New to the blog: a Category for Facts & Figures. Factchecking prompted by disablist Labour loyalists spouting right-wing tabloid rhetoric about benefit fraud. Especially disturbing as one fronts a Think Tank.
It’s important to note that tax credits have left half of working families dependent on welfare and stuck in menial, demoralising jobs that don’t pay a proper living wage.
Tax Credits, themselves a Benefit, are a subsidy for employers making it easy for them to maximise profits and perpetuates disenfranchisement that’s very difficult to escape.
The department expects to spend a total of £148bn on benefits, including income support, housing benefit, disability and unemployment payments and more. A billion pounds going AWOL isn’t to be sniffed at, but it’s worth pointing out that it’s just 0.7 per cent of total spending on these benefits.But where does the rest of Cameron’s £5.2bn come from?
So add this into the mix, and you get to a total fraud bill of £1.5bn, a figure which is lower than the headline-grabbing £5bn but, to be fair, one that Cameron also quoted in his article.
Errors, not fraud, account for the remainder of the £5.2bn.
Benefit and tax credit mistakes cost the taxpayer nearly £4bn, according to the most recent figures that we have.
Source: Channel 4 News, Factcheck Blog
The National Audit Office itself contradicts the Mail’s assessment, saying: “Customer error occurs when customers make inadvertent mistakes with nofraudulent intent.” The NAO does not therefore class attempted fraud as one of the reasons for money being lost through customer error. Instead, it highlights confusion over the complexities of the benefit system and changes to customer circumstances as the main reasons for customer error occurring.
The DWP did consider the issue of attempted fraud when it published a report of tackling benefit fraud and error back in October 2010. This noted that “under the current system it is very difficult to uncover cases of attempted fraud,” meaning that it may be under-reported in official estimates. However it does not impinge upon the Department’s estimate of customer error, which is explicitly limited to “non-fraudulent” cases.
In fact, the DWP has suggested that the complexities that contribute to customer error may also inflate the fraud figures. It noted in its report that: “The difficulty of reporting changes in circumstances, especially around short-term and casual work, can encourage people to ‘fall into’ fraud.”
George Osborne may be slashing the benefits budget to save cash, but part of the problem with our welfare system is the amount that goes unclaimed each year. In 2008/09 £12.7bn of means-tested benefits and £5bn of tax credits went unclaimed, a far cry from Osborne’s view of people taking unwarranted benefits as a “lifestyle choice”.
Source: Guardian: Britain’s unclaimed benefit billions
Carers and benefits
- Three out of four carers are worse off as a result of their caring role.
- Approximately 500,000 carers receive Carer’s Allowance, but around 1.2m are eligible. Eligible carers who are receiving another benefit such as a State Pension cannot receive Carer’s Allowance.
- Some Carers’ Centres uncover £1 million per annum in unclaimed benefits for carers.
- Out of carers surveyed, 9% had missed out on Carer’s Allowance for 3-5 years, 10% for 5-10 years and 14% for over 10 years, because they did not realise they were entitled to it.
- Out of carers surveyed, 49% said not getting these benefits affected their health, 20% said they were struggling financially and 20% said they were in debt.
As Disability Minister Maria Miller noted in a Parliamentary Answer: “Motability is largely self financed and the only funding the Department for Work and Pensions gives the scheme relates to the Specialised Vehicles Fund.” In 2010/11, this DWP funding totalled £18.2 million, a long way short of the £1.4 billion claimed in the press.
Instead, this is calculated by taking the mobility component (£51.40) over a year (£2,672.80) for all of the 540,351 people involved in the Motability scheme, giving a total contribution of £1.44 billion. As we’ve already noted, this is money that would have been paid out to fund the transport needs of higher rate mobility DLA claimants regardless of whether or not the scheme was in existence.
Most of the papers make clear at some point in their reports that the figure of 887,300 who, in the papers’ view are ‘fit for work’, comprises of 458,500 who took the WCA and were found well enough for employment, and a further 428,800 who withdrew their applications before they could undergo an assessment.
But can we be sure that all people in this second group are therefore ‘fit for work’?
As Anne Begg, chair of the Work and Pensions told today’s Daily Politics show, whilst some may have withdrawn their application because they either already were or later became well enough to work, this isn’t necessarily true for everyone in this group, which may also encompass those forced to withdraw for reasons such as going into hospital.
The DWP doesn’t currently collect the reasons for withdrawals of ESA applications, and so any suggestion that they were ‘trying it on’ or were ‘fit for work’ can only be speculation.
To reach a number for those that were found ‘fit for work’ which is supported by the DWP figures, those that withdrew from the process should be excluded from the analysis, which is exactly what the DWP itself does in its release. This gives a slightly lower proportion found fit by the WCA – 64 per cent.
However, even this figure must be used cautiously. Of those that completed an initial WCA, some 36 per cent chose to appeal. 39 per cent of these appeals found in favour of the appellant, meaning that 48,000 of those considered ‘fit for work’ in the headline figures were subsequently found not to be so.
Once this is factored in, the proportion of ESA applicants found fit to work by the WCA becomes 57 per cent – closer to half than the three quarters posited by the media.
Source: Full Fact: Three quarters of ESA Claimants Fit for Work?
Benefit Claims & Tax Credits
The true cost to the taxpayer of paying unemployment benefits to increasing numbers of people may prove much lower than the £12 billion figure might suggest, being estimated at £1.9 billion at the OBR’s last estimate.
The Daily Express this morning was treated to an editorial from the Employment Minister marking the launch of the government’s Work Programme.
“More than a million people have been left to languish on out-of-work benefits over the past 10 years,” Mr Grayling tells us, so the programme aims to get people, including long-term benefits claimants, back into work.
Is that true? Yes it is.
It is important to make clear, though, that nine out of ten of them have been judged to be unable to work because of illness or disability.
The 1,019,620 who have been on the same benefit continuously for ten years break down like this:
- Job Seeker: 1,050
- ESA and incapacity benefits: 922,930
- Lone Parent: 65,910
- Carer: 23,130
- Others on income related benefit: 6,600
Incapacity Benefit is restricted to those who “couldn’t work because of illness or disability before 31 January 2011,” when it was replaced by Employment and Support Allowance.
The other trigger for being in that group is receipt of Severe Disablement Allowance, which replaces Incapacity Benefit for people who have not paid a certain level of National Insurance.
It is not surprising that disability, caring responsibilities and parenthood might last for more than ten years.
As the global economic crisis continues, global wage inequalities have become even starker. While the government is keen to reduce these inequalities through its Working Tax Credit wage top-up, Hartley Dean argues that these schemes may be counter-productive, stigmatising some recipients and locking others into the low-paid periphery of a polarised labour market.
Although the WTC scheme was generally viewed positively and most of the people we talked to were grateful for the additional income, there were still some important undercurrents of resentment. WTC does not of itself compensate for the injustices or adverse effects of a precarious and inadequately paid work. Paradoxically, hardly any of the people who took part in this research explicitly recognised that schemes like WTC are in effect a subsidy to low paying employers, but a lot of them felt devalued at work or locked in to menial jobs.
Our findings suggest that wage top-up schemes may not always be conducive to sustaining a morally meaningful work ethic among those workers who are systematically confined to the low-paid periphery of a polarised labour market. In the UK, incidentally, it seems likely that some low paid workers may feel less good about having their wages topped up by the state, because the proposed Universal Credit will abolish the distinction between ‘credits’ for workers and ‘benefits’ for people out of work. More generally, however, schemes of this nature might assist in accommodating workers to a flexible and competitive low-wage labour market but there will still be circumstances in which workers may feel in various ways aggrieved.
- How Mind’s spoof paper aims to set the record straight on benefit fraud (guardian.co.uk)
- Ed doesn’t get it (Where’s The Benefit)
- Ed Miliband must stop spreading myths about benefits claimants (Left Foot Forward)
- New move to tackle benefit fraud (bbc.co.uk)
- Filling the Hole: How do the three main UK Parties Plan to Repair the Public Finances? (Institute for Fiscal Studies, 2010 Election Briefing Note No. 12 -PDF)
- Analysis of Disability Living Allowance: DLA Awards (DWP – PDF)
- Benefit cheat councillor escapes jail despite admitting £12k fraud (telegraph.co.uk)