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Benefit fraud figures

Government figures suggest that overpayments due to benefit fraud have remained at the 2011/12 of 0.7 percent, level.

Commenting, Hitesh Patel, audit firm KPMG’s Forensic Partner, says: “Belt tightening remains the hobby of necessity in the current economic climate. Yet, with many people driven by a pressure to survive as austerity measures begin to bite, it is relatively good news to see that the cost of benefit fraud has remained unchanged for the best part of a year.

“Despite high levels of unemployment and the resulting increase in claimants, the Government has managed to ensure that year-on-year losses remain stable. In the context of the sheer volume of transactions undertaken to distribute benefits this must be seen as a move in the right direction and an indication that policies and structural reforms are having a positive impact.”

“Yet, whilst it’s encouraging to see figures falling, now is not the time to be complacent. Application of sophisticated forensic techniques to build behavioural patterns and track fraudsters, combined with a tougher penalty regime for those who are caught might – at the very least help to deter people from engaging in fraudulent activity. At best, they may ensure that the stabilising figures released today are followed by news of a decline in fraud, tomorrow.”

Fraud and error in the benefit system stands at £3.5bn or 2.1% of total benefit expenditure, latest figures suggest from the Department for Work and Pensions (DWP).

Preliminary estimates for fraud and error in 2012/13 show £1.2bn of benefit spending is lost due to fraud, £1.6bn due to claimant error, and £0.7bn due to official error.

Last month Universal Credit was launched in Greater Manchester and Cheshire and the new benefit will reduce fraud by £200m a year when rolled out fully, according to the DWP.

Over the last year, the DWP says, it has increased its work to crack down on benefit fraud – although this investment is not captured by the figures.

Minister for Welfare Reform Lord Freud said: “Universal Credit will revolutionise the welfare state and ensure that the unacceptable levels of fraud in the benefit system are reduced considerably. The Universal Credit system will be much easier for individuals to understand, less vulnerable to human error, and more difficult for people to play the system.

“But our fraud investigation teams are also continuing their hard work – targeting areas of suspected high fraud, using the latest technology to investigate these criminals and going back over old claims to uncover people trying to swindle the taxpayer. In the last year, a range of measures have been put in place in the fight against fraud and error:

investigators are making greater use of Proceeds of Crime Act powers to take fraudsters back to court to confiscate assets, force them to repay stolen benefits or face prison.
targeted campaigns are focusing on areas of high suspected fraud
dedicated teams are checking old claims for potential fraud and error
new tougher penalties to deter fraudsters now include penalties of up to £2,000 without being taken to court.
extended loss of benefits for convicted benefit fraudsters for up to three years; an immediate three year loss of benefit for serious organised benefit fraud or identity fraud.
a £50 civil penalty in cases where claimants negligently give incorrect information on their claim or fail to report a change in circumstances which results in an overpayment.”

Anyone with information covering suspected benefit fraud should call the National Benefit Fraud Hotline on 0800 854 440.

According to the Government, Universal Credit is expected to lead to £2.2bn of savings due to reduced fraud, error and overpayments together with changes to the current earnings disregards in tax credits.


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