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 http://bit.ly/9Y5IFM

  2. 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!!

  6. G

    I agree Will, sadly the system is just wrong from top to bottom. Maybe one requirement would be that people actually have to go somewhere each week day for a number of hours to at least give them a reason to get up and out.

    Job centres need to be more pro-active and operate more like a recruitment agency. Give the employees bonuses when they find people work if need be (increase their desire to help people). If someone is long term unemployed then make it a requirement to train in something – just try to give people a reason to get out of bed, give them a skill, give them some pride and self-confidence back.

    For a year introduce a scheme – for the first year back in work make it tax and Ni free and give them 100% of their benefits 1st month and reduce the benefit contribution % over 6 months (it should still be cheaper than them claiming for everything – with the advantage they will soon be contributors)

    As for the real blatant benefit cheats. Give them a amnesty for the same year to sort out their claim status and then announce a new “benefit fraud helpline” – offer people 50% of the money that would be saved on the claimant for 6 months. Suddenly you better prey your friends are real good friends because £10-20k in your a/c for a phone call is going to testing.

  7. MissTJD

    More money wasted thro' error than fraud: RT @leftfootfwd: Cracking down on benefit fraud is counter-productive http://bit.ly/9Y5IFM

  8. Mark M

    So let me just get this straight. We have 3,000 benefit fraud officers trying to track down 56,000 benefits cheats – we pay out £2bn more in error, offset partly by £1.2bn unclaimed.

    For once I agree. We shouldn’t be cracking down on benefit fraud. We should rip up the whole system and replace it with one that’s simple and actually works (i.e. acts as a safety net that incentivises work, rather than creating a welfare dependency).

  9. Will

    Mark Easton published a very interesting piece on this. Apparently no-one has ever been convicted of benefit fraud three times, and only 69 people last year were convicted of it for the second time.

    Theresa May claims it will send a message to potential benefit cheats, but it doesn’t seem as though that message is necessary (and neither are the less severe but still harsh penalties included in the Welfare Reform Bill, which have not yet been introduced). Instead the message is aimed at the electorate.

  10. Miladysa

    RT @andrewroche: Cracking down on benefit fraud is counter-productive http://ff.im/-iUCd0

  11. Andrew Roche

    Cracking down on benefit fraud is counter-productive http://ff.im/-iUCd0

  12. lisa

    I am a 36 year single mum of five and i phoned the benefits centre to tell them that i started work part time and no longer needed my income support they told me they would see to it, two weeks later i went to draw my pay out of the bank and found that i had more money than i should havwe had, only to be told by my bank that it was a payment from dwp, so i phoned them and once again explained that i was now working, they told me that i was entitled to that money, i then phoned them again when i realised i was still getting my income support in the bank, and the lady i spoke to told me that i wouldn’t get the money if i was not entitled to it, i asked three times are you sure because i do not want this coming back onto me and she said she would look into and write to me if it was to be changed i received a ltter stating that i was entilted to it and now 9 wqeeks on i have had a letter stating that i have to attend an interveiw for suspected crimainal benefit offence whilst in employmnt, can they do me for fraud when it was their mistake and i did declare that i was working three times and was told i was entitled to that money, i also questioned them twice on the matter and they continued to pay me income support so i just took it that they were right and i was still entitled to it

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