Thursday, 28 October 2010

The numbers behind benefit fraud

Benefit fraud is a serious offence and it has been continuously mentioned in speeches and announcements by the Coalition Government.

I certainly do not condone it and the Kirk is completely against fraudulent activities, but, the stress that is being placed on benefit fraud seems slightly out of proportion to the reality. Let us have a look at the data; for the financial year 2009-2010 the National Audit Office estimates fraud to be 0.6% of the Department of Work and Pensions benefits bill, while errors make up more than double this figure. Benefit fraud is estimated at £1 billion, and tax credit fraud is estimated at £0.6 billion, making a total of £1.6 billion.

However the Chancellor seems to have conflated benefit fraud and error during his speech announcing the Comprehensive Spending Review on October 20th 2010. He said:

“Nor will fraud in the welfare system be tolerated any more. We estimate that £5 billion a year is being lost in this way - £5 billion that others have to work long hours to pay in their taxes. This week we published our plans to step up the fight to catch benefit cheats and deploy uncompromising penalties when they are caught.”
How come £1.6 billion got metamorphosed into £5 billion? Has there been a mistake in the decimal point?

There seems to be a tendency to emphasise fraud when poverty and welfare reform are discussed. This often distracts attention from getting resources to those genuinely in need. This is truly unfortunate because our experience working in deprived communities is that life on benefits is often a struggle, with difficult and stressful financial choices being a daily occurrence. We believe this reality is not well reflected in government statements and should be at the heart of any debate on Welfare Reform.

I have therefore written together with a number of other church leaders to David Cameron calling on him to instruct the Chancellor to correct his statement of 20th October and that the publication ‘Tackling fraud and error in the benefit and tax credits systems’ published last week by the Department of Work and Pensions and HM Revenue and Customs is similarly corrected, as it makes the same error.

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