By Maeve McGoldrick
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.
This motion, which is basically a deterrence mechanism, received overall support from the Lords present. However some of the same questions we brought up earlier were raised – around the levels of benefit fraud in comparison to the levels of error and underclaiming, how much these cost the public purse, and how justified it was to be spending an unbalanced amount of resources on the former.
Baroness Thomas pointed out that fraud consists of an estimated 0.8% of the total welfare expenditure (which is £135 billion) whilst under claiming consists of an estimated 0.9% of all benefits. Lord Freud questioned the role of undeclared work, agreed that anti fraud strategies were important for justice but also in retaining public confidence in the system. He highlighted that benefit fraud hit the public twice; firstly in the benefits lost, secondly through loss of tax revenue.
Lord Freud has referred to the informal economy in several debates recently, including in relation to the Child Poverty Bill, and seems to realise that the informal or black economy is something that has to be taken into account, even formalised. However the debate over deterrence confirmed that the one strike sanction policy will be incorporated into future ‘targeting benefit fraud’ campaigns which will be even more punitive rather than encouraging formalisation of work. Baroness Thomas expressed concern over vulnerable claimants and how sanctions would affect children; would they suffer the most from this deterrence mechanism?
With fraud at a cost of £1.1 billion and underpayment estimated to be £1.2 billion (this does not include those who are entitled to benefits but do not apply or those who apply and are incorrectly rejected) it would be interesting to see the DWP spending on tackling fraud and on addressing underpayments.
There is a new DWP Working Benefits campaign to incentivise people to move into work with a video that recognises some common barriers. However if they want people to declare work and progress off out-of-work benefits then any communications strategy must think through their targeting benefit fraud campaign and the mixed messages the DWP will be sending out. Big fraudsters are hitting the Daily Mail headlines on a regular occurrence and distort the reality of benefit fraud in the UK. This creates a lack of public confidence in the system, and government throws money into deterrence campaigns rather than modernising the benefits system to prevent fraud in the first place. The Working Benefits campaign is a very positive step but needs to be integrated with basic changes in the benefits system like the Earnings Disregard and the 16 hour rule if they are to encourage people to declare the work they do and claim in work benefits.
How about expanding the campaign to:
-remove ludicrous benefit rules that either deter or stop people training or studying during a claim to incapacity benefits or ESA – why stop people improving their chances of a job?
-allow people on Income Suppport for incapacity to earn the same as people getting Incapacity Benefit if it is Permitted Work – (Income Support for incapacity allows earning of £20 a week – Incapacity Benefit allows earning of £93 a week, usually for a year at a time)
- simplify the impossibly complicated Permitted Work rules
-illustrate living on a weekly budget on £65.45 a week with pictures of food, travel tickets, gas bills etc
Judy Scott