Wel-unfare: Benefit fraud, error and philanthropy

The issue of benefit fraud often receives some pretty harsh coverage in sections of the media and some politicians are also prone to making unhelpful statements about what is actually a very small minority of benefit recipients. What doesn’t receive as much coverage is the underclaiming of certain benefits and it is this issue that is the focus of this post. This post is also not a defence of fraudulent activity within the benefit system.

Fraud and Error

Fraud and error within the benefits system are often reported together, which many people have criticised as they are both separate issues. This way of doing things means that the figure reported for fraud and error is higher than that for fraud alone. According to a press release by the DWP on 23 February 2012 titled ‘Universal Credit – weapon against benefit fraudsters’ (my emphasis) the figures lost to fraud and error were as follows:

  • £1.2 billion lost to fraud
  • £1.3 billion lost to customer error
  • £0.8 billion lost to official error

So error accounts for approximately 1.5 times as much lost as fraud with a total for the two combined of around £3.3.billion. The press release also documents new powers which will introduce tougher penalties for fraudsters. These figures and the press release were based on a lengthy report called ‘Fraud and Error in thew Benefit System’.

Benefit Fraud campaigns

The DWP also run a campaign to catch people attempting to defraud the benefits system. The campaign, which is as far as I can tell, the only one promoted on their website, is called ‘Benefit Thieves – it’s not if we catch you, it’s when’ which states that all ‘benefit fraud is benefit theft.’ Below are some images from the campaign.

The Sun has also started a ‘Beat the Cheat’ campaign recently and in December, Crimestoppers launched a campaign targeting benefit fraud called ‘Wel- un -Fare’, shown at the top of the post. This campaign received front page coverage in the Daily Express under the heading ‘New Blitz on Benefit Cheats’

Take up of Benefits 0r ‘Benefit Philanthropy’

On the same day that the Fraud and Error report was published, the DWP also published a report on ‘Estimate of Take-up in the benefit system’. This publication wasn’t, according to the DWP website, accompanied by a press-release. At 214 pages, it is a lengthy report but on page ii in the Executive Summary, the report notes that:

Taking all six income-related benefits together, there was between £7.52 billion and £12.31 billion left unclaimed in 2009-10; this compared to £40.56 billion that was claimed and represents take-up by expenditure of between about 77 per cent and 84 per cent. (my emphasis).

Unlike benefit fraud which costs approximately £1.2 billion, there are, to the best of my knowledge, no national campaigns or media coverage targeting what could be called ‘benefit philanthropists’ – those that do not claim or receive the £7-12 billion in benefits that they are entitled to. Incredibly, approximately 4 in ten people who are entitled to Jobseekers Allowance do not claim it. (This issue has been covered in a recent post on the Inequalities blog by Ben Blaumberg which can be found here). People who are unemployed are likely to be on some of the lowest incomes in our society and so, one would imagine, they meet the definition of the ‘most disadvantaged’ families or individuals that are mentioned 19 times in the government’s child poverty strategy.

Universal Credit is supposed to address some of the complexity in the benefits system that can put people off claiming and there are other issues around the stigmatization of claiming as well, but we shouldn’t wait until Univeral Credit is introduced to see this issue addressed. If this unclaimed money was received by the people entitled to it, it would almost certainly enter the economy and would probably not be put into savings accounts or investments. In 1909, Winston Churchill, talking about the benefits of the ‘old age pension’ said:

Nearly eight millions (pounds) of money are being sent circulating through unusual channels, long frozen by poverty in the homes of the poor, flowing through the little shops that cater to their needs, cementing again family unions which harsh fate was tearing asunder, uniting the wife to the husband and the parent to the child’

and Paul Spicker, more recently, made a similar point in a post about stimulating the economy on his blog. His post was about one-off aditional payments to certain recipients of benefits but the advantage of improving the flow of money to the poorest people remains the same. He said:

The distributive effect would be generally progressive (it could be made more progressive still if the payments are treated as taxable); and it would lead to an immediate, localised stimulus to spending that would fall roughly in proportion to the prevalence of deprivation.  And if such payments happened to do a little to alleviate child poverty, that is a side-effect I think we should be able to bear with equanimity.

A New Campaign?

Given that it looks unlikely that the popular media will start a campaign on this issue in the near future, I would like to ask if any of our readers have the capacity, resources and inclination to start or help with an on-line campaign highlighting benefit philanthropy or a new generation of ragged trousered philanthropists or something similar? I don’t have the necessary skill to do this but I’m sure it’s not a huge task for someone who knows their way around a computer and a social network site or two better than I do….

Please get in touch – or get parodying –  if you are interested…..

Best wishes,

Steve

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4 responses to “Wel-unfare: Benefit fraud, error and philanthropy

  • chriswarburtonbrown

    There is, of course, a much more sinister agenda behind these benefit fraud campaigns; the demonisation of claimants and claiming. This in turn seems likely to further increase the number of ‘benefit philanthropists’ by scaring or embarrassing potential claimants. So the treasury wins all round. But shame on the DwP for joining in so enthusiastically.

  • Ben Baumberg

    A really interesting and useful post, as ever. Not sure that ‘philanthropists’ is going to catch on though; it’s not so much people deciding that they want to donate money back to the taxpayer, but (to a large degree, as far as the evidence suggests) people not being aware that they’re eligible, and (to a smaller degree) people deciding it’s not worth the effort given the low levels of benefits and various aspects that can be included under ‘stigma’.

    Will be coming back to this regularly on Inequalities over the next 6 months anyway, as part of the project that I’m doing with Kate Bell and Declan Gaffney – so would be great to keep the conversation across the blogs.

  • Stephen Crossley

    Hi guys, thanks for the comments.

    I agree that the most interesting aspect of this, for me, is the role of the DWP and the ‘politicised’ nature of their role and intervention in this. The idea of benefit or welfare ‘philanthropists’ is, of course, tongue-in-cheek and inspired by the book ‘The Ragged Trousered Philanthropists’ which makes similar arguements about low waged workers ‘gifting’ money back to employers by not being aware of their situation and not ‘organising’ against them. Another similie could perhaps be the non ‘uptake’ of bankers bonuses. All in it together – from bankers to the unemployed….

    Ben – we’ll glady support both this broad agenda and, more specifically, your stigma project in the future, if we can. Is it the Elizabeth Finn Care research project? I hope it goes/is going well and if we can help with disseminating the findings in anyway, please let us know.

    Regards,

    Steve

  • “In search of the scrounger” Plus ca change… | North East Child Poverty

    […] We have previously blogged about the increase in ‘in-work conditionality’ here and the role of the DWP in arousing suspicion of benefit fraud with their ‘Benefit thieves’ campaign here […]

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