Benefit figures & fraud - a few home truths

[nickd]

Has the coalition now declared war on the working as well as disabled & out of work?

Tax Credit System "wide open to abuse" and "haemorrhaging money"

Today Iain Duncan Smith laid bare his next angle of attack on welfare. In an article in the Daily Telegraph IDS made a brutal attack on the tax credit system introduced by Labour. The Guardian also covered the story which reveals the extent of the claims made by IDS:


More than £10bn of public money has been lost in fraud and error under the tax credit system put in place by Labour, the work and pensions secretary has claimed.


In a scathing attack on the welfare model developed by the last government, Iain Duncan Smith said tax credits were "not fit for purpose" but had been extended ahead of the 2005 and 2010 general elections in a pitch for votes.


The system was "wide open to abuse" and "haemorrhaging money", he wrote in an article for the Daily Telegraph.


"In the years between 2003 and 2010, Labour spent a staggering £171bn on tax credits, contributing to a 60% rise in the welfare bill.


"Far too much of that money was wasted, with fraud and error under Labour costing over £10bn."


Duncan Smith said HM Revenue and Customs conducts checks on far fewer tax credit claims than suspected benefit fraudsters. That is despite about one in 12 tax credit claims being incorrect or fraudulent, compared with fewer than one in 25 benefit claims.


Use the link to read the rest of the story in today's Guardian. I have to say IDS's latest attack is one which completely incensed me, so much so I wrote a few comments of my own in response to IDS's latest attack on the welfare system, you can read my comments here.


What really galls me about how IDS goes about his business is the way he indulges in attaching a culture of blame to anyone but himself. We've had those who are unemployed through no fault of their own being dubbed as shirkers, we've heard all sorts of horrendous stories about the genuinely ill being labelled fakers, we've had endless accounts from IDS about endemic worklessness being caused by a labour rather his own Tory government which in reality was the most culpable when it came to parking 2.6 million on the sick, we've had story after story about Britain on the fiddle despite the actual fraud figures being a fraction of what they are perceived - by media distortion - to be; but IDS's latest attack is the lowest of the low - he's now picking on those who work for sufficiently low wages to entitled to in work benefits.


The Conservatives promote the Telegraph headlines on the Conservative home website along with an extract from the Sun over the number of 'benefit fiddlers' being jailed:





Along with the following comments:


"The number of benefit fiddlers being jailed has HALVED despite a big Government crackdown"


"Official figures show 430 cheats were caged by judges or deported in the past 12 months — compared with 957 last year and 893 in 2010. Fewer than one in four handout fraud cases now leads to a court conviction and only one in 50 ends in a prison term. The failings come despite a massive push to root out benefits cheats, who cost taxpayers more than £1billion a year." - The Sun


When it comes to welfare it's always fraud which is cited as one of the main contributory causes of a rise in expenditure. Yet it's patently obvious that IDS is struggling to find a real evidence base and getting in to difficulty with his beloved Universal Credit. I rather suspect that what's thrown his overly ambitious scheme one step nearer to chaotic implementation is a realisation that transferring millions of tax credit claims over to Universal Credit is going to be far from straightforward when many of the existing claims will be far from reconciled in terms of pre-existing overpayment & underpayments from previous annual awards.


The minute IDS hears the word 'overpayment' he jumps to a conclusion that it will be down to an errant act of fraud on the part of the claimant; he just hasn't got a clue how it all works.


UC impact assessment

www.dwp.gov.uk/docs/universal-credit-wr2011-ia.pdf


To put this in to context you need to look at what IDS is saying in his latest sweeping statement then take a look at the evidence to see whether it matches up with his claims.


An appropriate starting point is to look at the latest fraud & error report and breakdown the all too often spun 'headline' figures:

[nickd]

Fraud and Error in the Benefit System: 2011/12 Estimates (Great Britain)

But how accurate is the public's perception?

An appropriate starting point is to look at the most recent statistics and work our way back to see how accurate IDS is in his claim that the Tax Credit System is "wide open to abuse" and "haemorrhaging money" and also see whether benefit fraud has systematically risen in the way media reports appear to suggest...


A good article by Will Horwitz can be found on the Community Links website. Here's what Will has to say...


"Last week the Department for Work and Pensions released their annual figures (PDF) on fraud and error in the benefits system. It seems a good time to make exactly the same points we made last time this happened.


Firstly lumping together fraud and error is misleading and means everyone (including Teresa May, in the Telegraph article linked above) concentrates on the fraud and forget about the error.


Secondly underpayment of benefits (this year running at £1.2bn), is arguably an even bigger problem, because it leaves vulnerable people in a desperate situation, evicted or unable to buy food. They often end up seeking advice at Community Links, because the system has let them down so badly. And don’t forget this is just people claiming a particular benefit but getting less than they’re entitled to. It doesn’t include people who aren’t aware they’re entitled to a benefit at all.


Thirdly, ‘customer error’ is not the fault of the claimant. The report separates out intentional fraud (£1.1bn), unintentional ‘customer error’ (£1.1bn), and ‘official error’ (£0.8bn). Our experience at Community Links shows that claimants make errors because they are left to navigate a hugely complicated system with very little guidance, bombarded with unintelligible forms, and offered very little support. It’s a stressful experience, made worse when DWP tries to claw back money they’ve overpaid. The high level of customer error is an indictment of the DWP (if a business was losing £1bn a year because customers couldn’t work out how to use the payment system, they’d sort it out pretty quickly)".

Take a look at the latest
DWP fraud report here.

Jobcentre Plus (+)or is it a minus (-) ?

In my experience the scope for official error within the benefits system is huge, it's incredibly complex and one has to remember that many claimants are battling with various circumstance related to all manner of crisis in their lives (disability, illness, bereavement, the shock of losing a job to name but a few). We are also dealing with pensioner groups who will often find it inordinately difficult to keep track of changes in the rules over their entitlements.


With that in mind let's take a look at how the latest DWP fraud report portrays it's 'headline statistics'...

Headline results


Estimates of Fraud and Error across all benefits in 2011/12

The estimate of total overpayments due to fraud and error across all benefits is


£3.4bn; this is 2.1% of the total benefit expenditure, which was £159.2bn in 2011/12.


The estimate of total underpayments due to fraud and error across all benefits is £1.3bn; this is 0.8% of the total benefit expenditure in 2011/12.


Estimates of Fraud and Error by type of error in 2011/12


 0.7%, or £1.2bn, of total benefit expenditure is overpaid due to fraud;


 0.9%, or £1.4bn, of total benefit expenditure is overpaid due to claimant error;


 0.5%, or £0.8bn, of total benefit expenditure is overpaid due to official error.


 0.6%, or £0.9bn, of total benefit expenditure is underpaid due to claimant error;


 0.3%, or £0.4bn, of total benefit expenditure is underpaid due to official error.

Estimates of Fraud and Error by individual benefits in 2011/12
Key estimates for the individual benefits that are measured on a continuous basis are that:


 4.4%, or £310m, of Income Support expenditure (£7.2bn) was overpaid;


 4.6%, or £230m, of Jobseeker’s Allowance expenditure (£5.0bn) was overpaid;


 5.7%, or £460m, of Pension Credit expenditure (£8.2bn) was overpaid;


 4.9%, or £1,130m, of Housing Benefit expenditure (£22.8bn) was overpaid.


 0.9%, or £70m, of Income Support expenditure (£7.2bn) was underpaid;


 0.3%, or £20m, of Jobseeker’s Allowance expenditure (£5.0bn) was underpaid;


 1.8%, or £150m, of Pension Credit expenditure (£8.2bn) was underpaid;


 1.4%, or £310m, of Housing Benefit expenditure (£22.8bn) was underpaid.


HMRC annual accounts 2012


www.hmrc.gov.uk/about/annual-report-accounts-1112.pdf


Universal credit - weapon against fraud - February 2012


www.dwp.gov.uk/newsroom/press-releases/2012/feb-2012/dwp018-12.shtml

[nickd]

Lets take a look at some of these claims on benefit fraud





www.blog.rippedoffbritons.com/2011/06/benefits-fraud-would-taxpayer-save.html


Let's take a look at the real statistics







Benefit fraud has halved over the last decade.



Yes the figures from 2000/01 to 2009/10 have actually seen benefit fraud fall from £2.2 billion to £1.1 billion pounds. And where's does this stunning revelation come from? Some lefty think tank? No, no from none other than the Secretary of State for Work and Pensions, following his appearance before the Committee on 9 November 2011. Isn't it amazing how you never get to hear any of this in the papers. You can access the information right here on the Parliamentary website ; you could hardly get a more reliable source of data could you?


A breakdown of the figures in 2008/2009





You can read a good insight into how benefit fraud is significantly overshadowed by tax evasion in a blog by Lisa Ansell, click on the link to Lisa's comparison chart and see how much more is lost through tax evasion than it is through benefit fraud. Here's what she has to say:


"Until the 1980s, we knew that the relatively low levels of benefit fraud would be offset by unclaimed benefits by miles. Then someone hit on the notion of demonising the unemployed, and all our political parties decided that was a very good way to whip up fury to distract from economic failure. Now we don't talk about benefits outside those terms. We don't talk about why women are the main receivers of benefits, we don't talk about the cost of providing god knows how many layers of ineffective services to treat symptoms of preventable poverty. We don't talk about the £4billion lost in error, because the entire system geared towards prevent 1% of benefit fraud. Political debate does that. Obscures reality. Quite effectively."


What I fail to understand is how when you talk to people they will almost laugh off tax evasion as somehow being socially acceptable, yet when it comes to benefit fraud the same individuals will express an almost loathing for claimants who fiddle the system. I don't get the difference if you are going to get all moral about it surely cheating the State is the same crime; what's the difference between falsely filing your tax returns and falsely claiming benefits? It's as though those who use a degree of 'cleverness' to avoid paying their true amount of tax due are seen as fairly playing the game, it's somehow smart to cheat the State on the one hand but not when it comes to claiming benefits. We really do need to ask ourselves why we've turned on the benefit claimant in such a draconian way. Media exposure on MP's who cheat their expenses, or businesses which avoid their taxes tends to be short lived. How many of you for instance saw much exposure over Tory donor and one time 'man from Del Monte' Asil Nadir in his recent conviction at the Old Bailey for numerous charges relating to a £29 million pound fraud? You can read about Asil Nadir here; the judge in his £4 million fraud trial even called him 'charming'. What's charming about a man who cheated many people out of millions?

[nickd]

Press Release - Minimising the cost of administrative errors in the benefit system


25 November 2010

Full report - Minimising the cost of administrative errors in the benefit system


A report today by the NAO has highlighted that the Department for Work and Pensions has not reduced the mistakes made by its staff in processing benefits. In 2009-10, it overpaid its customers by an estimated £1.1 billion and made underpayments of £500 million.


However, the scale of the challenge faced by the Department should not be underestimated. The benefits system is large, encompassing over 27 different benefits and a total caseload of around 20 million people. The scale of this task increases further when changes in family circumstances and financial conditions are also taken into account. Mistakes occur when processing such a large volume of payments.


In addition, the Department has had to respond to the recent recession in which Jobseekers Allowance caseload almost doubled between 2008 and 2009. To date there does not appear to any discernible deterioration in performance, which may represent progress.


The report notes that the Government’s recent announcement of the introduction of Universal Credit is an opportunity to simplify many of the regulations, but such changes will take a long time to implement. In the meantime, the onus remains on the Department to keep the costs of mistakes to a minimum.


The Department has demonstrated a clear commitment to reducing administrative error, through the publication of a strategy in 2007 aimed at tackling mistakes made by its staff and through the formation of dedicated departmental-wide groups such as the Fraud and Error Council which reports direct to the Permanent Secretary.


There is, however, scope for improvement in the quality of information used to assess where the Department should focus its efforts. Although DWP has initiated an exercise to understand fully the causes of error, this will not be complete until the spring of 2011. There is also scope for further work in collecting and analysing the full costs and benefits of the Department’s interventions in order to assess cost effectiveness.


The Government announced a new strategy in October 2010 with a greater emphasis on preventing errors from arising and this is now an opportunity for lessons to be learned.


Amyas Morse, head of the National Audit Office, said today:


“The Department is clearly committed to reducing the cost of administrative error and it is frustrating that there has been no discernible reduction since 2007. Progress will depend on developing a better understanding of the costs and benefits of different interventions, so that they can be targeted more effectively and are able to achieve a significant reduction in the cost of administrative error.”


1. In 2009-10, the Department for Work and Pensions paid out £148 billion in benefits and pensions to its customers. The benefit system is complex, encompassing over 27 different benefits and a total caseload of around 20 million people. The Department estimates that it made £3.1 billion of overpayments and £1.3 billion of underpayments as a result of fraud and error in 2009-10.


2. Underpayments due to administrative error put an unfair burden on people. Overpayments represent a direct loss to taxpayers as the amounts are not normally recoverable. The estimated cost of overpayments due to administrative error as a percentage of benefits expenditure has remained at 0.7 of a percent since 2006-07. Underpayments as a percentage of expenditure have changed from 0.4 of a percent in 2006-07 to 0.3 of a percent in 2009-10.


3. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk/. Hard copies can be obtained from The Stationery Office on 0845 702 3474.


4. The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 900 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.


www.nao.org.uk/publications/press_notice_home/1011/1011569.aspx

[nickd]

Disability

mylegal.proboards.com/index.cgi?action=display&board=frontline&thread=818&page=1#2450

[nickd]

Tax Credits

[nickd]

Working Families' Tax Credit and Family Credit Statistics
Quarterly Enquiry - November 1999
United Kingdom

HMRC



May-88 -- 261.0 - 187.4 - 73.6 -
May-89 -- 303.0 - 188.6 - 114.4 -
May-90 -- 315.2 - 193.3 - 121.9 -
May-91 -- 346.6 - 214.9 - 131.7 -
May-92 -- 396.7 - 236.9 - 159.8 -
May-93 -- 488.3 - 280.7 - 207.5 -
May-94 -- 550.9 - 315.0 - 235.9 -
Aug-94 -- 570.6 - 326.0 - 244.6 -
Nov-94 -- 584.3 - 329.5 - 254.8 -
Feb-95 -- 595.0 - 333.2 - 261.8 -
May-95 -- 607.6 - 339.5 - 268.1 -
Aug-95 -- 628.2 - 349.5 - 278.7 -
Nov-95 -- 648.7 - 358.8 - 289.9 -
Feb-96 -- 666.8 - 370.6 - 296.2 -
May-96-- 693.0 - 387.8 - 305.2 -
Aug-96 -- 702.8 - 392.3 - 310.5 -
Nov-96 -- 725.6 - 396.2 - 329.4 -
Feb-97 -- 733.5 - 397.9 - 335.6 -
May-97 -- 747.7 - 406.3 - 341.4 -
Aug-97 -- 758.0 - 407.2 - 350.8 -
Nov-97 -- 766.1 - 399.0 - 367.1 -
Feb-98 -- 760.5 - 390.9 - 369.6 -
May-98 -- 767.1 - 390.3 - 376.9 -
Aug-98 -- 783.0 - 393.5 - 389.5 -
Nov-98 -- 790.7 - 389.3 - 401.4 -
Feb-99 -- 789.1 - 388.7 - 400.3 -
May-99 -- 790.7 - 387.2 - 403.5 -
Aug-99 -- 784.2 - 378.9 - 405.2 -
Nov-99 -- 930.5 965.0 448.5 467.2 482.0 497.7

www.hmrc.gov.uk/wftctables/wftc_tables.pdf

Working Families' Tax Credit
Statistics - Summary Statistics
February 2003
United Kingdom

May-00 -- 1,024.0 -- 1,061.4 -- 493.3 -- 513.4 -- 530.7 --548.0
Aug-00 -- 1,089.7 -- 1,129.1 -- 527.2 -- 548.5 -- 562.4 -- 580.6
Nov-00 -- 1,126.3 -- 1,167.8 -- 543.0 -- 565.9 -- 581.5 -- 601.8
Feb-01 -- 1,182.0 -- 1,225.7 -- 574.8 -- 598.3 -- 607.3 -- 627.3
May-01 -- 1,214.8 -- 1,259.5 --593.5 -- 617.6 -- 621.3 -- 642.0

Based on all awards

May-01 -- 1,206.9 --1,251.4 -- 591.3 -- 615.2 -- 615.5 -- 636.1
Aug-01 -- 1,226.0 -- 1,271.0 -- 593.5 -- 617.4 -- 632.5 -- 653.6
Nov-01 -- 1,247.7 -- 1,293.7 -- 593.2 -- 617.2 -- 654.4 -- 676.5
Feb-02 -- 1,269.9 -- 1,316.9 --601.7 -- 626.0 -- 668.2 -- 690.9
May-02 -- 1,293.7 -- 1,341.2 -- 610.8 -- 635.0 -- 682.9 -- 706.2
Aug-02 -- 1,307.5 -- 1,355.5 -- 611.8 -- 636.1 -- 695.7 -- 719.4
Nov-02 -- 1,327.7 -- 1,377.3 -- 615.0 -- 639.8 -- 712.8 -- 737.6
Feb-03 -- 1,480.4 -- 1,427.5

www.hmrc.gov.uk/wftctables/wftc_feb03.pdf

[nickd]

X

[nickd]

X

[nickd]

X