB services to companies like Capita, but I think you wwre focus on ‘welfare to work’.

  13. earwicga — on 18th October, 2010 at 2:36 pm  

    The vast amounts of money that have been spent on private contractors should have been given instead to JobCentrePlus services Rumbold or the services they offered should have been maintained. Advisors can find out what you are eligible and not eligible to claim. Therefore reducing error. But you are quite right that companies like A4e ‘have no impact’. To unemployed people that is. Not in any positive way that is.

  14. Refresh — on 18th October, 2010 at 3:07 pm  

    The biggest muggers sit at the top of the tree – Newscorp and Philip Green come to mind.

  15. Rumbold — on 18th October, 2010 at 3:29 pm  

    Earwiga:

    Again, the JCP advisers can check what benefits they are entitled too, but it is the individual who still have to make the phonecalls/do the paperwork. The JCP can only be, at best, an advisery service.

    The vast amounts of money that have been spent on private contractors should have been given instead to JobCentrePlus services Rumbold or the services they offered should have been maintained.

    The amounts are relatively small compared to the overall DWP budget. And you would still have to replace what they do with JCP advisers (whether they would be any better is a matter for debate- we don’t know either way, as neither the JCP nor private contractors have been particularly good at getting people back to work).

  16. joe90 — on 19th October, 2010 at 10:44 am  

    Having seen the dispatches programme on c4 last night its obvious where all our tax payers money has gone its in the cayman islands hidden by all the greedy bankers!!!!

    Anything george osbourne has to say on the budget and cuts is a complete sham. Him and his etonian tories where exposed last night as a bunch of tax dodging thieves what hypocrites.

  17. Miss Ben E Fit — on 23rd October, 2010 at 11:46 pm  

    Two videos here showing who ther real benefit theives are

    http://www.abcofesa.co.uk/board/viewtopic.php?f=12&t=117&start=0&hilit=theives

  18. Miss Ben E Fit — on 3rd November, 2010 at 4:31 pm  

    They should show as much speed in paying claims promptly as they do in tackling benefit fraud.

    Terminally ill people are actually dying whilst awaiting ESA payments

    The reporter, Mark Daly, asks if the Government is targeting welfare scroungers or is persecuting the genuinely ill. Suspecting a patient of faking illness takes it toll. There is a suspicion that there is a sick note culture.

    http://www.abcofesa.co.uk/board/viewtopic.php?f=22&t=201&p=341#p341

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