Tuesday, 10 August 2010

Cameron's credit-spying plans to cut benefits

Today’s announcement by the Cameron administration on the latest tools they intend to use to crack down on benefit fraud is worrying news for disabled claimants.

The governments wants to use information from credit reference agencies and other third parties to identify suspicious claims. Cameron says welfare and tax credit fraud and error cost the exchequer £5.2bn a year, with a further £1.6bn a year lost on  administrative incompetence. He made no distinction today between the amount of fraudulent claims and the amount of error, although it is widely accepted that fraudulent disability claims are only around 1%, while administrative errors average 2.5% a year.

However, benefits minister Ian Duncan-Smith, who is overseeing reform of the system, was interviewed on the Today Programme today and was forced to admit that the Tories had overstated the amount fraudulently claimed by some five times and that the true figure for fraud was in fact just £1.5bn, according to official Treasury figures, which show that along with the cost of errors amounts to just £3.1bn.

A pilot scheme is already operating in Manchester where the city council works alongside the Department for Work and Pensions to uncover fraudulent claims and co-prosecute. They use data-matching software to examine the financial habits of claimants – where they see someone appearing to spend more than their benefits they will then launch a more in-depth investigation. There is an average of three court cases a week in Manchester at present.

Under the new plans, this scheme will be rolled out nationwide. While cracking down on fraudsters is to be welcomed, it is highly likely that disabled claimants could find themselves being unfairly investigated.

Many genuine disabled claimants live in constant fear of having their entitlement cut off. The current daily rhetoric that lumps together fraud and error, combined with “helplines” that encourage people to report neighbours they suspect are defrauding the benefits system, is now discouraging many from leaving their homes, particularly those who use mobility aids only part of the time. The BBC’s Ouch disability forum has already documented some cases where neighbours reported genuine claimants for fraud because they left their house on foot rather than a wheelchair.

A further concern over the decision to use credit reference companies to piece together claimants’ spending habits is the issue of invasion of privacy. Disabled claimants already surrender almost all their privacy when filling in complex claim forms. Being forced to describe toilet needs, for example, to faceless administrators is very distressing for many claimants. But, at present, claimants can still spend their Disability Living Allowance as they wish so they can make their lives as easy as possible. Snooping by credit agencies could mean many will be forced to justify how they use their benefits. There is a real fear that under such circumstances, official disapproval of how benefit money is used could result in more disabled people finding their meagre income will be severely reduced or even cut off.

Cameron’s announcement was made in the Manchester Evening News and he has given no further statement to the media, leaving Duncan-Smith to do that. An as yet unsubstantiated rumour has been flying around Manchester Twitter users that the MEN rejected Cameron's article when it was first submitted.

And finally, to put this latest proposal into context, it’s worth remembering that the TUC says the cost of benefit fraud is minuscule compared with that of tax evasion and avoidance. The most recent figure from the organisation Tax Research put the figures for combined tax evasion and avoidance at £95bn. Maybe this is where government resources should be targeted?

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1 comment:

  1. That is a worry for me. I do get rather paranoid that on the few times I leave the house not in my chair someone will try to rat me in to the authorities, despite the fact that I use my chair 90% of the time out of the house (the other 10% on foot for short distances, but suffer for it later).

    They won't chase the tax evasion/avoidance because they are too linked to the companies/people involved. They'll at most make it look like they made a symbolic gesture that amounts to nothing in reality. They go after the disabled and poor because we are easier targets.