Benefits fraud is on the rise, with some swindlers pocketing up to £10,000 annually, according to an MP who has raised concerns following a visit to his local job centre. Damien Egan, MP for Bristol North East, spoke with work coaches at the job centre in his area who have worked there for over 40 years. They warned that they “have never seen it so bad” regarding fraudulent claims.
During a session with the Work and Pensions Committee, of which he is a member, Mr Egan spoke about a crude tactic that fraudsters use: “I was surprised to hear that people were getting money for health benefits even when it might just say ‘no can work’. Then it would take months and months and months before work capability kicked in, and then there was a repeat pattern when these people were found fit for work, and then would come back into the system with something else. It wasn’t being checked.”
Universal Credit recipients are typically required to undergo a work capability assessment to determine their ability to work and any conditions related to their job search or working more hours. The work coaches also informed Mr Egan about another potential abuse involving the self-employed expenses scheme, where individuals could inflate their benefits by £10,000 a year through “various expenses”.
Mr Egan cautioned: “The system isn’t checking it. It’s just too easy.” He also noted that despite the escalating issue, efforts to combat fraud appear to have waned. The MP commented: “They were saying that as fraud has been going up, the amount of investigations and prosecutions has been going down. So it’s created this perfect storm. Criminal gangs are exploiting the system.”
He made these remarks during a committee meeting attended by Department for Work and Pensions (DWP) officials, discussing their strategies to combat fraud in light of new legislation. The new laws will permit officials to scrutinise bank statements and directly withdraw funds from individuals’ accounts in instances of fraud.
DWP representatives stated they are intensifying their efforts to counteract fraud, including collaborating with the Home Office to utilise border records. This data can reveal when claimants are entering and exiting the UK in violation of their benefit rules.
They also mentioned that the move to digitise tax through HMRC will aid in addressing the issue of self-employed expenses, as the DWP will have access to more comprehensive data. Mr Egan queried whether there has been an uptick in prosecutions of benefit cheats.
In response, Neil Couling, director general of Fraud, Disability and Health and senior responsible owner of Universal Credit, said: “Fraud is such a big volume that you can’t prosecute your way out this problem. We are reserving our prosecutions for the most egregious, the big organised cases. So for individualised frauds, there’s a series of administrative penalties that we would apply, rather than go to the courts. “
He added: “The courts themselves are very busy with their own backlogs of prosecutions that they are trying to work through.” The coronavirus pandemic saw a sharp rise in benefit fraud as claim numbers soared, with 2.4 million new claims lodged. The number of new claims reached as high as 100,000 a day at peak times.
But the DWP said it hopes to claw back some £1.7billion this year from fraudulent claims and errors, the Department for Work and Pensions (DWP) is set to utilise new authorities granted by the Fraud, Error and Recovery Bill. These will enable investigators to request details of bank statements to confirm whether individuals implicated in fraud cases have the means to repay, while also granting powers to directly deduct money from bank accounts.
Despite these steps, there are voices of concern regarding the potential misapplication of these measures and the risk that directly deducting fund could put severe financial strain on people. Mr Couling emphasised that such powers would be invoked strictly as a measure of last resort: “We give the opportunity for people to pay this money back. We don’t go straight to these powers. These are conversations.”
Furthermore, he continued in clarifying the intention behind the legislation: “The whole process and the point of the powers is designed to encourage people to pay what they owe. It’s not that we say you’re a fraudster, we’re going straight to your bank account, it just doesn’t work in that way.”