benefit fraud  

benefit fraud in the UK

     
  the government understates benefit fraud
   

The DWP's estimates for benefit fraud for 2010 - 2011 are here.

 

Expenditure

Fraud

Last measured

Income Support

£7.9bn

2.4%

£190m

Oct09 - Sep 10

Jobseeker's Allowance

£4.5bn

4.1%

£180m

Oct09 - Sep 10

Pension Credit

£8.3bn

2.3%

£190m

Oct09 - Sep 10

Housing Benefit

£21.6bn

1.3%

£290m

Oct09 - Sep 10

Instrument of Payment

 

 

£0m

Oct09 - Sep 10

Disability Living Allowance

£12bn

0.5%

£60m

Apr 04 - Mar 05

Retirement Pension

£69.9bn

0.0%

£0m

Apr 05 - Mar 06

Carer's Allowance

£1.6bn

3.9%

£60m

Apr 96 - Mar 97

Incapacity Benefit

£5.6bn

0.3%

£20m

Oct09 - Sep 10

Interdependencies

 

 

£10m

Apr 10 - Mar 11

Unreviewed

£17.2bn

0.9%

£160m

 

Council Tax Benefit

£5.0bn

1.2%

£60m

Oct09 - Sep 10

These latest figures take the DWP's central estimate of benefit fraud up to £1.2bn, with a range of £1.0bn to £1.6bn.

The government itself claims that benefit fraud by the relatively few claimants living abroad is running at £63m a year. That would reduce benefit fraud by people living in the UK to some £1.14bn.

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

In a jobseekers' allowance pilot in 2011, 20% of those ordered to take part in four-week community projects stopped claiming immediately and another 30% were stripped of their benefits when they fail to turn up. Now we clearly can't extrapolate a 50% fraud level across all jobseekers' allowance claimants, but let us cautiously add an a second 4.1% to the fraud total, doubling it to 8.2% - which at this stage seems realistically 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. 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!

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%.

The government figure for incapacity benefit fraud has leapt from £10m to £60m but it's still 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

£180m

Council tax single person discount fraud - if total £300m, add

£240m

Housing benefit fraud - for a cautious 5% fraud rate add

£790m

Disability living allowance

£540m

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

£1,584m

Swansea council estimated that benefit fraud costs around £100 a household each year - over £2 billion nationally. Fraud Central - a partnership of the DWP and four scottish councils - remarkably says that "Benefit Fraud costs upwards of £2 billion per year". And it points out that

"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."

But the truer figure - for benefit fraud alone - now looks closer to £6bn a year.