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Benefit fraud – Cameron’s bluster vs Duncan Smith’s nuance

Wednesday, August 11th, 2010

Cameron’s blustering attack on people committing benefit fraud yesterday highlighted the growing gap between Iain Duncan Smith’s increasingly nuanced line on the issue and the rest of government’s determination to milk the potential of a ‘government cracks down on benefit cheats’ headline for all it’s worth.

After much concerted lobbying from Community Links, as part of our Need not Greed campaign, we were delighted to see DWP’s 21st Century Welfare paper include the paragraph:

“As a result [of the complexity of the benefits system] working legitimately is not a rational choice for many poor people to make. Fraud is always wrong, but we must recognise that the benefits system is making matters worse by pushing valuable work, and the aspiration that this can engender, underground.”

This complexity in the system also ensures that twice as much is lost each year in error as is lost to fraud. Tackling these real problems within the system will ultimately be far more successful at bringing down the welfare bill than pandering to prejudice against benefit claimants.

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Posted in Benefits, Informal Economy, Welfare | 1 Comment »

Benefit fraud crackdown – we’ve heard this all before

Tuesday, August 10th, 2010

Government’s latest wearily predictable spate of bullying the most vulnerable in society for cheap political gain – or ‘cracking down on benefit fraud’ as they prefer to call it – is as tiresome and damaging as ever.

As many have already pointed out, the £5.2bn figure being bandied around is for fraud and error, with error (£3.7bn) far outweighing fraud (£1.5bn). Cameron would claim he has said that all along, but his spin has been enough to deceive the Telegraph, who this morning were claiming that “Mr Cameron discloses that £5.2billion of the £87billion welfare budget is lost to fraudulent claims for tax credit and welfare, while administrative error wastes £1.6billion.”

Secondly, the latest figures I have (for 2006/7) show that 6,756 were successfully prosecuted, a further 12,000 were cautioned, 10,000 received an administrative penalty, 95,000 had their benefit changed but weren’t deemed to have done anything serious enough to warrant any kind of sanction, leaving an enormous 196,000 people who experienced a hugely stressful investigation and were found to have done nothing wrong.

We regularly talk to terrified people who are about to be hauled in front of a Jobcentre advisor and quizzed about their claim. Their only source of income is at risk – that five minute interview could mean the difference between scraping by and being plunge into destitution. And they might only be there because a neighbour has fallen out with them and phoned the benefit fraud hotline, or they had a bit of paint on their hands at their last interview. These advisors, don’t forget, are the same people who are supposed to be supporting people into work.

Even those who are defrauding the system usually do so out of need, not greed – scraping together enough for Christmas or paying for repair of a boiler through a bit of informal work, for example. The structural problems with the benefits system that Iain Duncan Smith has identified, the ones which make it very hard to get into work and render the system so complex it borders on incomprehensible, must shoulder the blame for all the error and most of the fraud. The few cases of blatant greed make the headlines, but don’t reflect the reality for people we see.

If I was Iain Duncan Smith this morning, I would be annoyed. His plans for welfare reform might be uncosted so far and might never make it past the Treasury, but they do represent a thoughtful and detailed attempt to address some of the more nuanced problems with the benefits system. Cameron’s announcement today, on the other hand, is crude, callous politics of the very worst kind – the age-old trick of bullying those least able to defend themselves to unite the rest in opposition. It’s a trick every government tries, usually with asylum seekers, poor migrants, and benefit claimants.

Before he became party leader, Cameron visited Community Links. The invitation is always open should he wish to return. But if he does so, I’ll make sure he spends a day behind the desk at our New Deal project – the most successful in London and the South East – talking to our advisors about the reality of being on benefits and looking for work. Hopefully he’d think twice before picking on people again.

Lastly, as many people have pointed out, don’t forget about the £70bn in tax evaded each year. Cameron said today that, ‘at a time when we’re having to take such difficult decisions about how to cut back without damaging the things that matter the most, we should strain every sinew to cut error, waste and fraud…’ in the tax system?

UPDATE: My colleague has pointed out the following line from DWP’s 21st Century Welfare paper last week:

“As a result, working legitimately is not a rational choice for many poor people to make. Fraud is always wrong, but we must recognise that the benefits system is making matters worse by pushing valuable work, and the aspiration that this can engender, underground.”

Perhaps someone should tell Cameron…

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Posted in Benefits, Informal Economy, Welfare | 3 Comments »

The impact of the emergency budget on Newham

Thursday, June 24th, 2010

Emergency Budget There has been so much macro-analysis of the emergency budget this week that we wanted to see how it will impact on local people in the London borough of Newham where we work. It’s difficult to analyse the changes as they are going to be introduced over the next few years, and we won’t see the detail until the 20th October when the Comprehensive Spending Review is published.

Newham has worked hard to get off the bottom of the league tables when it comes to multiple deprivation, but we have seen the consequences of the recession over the last two years as demand for our services has soared – those seeking debt advice have doubled, and those seeking employment support have tripled in last 18 months.

So here’s a snapshot of what these changes mean for local people in east London.

Benefits and Tax Credits

  • The three year freeze (should read ‘cut in real terms’) of Child Benefit will affect 41,035 families in Newham who receive Child Benefit (a total of 79,320 children), a powerful tool in the fight against child poverty. Newham has one of the youngest populations in the country so we will be affected disproportionately.
  • We welcome the increase of Child Tax Credit by an extra £150 per year. This will help the 38,600 Newham families who are currently in receipt of Child or Working Tax Credits (highest take-up in London) offset the cuts of their Child Benefit.
  • Even though the government cut the free schools initiative being trialled (very successfully) in Newham and other boroughs, we are heartened to hear of Newham Council’s commitment to continue with it anyway.
  • A total of 1,910 people (18.8% of those on JSA) have been claiming JSA for longer than 12 months in Newham, many of whom we help back into work through our very successful employment programmes. We recently submitted a paper to DWP proposing how the new Work Programme must be designed so that it doesn’t leave behind those who most need its support – read a copy here.
  • We are concerned about the Housing Benefit being withdrawn from people on Jobseekers Allowance after 12 months. Particularly if at this point they have to go on the compulsory Work Programme. It’s contradictory and may lead to a massive increase in homelessness, debt or cash-in-hand work.
  • Key out-of-work benefits are claimed by 30,440 residents   (18.3% of the local population). Through delivering an advice service to 9,000 people each year and our research and campaigning work we know that fundamental reform of the benefit system is an absolute imperative. So we were heartened to hear that changes are underway, including work incentives which we’ve been lobbying for. We look forward to working with DWP over the summer as it prepares a new Welfare Reform Bill.

Housing
Current LHA rates for Newham top out at £350 for a 5-bedroom house, so Newham residents won’t be affected by the cap.

Tax
We welcome the government following up on one of our policy recommendations to increase the personal tax allowance threshold. This latest increase to £7,475 will take about 10,500 local residents out of the tax system (15.8% of Newham’s working age population), putting more money into the pockets of those who need it most.

However the VAT increases will adversely affect those poorest in our society. The richest 10% spend £1 in every £25 of their income on VAT. The poorest 10% spend £1 in £7.

Jobs
Where are the jobs? The assumption in the budget is that the private sector will fill the deficit by providing more jobs. And that it will be easier for people on benefits to move into work. But again where are the jobs now?

  • In Newham there are 46 jobs for every 100 people of working age. Compared to 94 for London, and 83 nationally. In other words, people either don’t work, or have to travel outside the borough for work.
  • Nine JSA claimants are competing for each unfilled job vacancy in Newham, compared with a national average of 5:1. And there are 10,196 people are claiming JSA in Newham. That’s an awful lot of competition from just one of the 33 boroughs in London.
  • The types of work available to people in Newham are in the service sector (representing 89.9% of all jobs in the borough). Often insecure and temporary (32% are part time), low paid (21% get paid less than £7 an hour) and low skilled (24.2% fail to reach level 4 at Key Stage 2 – average of English and Maths).

Public Sector
Newham residents rely more heavily upon their public services than other more affluent areas. Some local services are already at bursting point as demand outstrips supply. When these are cut where will local people turn to?

  • 36% of jobs in Newham are in the public sector (top 10% in the country). Newham Council has already had to cut £30million (c.7%) from this year’s budget. However if we are to see departmental cuts of 25% over the course of this parliament and a council tax freeze, how may of these jobs will go in Newham? Public sector funding also supports a diverse voluntary sector, delivering a wide range of services. The prospect of 25% cuts is not good for those who work in the sector, or for those they support.

It’s early days to see how this budget will actually impact on local people in east London. But we do know that as belts have tightened in the past it has often been those with least that suffer most. Let’s hope this coalition government’s rhetoric of fairness and support for the most vulnerable actually plays out into reality.

The consultation process for the Comprehensive Spending Review should be launched today (24th June) and the timetable runs through to the autumn – so get involved, we will be.

Note: Current data sources have been used where possible, and can be provided upon request.

Posted in Benefits, Child Poverty, General, Housing, Informal Economy, Welfare, Working age poverty, debt, employment | 2 Comments »

Welfare reform proposals get a mixed reaction from the most successful New Deal project in London

Thursday, May 27th, 2010

New Secretary of State for Work and Pensions Iain Duncan Smith’s welfare reform announcements today (and his simultaneous Guardian charm offensive) get a mixed reaction from colleagues around Community Links who, amongst other things, run the most successful New Deal project – supporting long-term unemployed back into work – in London and the South East.

On the one hand, we’ve been calling for wholesale reform of the benefits system for many years, so it’s good to see him demanding it too. His recognition of the problem of work incentives in the benefit system – whereby people can end up worse off and less secure on taking a low-paid job – is welcome.

The benefits system needs to be designed so people can take stepping stones into well paid and secure work, rather than leaving them high and dry as soon as a temporary and low-paid job appears. Equally, it must be ready to pick them up again quickly if the job ends, both to prevent the cycle of debt that often begins in that few weeks between the last pay cheque and the first benefit cheque, and to give people the reassurance that taking the job in the first place won’t jeopardise their situation further down the line. Whether he can get these large and expensive reforms through the Treasury remains to be seen.

However, his continuing adherence to the idea of sanctions for ‘those who won’t work’ is worrying. We know that even the long-term unemployed want to work, but some face many and complex barriers – lack of training or education, lack of support at the Jobcentre, health or family problems. For some, it takes several cycles through our six month programme before they’re in a position to accept a job. Cutting their benefits after the first cycle will plunge them further into poverty and further from the job market, costing more, and stigmatising where government should be supporting.

Finally, the Work Programme model – whereby charities like ours (and private contractors) take on more of a role in supporting people into work – has good aspects, not least the ‘black box approach’ that would let us design bespoke programmes for individual jobseekers. Yet the signs are that, by making the contracts so big that only large multinational companies can apply, they will lose the unique contribution a charity like ours can make to supporting the long-term unemployed. The system will need to be carefully designed, and properly funded, to make sure this doesn’t happen.

Overall, much of the rhetoric – punishments and stigmatisation aside – sounds promising, but the detail is still not there. At the launch this morning Duncan Smith said he wanted to work with charities like ours to hammer out the detail over the next few months. If this is a genuine offer then we are very willing to help him shape the system so that it best serves the needs of the two thousand jobseekers we see every year, the tens of thousands in Newham, and the millions nationwide.

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Posted in Benefits, Informal Economy, Welfare, Working age poverty | 3 Comments »

Developing an EU platform to address undeclared work

Monday, May 17th, 2010

Amsterdam, a city known for its permissive approach to life, was the venue for a fascinating two day meeting on undeclared work recently. We were invited as the only social partner following our research and campaigns on the informal economy. It was hosted by Regioplan, a research organisation based in the Netherlands, and attended by various bigwigs (mainly from governments) from western European countries, to assess the feasibility of developing an EU platform to address undeclared work.

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Posted in Informal Economy, Welfare, Working age poverty, employment | No Comments »

Pre-election karaoke

Wednesday, May 5th, 2010

Amid the din of election coverage, it’s nice to be reminded that most of the world is carrying on as normal – working, volunteering, even dancing. Today, for example, is Community Links’ annual pensioners’ tea dance and karaoke party, organised by a group of volunteers from one of our corporate supporters. The hubbub emanating from the hall, right in the middle of our office, is a nice if distracting reminder that the good society is being supported every day, and no doubt will continue whoever makes it in to government.

Something that might not make it through the election period, however, is our proposal for a Community Allowance, which has been sitting with DWP for months, and is in danger of disappearing completely. After the election, expect to hear much more about it, as we try and persuade whoever’s in government of its obvious merits.

Until then, however, it’s sobering to remember that for many of the pensioners downstairs, the people coming through our doors for advice, or the young people we support into work, the next few years are going to be pretty tough, irrespective of tomorrow’s result. The recession hits the people we work with hardest and longest, and it’ll take more than some karaoke to sort that out. Proposals like the Community Allowance, which rewards work that strengthens communities and supports people back into work, could be crucial.

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Posted in Benefits, Informal Economy, Volunteering, Welfare, Working age poverty | No Comments »

DWP’s mixed messages on benefits

Friday, April 9th, 2010

Following on from our earlier post on benefit fraud, it’s worth noting an interesting debate on the subject in the Lords last week. In 2009 James Purnell’s Welfare Reform Bill was passed and in it was the controversial ‘one strike and you’re out’ amendment; section 24 of the new Act. After the first caution or administrative penalty, let alone conviction, a claimant will have their benefits stopped for a four week period. If this happens twice (two strikes) in a five year period their benefits will be stopped for thirteen weeks.

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Posted in Benefits, Informal Economy, Welfare, Working age poverty, employment | 1 Comment »

Benefit fraud crackdowns drive people further into poverty

Friday, April 9th, 2010

It’s dispiriting to see the Conservatives today follow Labour’s lead in proposing even harsher sanctions for people accused of benefit fraud. As we’ve pointed out before, there are several problems with this increasingly punitive approach.

Firstly, from our experience giving advice to over 12,000 people each year in Newham, we know that 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 which push them further into poverty. The occasional extreme case of greed you read about in the papers does not reflect the lives of those coming through our doors.

Secondly, benefit fraud is not as big a problem as either party might have you believe. Less than one percent of benefit claimants commit fraud (56,000 out of 5.8m), and more money is wasted each year on error (around £2bn) than is given to people claiming fraudulently. Meanwhile, about £1.2bn is underpaid, meaning people desperately in need of benefits do not receive them. Advertising campaigns that flame the public perception that everyone on benefits cheats the system 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 by imposing heavy-handed sanctions on people who, in the main, are just trying to get together enough money to get by.

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Posted in Benefits, Informal Economy, Welfare, Working age poverty, employment | 5 Comments »

Benefit fraud crackdown will plunge more people into poverty, not tackle its causes

Friday, April 9th, 2010

Our press release reacting to today’s Conservative proposal. More thoughts later.

Most benefit fraud is committed out of need not greed, and harsher penalties will not work, says leading grassroots charity Community Links reacting to Conservative proposals to further penalise benefit fraud.

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Posted in Attitudes, Benefits, Informal Economy, Welfare, Working age poverty, employment | 1 Comment »

Charlotte’s story – unemployment and the Jobcentre

Wednesday, March 31st, 2010

Charlotte is 19, lives in East London, and is currently unemployed.

“I left school at 16, with 10 GCSEs. I’ve worked since I was 14, doing cash in hand jobs – waitressing mostly – and I also have an NVQ Level 2 in hair dressing. When I was 17 I had to go on income support because I broke my leg and smashed a vertebra in my back. The Jobcentre was good about that, and they gave me advice, but that was because I wasn’t allowed to work. When I was about 18 I started working formally as a market researcher, but I lost my job in September last year.

I tried as long as possible not to go on benefits, and lived off some savings for as long as I could. But I couldn’t find a job after so long that I had to sign on.

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Posted in Benefits, Informal Economy, Welfare, Working age poverty | 2 Comments »

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