benefit fraud  

benefit fraud in the UK

     
  the government understates benefit fraud
   

The DWP's estimates for benefit fraud for 2012 - 2013 are here.

 

Expenditure

Fraud

Last measured

Income Support

£5.5bn

2.3%

£130m

Apr 12 - Mar 13

Jobseeker's Allowance

£5.2bn

2.9%

£150m

Apr 12 - Mar 13

Pension Credit

£7.6bn

2.2%

£170m

Apr 12 - Mar 13

Housing Benefit

£23.7bn

1.3%

£320m

Apr 12 - Mar 13

Disability Living Allowance

£13.5bn

0.5%

£70m

Apr 04 - Mar 05

State Pension

£79.8bn

0.0%

£0m

Apr 05 - Mar 06

Carer's Allowance

£2.0bn

3.9%

£80m

Apr 96 - Mar 97

Incapacity Benefit

£3.3bn

0.3%

£10m

Oct09 - Sep 10

Interdependencies

 

 

£10m

Oct 11 - Sep 12

Unreviewed

£21.0bn

0.9%

£190m

 

Council Tax Benefit

£4.9bn

1.2%

£60m

 

These latest figures take the DWP's central estimate of benefit fraud to £1.2bn, with a range of £0.9bn to £1.7bn.

Benefit fraud by the relatively few claimants living abroad is estimated to be running at £79m a year. That would reduce benefit fraud by people living in the UK to some £1.12bn. (So called "abroad fraud" would be an implausibly high 6.6% of total benefit fraud - suggesting that the overall total of benefit fraud has been pitched far too low.)

On top of all this, a realistic estimate for tax credit fraud would be £1bn.

In a jobseekers' allowance pilot in 2011, 29% signed off jobseeker’s allowance rather than turn up for unpaid work. A further 17% failed to start their placement and lost their benefits in consequence. Now we clearly can't extrapolate a 46% fraud level across all jobseekers' allowance claimants, but let us cautiously add say another 5% - which seems very conservative.

And the National Fraud Initiative identified probable fraud in council tax single person discount at a "cautious" £200m. The DWP have gradually edged their figure up from £40m to £50m and now to £60m. The NFA estimate that fraud in council tax discounts costs around 99 million. The most frequently claimed discounts are single person discounts, of which 92 million has been estimated as fraudulent. The NFA therefore estimates the total fraud in council tax discounts and exemptions at 131 million a year. However, sampling by a private firm suggests a total above £300m.

In Lambeth, use of voice recognition software identified over 18% of claimants as benefit cheats. As shown above, the government's national figure for housing benefit fraud is £290m. At 18% this would be over £3.8bn for housing benefit fraud alone! By December 2011 the housing benefit bill had risen to £22.4bn annually.

The number of people claiming disability living allowance has roughly trebled since its introduction in 1992 and currently only 6% of claimants have their claim medically assessed by a specialist for the purpose of their claim. It seems a fair guess that the amount of fraud is significantly higher than the 0.5% the DWP currently claims. The DWP's budgetary guess is 20%. Let's stay far lower, at 5%.

Retirement pension fraud is reported as Nil, yet the National Fraud Initiative found £98m of pension fraud in England over two years. Let's cautiously say £50m a year for the whole country.

The government figure of £10m for incapacity benefit fraud is laughably small. One single sentencing session for single person benefit frauds in Merseyside identified frauds approaching £1m. That's just 21 claimants for one type of benefit in one authority area.

Two out of three claimants for the new employment and support allowance fail. If we cautiously assume that even one third of those on incapacity benefit should not be there, that alone represents a figure of £2.2bn.

How would cautious adjustments affect the benefit fraud total?

Government total

£1,200m

Tax credit fraud - add

£1,000m

Jobseekers' Allowance - add

£260m

Council tax frauds - if total £300m, add

£240m

Housing benefit fraud - for a cautious 5% fraud of £23.7bn add

£875m

Disability living allowance

£600m

Retirement pension

£50m

Incapacity benefit fraud - for a cautious 25% fraud rate add

£815m

Fraud Central - a partnership of the DWP and four scottish councils - remarkably says that "Benefit Fraud costs upwards of £2 billion per year". But the truer figure paid out now looks closer to £6bn a year.

This takes no account of the huge costs of social housing fraud. The Audit Commission put the cost to the taxpayer nationally at £1.8 billion in 2012.

And as Fraud Central point out:

"Benefit Fraudsters not only affect Social Security benefits, they can have free prescriptions, free eye tests and free dental treatment costing the NHS millions of pounds per year."