Cracking down on benefit fraud is counter-productive

The Conservatives have followed Labour’s lead in proposing even harsher sanctions for people accused of benefit fraud. This punitive approach is counterproductive.

It’s dispiriting to see the Conservatives today follow Labour’s lead in proposing even harsher sanctions for people accused of benefit fraud. There are several problems with this increasingly punitive approach.

Firstly, almost all those defrauding the system do so out of need, not greed. They need a few hours work to tide them over – to pay a surprise bill, or replace the microwave. Declaring it to the Jobcentre would mean any earnings are deducted from benefits, leaving them with no extra money. Punishing these people is unfair, but also destructive – they need stepping stones to a job and higher income, not sanctions. The occasional extreme case of greed you read about in the papers does not reflect the lives of most of those on benefits.

Secondly, benefit fraud is not as big a problem as either party might have you believe. Less than 1 per cent of benefit claimants commit fraud (56,000 out of 5.8 million), and more money is wasted each year on error (around £2 billion) than is given to people claiming fraudulently. Meanwhile, about £1.2 billion is underpaid, meaning people desperately in need of benefits do not receive them. Advertising campaigns that flame the public perception that everyone on benefits is a cheat are actively stigmatising and harmful.

Thirdly, while both parties would argue that sanctions act as a deterrent, they don’t seem to have considered the fate of those they sanction. These, by definition, are not people with wealth to fall back on. Denying people benefits, for 13 weeks or 3 years, is going to force them further into debt and eventually destitution. It’s hard to see how this is addressing the causes of poverty.

In short, politicians might be surprised to discover how much fraud would go down if they sorted out the benefits system so it worked better for the people it’s meant to serve. In the meantime, don’t drive people further into poverty.

13 Responses to “Cracking down on benefit fraud is counter-productive”

  1. Claire French

    RT @leftfootfwd: Cracking down on benefit fraud is counter-productive

  2. Avatar photo

    Will Straw

    Really interesting piece, Will. But what, in your opinion, should we do about the small number of people who are genuine benefit frauds?

  3. G

    I enjoy the articles here but this is the first I really dis-agree with.

    The amount of Benefit fraud going on is far greater than people say. I know of only a handful of people claiming benefits and fraud in them runs at over 40%. I am middle class, work in finance and would consider my friends as good honest people. When it comes to benefits that flies out the window.

    The most common is people with children claiming to be single. They get housed, rent paid, child benefits, food for bills, food, council tax. Not bad, especially when their full time working partner moves in. I alone know of three people doing this one couple happily for over a decade now.

    Then we have the above scenario where the partner does not work but also claims the full package of accommodation, bills…. only in this case they move into their partners place and then rent out their free state provided home out to a third party. This person/family have a tax free income of over £40k more than most working families – they will never stop unless caught, and I see no way they will ever be caught.

    There are as you say some people doing odd bits of work undeclared and the system needs to somehow make the transition in hours / benefits work as a greater incentive to work – but benefit fraud itself is huge on a scale that a lot of people simply cannot grasp.

  4. Will

    Hi Will and G,

    Thanks for the comments. I agree there does need to be some deterrence / punishment for people who are genuinely defrauding the system. However, that should only come into effect once the system does not regularly fail many of those vulnerable people who rely on it. It needs to stop underpaying people the benefits they’re entitled to, or trying to claw back money it has overpaid them. It needs to stop making the process so complicated that people can spend weeks or months without any money whatsoever, getting further and further into debt. It needs to incentivise rather than discourage people taking smaller steps back into work, for example through a few hours work a week. And, I agree with G, it needs to stop penalising couples who live together (note this is nothing to do with marriage, it’s about whether couples, married or unmarried, live in the same house).

    Once those issues have been sorted out, then we can have the debate about the appropriate severity of the punishment. But until then, I think this unsightly race to the bottom is not just stigmatising, it’s ineffective.

  5. David Taylor

    Great article Will!!

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