By David Kilty, Solicitor Partner at David Phillips & Partners, Bootle office
A recent government report highlighted an interesting statistic: more money is incorrectly paid in benefits due to innocent errors than fraud.
The report, ‘Fraud and Error in the Benefit System: Preliminary 2011/12 Estimates (Great Britain)’, was prepared by the UK government’s own Department for Work and Pensions (‘DWP’), and compares current and historical data on social security benefit payments, including Income Support, Jobseeker’s Allowance, Pension Credit and Housing Benefit. This data was used to create estimates of payments for the 2011/12 fiscal year, in which £159bn was paid.
It describes three situations which lead to overpayment of benefits:
This is obvious to most of us, but for the purposes of the report it is defined as a situation where:
- the basic conditions for receipt of benefit, or the rate of benefit being paid, are not being met;
- the person receiving the benefit (‘the customer’) can reasonably be expected to be aware of the effect of the basic conditions not being met on their entitlement to benefit; and
- the benefit paid reduces or stops because of a review.
B. Customer Error
This is defined as an innocent mistake with no intent to defraud, where the customer provided inaccurate or incomplete information or failed to report a change in circumstances
C. Official Error
This occurs when the benefit is paid incorrectly due to inaction, delay or a mistaken assessment by the Department for Work and Pensions, a Local Authority or Her Majesty’s Revenue and Customs.
Of the three, which is the one we hear most about? Answer: benefit fraud.
What the government don’t tell you about benefit fraud
The government report states that only 0.7% (£1.1bn) of the total benefit expenditure is estimated to be overpaid due to fraud. Of that, the net loss to the taxpayer will be considerably less, as this figure does not include money subsequently recovered by the government. In 2011/12 DWP and Housing Benefit recoveries were estimated at £780m, so that the total anticipated loss due to benefit fraud is only 0.2% (£320m). It should also be noted that the total cost (0.7%) has decreased from 0.8% in the previous year.
By contrast, customer and official error cost a combined 1.3% of the total payments, or £2.1bn. Put another way, errors caused by failings in government departments and on the part of the recipients are 6 ½ times more costly than fraud. What is worse is that this figure is the same as the previous year, showing that there is no improvement in dealing with errors while more resources appear to be allocated to fighting comparatively insignificant amounts of fraud.
As a benefit fraud solicitor at David Phillips & Partners Solicitors, my job is assisting those who have been accused of cheating the system. Many of my clients are completely innocent, but are still made to go through a stressful and often life-changing investigation by aggressive, well-funded investigators. These figures highlight that fraud is a comparatively small problem, despite the headlines, and that people accused of benefit fraud are far more likely to be innocent due to their own or a government official’s mistake.
It strikes me that the government is focussing on fraud, a popular vote- winner, rather than managing its departments and accepting that innocent mistakes occur. Allocating resources to education which helps reduce errors (both by government departments and benefit recipients) would be a better use of some of the government’s current spending on pursuing virtually non-existent benefit fraud. Will this happen? Only if it wins votes. Until then, benefit fraud solicitors like me will continue to fight hard on behalf of people wrongly accused of benefit fraud.
If you have been accused of benefit fraud, David Phillips & Partners can help. Call 0800 027 7870 or complete the ‘Contact Us’ form on this page.