The benefit fraud scandal – what should we do?
The term “disabled person” is almost becoming interchangeable with the term “benefit cheat” these days. And not surprisingly. The government are coming down hard on benefit cheats in these difficult times. They are employing private “bounty hunters” to check what benefit cheats, erm, claimants are spending their money on.
Like most people I have a big problem with people who claim benefits they are not entitled to. But let’s look a little bit deeper into some of the real issues here. David Cameron claims that “Welfare and tax credit fraud and error costs the taxpayer £5.2bn a year.” (Manchester Evening News, 10 August 2010). This is a big number. A huge, unacceptable number. It turns out that of that number, £1.1 billion is attributed to fraud (Department of Work and Pensions). Whilst this is still a big number, it represents 0.7% of the total spend on benefits of £148 billion, and is much less than the £5 billion figure bandied about.
So, where does the remainder of Cameron’s £5.2 billion come from? Error, apparently. Benefit and tax credit mistakes cost the tax payer almost £4 billion a year (Channel 4 news). Other mistakes, not factored into this calculation but which also cost the tax payer many millions, is the inaccurate assessments made on many claimants in the first place, leading to expensive appeals which find that 70% of assessments were calculated wrongly. Also there is little concern expressed for the many, many people who don’t claim benefits they are entitled to or who are refused benefits they are entitled to (what about the 70% of those people who don’t appeal?)
If the government were to get its act together, it could save a few billion by reducing its own incompetence. That’s not to say that the £1.1 billion that fraud costs us is acceptable. Far from it. Any more than the £95 billion lost through tax avoidance and fraud is acceptable. A number which is likely to grow as the government is also cutting the number of tax inspectors – by 25,000.
So. We have the following situation:
Approximately £1 billion lost in benefit fraud
Approximately £4 billion lost in errors made over benefit payments
Approximately £95 billion lost through tax evasion and fraud.
Maths was never my strong point, but I am a bit puzzled about the government’s priorities on this one. Investing in “bounty hunters” to trap benefit cheats, whilst cutting back on tax inspectors to make it easier to commit tax fraud. I can’t help thinking there is something wrong with this picture.
What do you think?
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I think you’re absolutely right Jane – it doesn’t make sense. And I was always good at maths!
Inefficiency is a sore point with me at the moment … only, in my case it’s local government inefficiency. Many local councils are currently carrying out (or have already completed) a review of single person discounts for Council Tax. Everyone’s trying to save money!
A review is fair enough for people who’ve been claiming a discount for years – their circumstances might have changed (I lived at my previous address for 18 years without being checked) – but I rather object to the implication that I might have lied about my status less than three years ago, when I moved here. If the review had been carried out efficiently, though, I would soon have forgotten about it but – in my case – it wasn’t.
There had been a mistake on the electoral register (BY the council!) who had entered the name of the road I live in as my surname. It was put right more than a year ago – when they admitted it was their transcription mistake.
The council tax review team, though, immediately assume there’s two of us living here … with the same christian name! They ask me to phone them – and I do. They say it isn’t a problem, my discount won’t be affected – then the next thing I know, I’ve got a revised bill for the full council tax, including arrears. I phone again – and they deny ever having received any communication from me – refuse to put it right over the phone, and insist I must write in with a complaint. I cancel my direct debit for the correct amount of Council tax – because I’m not paying almost three times as much. Great result from their review!
Incompetence like that must be doubly frustrating for people who are on benefits and rely on the money to live. £4 billion – can you imagine how many people that affects! Whatever happened to doing your job efficiently? (I’m doing grumpy old woman this week).
I agree with a lot of what you say Jane, part of the problem is the systems in place need a complete review and overhaul and that will mean actually making certain front line civil servants do their job correctly, having seen Disability advisors in JCP+ who do their job well and those that don’t, I think it is a case of getting the right people for the jobs and the level of detail involved – it’s not for paper shufflers it’s a role for people to use common sense and document things correctly and then be checked (you know how banks do double data inputting to prevent mistakes).
It’s for people to work consistently within the rules and understanding the difference between rules and guidelines – and admitting a mistake asap – sod the liability of admitting a mistake, do it and correct it, instead of stringing it out, month after month just because of a small but very human error.
As for the rich, sure by all means go after them and if they threaten to leave the country – let them, they can drain another countries resources and not contribute to their economy
My default position on this debate is Merthyr Tydfil!
Labour get voted in in 97, Merthyr has an unemployment rate of 32%. New rules on claiming unemployment benefit comes in in 2002 thanks to Gordon Brown, at this point less than 8% of Merthyr residents are claiming any form of disability benefit – bit higher than UK national norm thanks to legacy respiratory issues (breathing to lung disease, etc) associated with mining. By 2005, Merthyr residents claiming disability benefit rise to 39%, while those claiming unemployment falls to less than 12%. Number of Merthyr residents on long term disability rises as time lapses since 2002!
There is no doubt that many real disabled people are getting caught in what is going to be a very vicious debate on many fronts of cost cutting; more will in the forth coming debate and action rounds over the next three years. But should any saving which can be so obviously spotted not be address? Secondly, this whole debate should be taken in context of Ian Duncan-Smith’s initiatives on welfare to work, social mobility and the big society: if there is Thatcher in ConLib anywhere, the root of it is with IDS!
All the potential savings will be addressed, and it think its now pretty obvious how foolishly proliferate Labour were with our money. Yes, the previous period of Conservative government had under invested, but that’s been followed by 13years of spend, spend, spend. There is a happy medium in the middle, and its called socially lead financial reality – I just hope we all have the courage to stand up for it like you have in this blog Jane!
I think some of the problem is that is assumed if a disabled person doesn’t work they must automatically be a scrounger. Unfortunately I know many disabled people whose disability means it would be impossible for them to do paid work (it’s hard enough for non-disabled people to find jobs these days) even ‘tho they would love to be independent and have more to live on than their meagre benefits offer. But sadly, disability hate crime is going up (see previous blogs) and part of this is the current government and media frenzy in going after the benefit cheats (who do, of course, exist, but don’t represent all disabled people or any others who claim legitimate benefits).
I’d actually like to keep the rich people in this country – largely they may run businesses which offer employment and help the economy. But I do think they should pay the taxes they legitimately owe. And I don’t understand why they aren’t also targeted in this “we’re all in it together” campaign of paying off the deficit. There is much more to be gained from reducing £95 billion of tax evasion than £1 billion of benefit fraud. Why not target both, proportionately?
Twitter: evenbreak
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I am not, and would not, defend people who claim benefits fraudulently – they make life so much harder for the vast majority of legitimate claimants. And I do think measures should be put in place to address it. But from a purely financial point of view, the most that could be saved is £1 billion. Not to be sniffed at, for sure. Whereas in tackling tax evasion there could be savings of up to £95 billion.
There is perhaps a separate debate to be had on which is worse – a long term unemployed person fraudulently claiming to be disabled and getting a few more pounds a week, or a wealthy person not paying the tens of thousands of pounds of tax they should. Both are wrong, and surely both should be targeted. But paying private firms of “bounty hunters” to flush out the benefit cheats, whilst cutting back on tax inspectors to enable more wealthy people to avoid paying tax seems crazy to me.
Twitter: evenbreak
Simply, I don’t think either contribute to our society: the rich under paying tax, or the work shy claiming benefits fraudulently.
Duncan-Smith’s position is that the work shy perpetuate through a community and rot it from the inside, and is in actual fact the biggest threat to dividing society long term. I think this is one of those debates of “which is the greater evil” to which the answer is that both need addressing.
One of the problems of centrally administered benefits is that its lowest-cost implemented through fitting people into boxes: you have X, you get Y. Does anyone really think that real disabled people shouldn’t get benefits? No, and they should get them quicker. The problem is needs assessment, which seems to be concluding at present rotten and not working, allowing both the fraudulent claimants to go up, while the rightful claimants are excluded before becoming the subject of media and public derision.
The short term answer would seem to be an all-social parties engagement to verify need quicker, but I do think part of the long term solution is in Duncan-Smith’s perspective. Its certainly not helping the real disabled or society
The main points Jane’s making and I’m taking away from this are:
ONE:
£1bn fraud + £4bn errors ‘lost’ via disability payments
Versus
£95bn ‘lost’ through tax evasion and fraud
Maybe it doesn’t take much, but I’m confused – If these figures are facts rather than ‘guestimates’, where do they come from? If £1bn is being paid out in fraudulent claims, which ones are they and why aren’t they immediately being put right? Ditto the £4bn in errors? Ditto the £95bn unpaid tax?
TWO:
As a result of government-employed Tax Inspectors being cut back, private bounty hunters (presumably on a results basis, a bit like commission only reps?) will be used to cut the slack and chase up the disabled. Makes wicked sense in a sick way, doesn’t it? For bounty hunters I suspect read bullies – a disabled person isn’t likely to be in a position to nip out of the way, stay a step ahead and evade them is he or she?
And the bounty hunters themselves are going to be really objective and stand up for claimants they think are pukka aren’t they?
Never mind, eh. They’re going to be far easier targets than the high earners who between them ‘rob’ HM govt’s coffers of £95bn…
THREE:
Looking at the tax evaders – are there any more of THEM than fraudulent disabled claimers or incompetent government employees? Or are they just likely to be smarter than the government is able to take on and win against? Or maybe many of them have friends in high places? Maybe there’s “You scrub my back; I’ll scrub yours” going on and, while it’s okay to cry crocodile tears over the state of affairs it’s not okay to upset the status quo…
Oh, why is it I sound so cynical…
Twitter: Linda_Mattacks
he one thing everyone misses in this discussion is that fraud is a minute compared to the amount of the sums wasted through maladministration and overpayments, if the DWP did their job properly in the first instance, we would not be arguing about this now…….the gutter press will highlight the ‘scroungers and spongers’ as it is easy for them to do so and sensationalism sells papers…..spin by the Government Spokespeople always places fraud before error thereby giving an unfair bias that fraud is a bigger problem, when exactly the opposite is true.
The Disabled Community needs to wake up and join forces and sign the petitions that some of us bust a gut getting out there through grit and determination with little thanks….I am still gutted that nothing happened regarding the petition that PC set-up and a number of us worked hard on promoting…..is it a wonder that the disabled community are seen as easy targets when they will not fight for themselves?
he one thing everyone misses in this discussion is that fraud is a minute compared to the amount of the sums wasted through maladministration and overpayments, if the DWP did their job properly in the first instance, we would not be arguing about this now…….the gutter press will highlight the ‘scroungers and spongers’ as it is easy for them to do so and sensationalism sells papers…..spin by the Government Spokespeople always places fraud before error thereby giving an unfair bias that fraud is a bigger problem, when exactly the opposite is true.
The Disabled Community needs to wake up and join forces and sign the petitions that some of us bust a gut getting out there through grit and determination with little thanks….I am still gutted that nothing happened regarding the petition that PC set-up and a number of us worked hard on promoting…..is it a wonder that the disabled community are seen as easy targets when they will not fight for themselves?
he one thing everyone misses in this discussion is that fraud is a minute compared to the amount of the sums wasted through maladministration and overpayments, if the DWP did their job properly in the first instance, we would not be arguing about this now…….the gutter press will highlight the ‘scroungers and spongers’ as it is easy for them to do so and sensationalism sells papers…..spin by the Government Spokespeople always places fraud before error thereby giving an unfair bias that fraud is a bigger problem, when exactly the opposite is true.
The Disabled Community needs to wake up and join forces and sign the petitions that some of us bust a gut getting out there through grit and determination with little thanks….I am still gutted that nothing happened regarding the petition that PC set-up and a number of us worked hard on promoting…..is it a wonder that the disabled community are seen as easy targets when they will not fight for themselves?
I hoped I had highlighted the administration errors in this blog, but yes, there is little to be seen about it in the media generally.
‘The disabled community’ (if such a thing exists) is made up of a very diverse group of people – like any other group. And a group who generally have additional constraints and things to contend with than the general population. So it’s not surprising that such a group a) never gets its act together and therefore b) becomes such an easy target.
Traditionally we don’t fight back (how could we?) and so we are the obvious ones to go for. Especially as it quite easy to whip up public opinion against us.
Twitter: evenbreak
What intrigues me is why the hell the “disabled community” should have to be fighting its corner in all this in the first place? As far as I can make out there is a big difference between people who are registered as disabled, and people who are signed off by their doctors as being sick. Are these two groups being tarred with the same brush? I really hope not.
Twitter: SuzeStMWrites
For years tax inspectors have been asking governments to spend the same sort of money on tax fraud as they do on benefit fraud on the basis that they could save 10 times as much public money
That’s the great article! I just pass ‘n read it, two thumbs up!