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Benefit Fraud Hotline

Today the government launched its most recent benefit fraud campaign. They’ve had these before and it’s unclear what effect they had. Did they result in more calls to the benefit fraud hotline? Does more calls mean more detection of fraud, or more unnecessary fraud investigations?

Fraud is a crime, let’s not forget that. Like tax evasion is a crime – costing at least £14 billion a year according to the Annual Fraud Indicator, or more than ten times the cost of benefit fraud. And wrongful expense claims is a fraud – 389 of 752 current and former MPs wrongly claimed money. The question is not whether it is wrong, but what to do about it.

Fraud costs 0.7% of the benefit budget. Error costs 1.4% of the benefit budget (although a further 0.9% is underpaid through error and more than 6% goes unclaimed). If the government’s interest is accuracy then it would do better to tackle error and under-claiming. Although I can’t see many posters saying ‘Health got worse? Let us know – you might be eligible for more benefits’ or ‘Only working part-time? Let us know – you might be eligible for tax credits.’

If the government wants to tackle criminal intent, then the question is, what is the best way to do it? The government has a number of strategies it can use. Encouraging people to report fraud is just one, and one that is less cost-effective than using data-matching. Others include things like designing a new social security system that is less vulnerable to fraud and error (not that the current one is very vulnerable) and new technology to identify fraud at the point of claim. This new system, which would tackle official error as well as claimant error and fraud, is called Universal Credit, but sadly the management of that hasn’t been doing well.

The hotline itself has a ‘success’ rate of 4.4%, but only if you include over-payment through error (although there is no report on how much is identified through the hotline as under-paid through error, or even if the DWP corrects this through back-payments). That’s about double the overpayment generally in the benefits system, so the general public aren’t doing too badly (they only get 95% wrong). But it essentially means the DWP is waiting for a (potentially malicious) call to decide who to investigate; risk-profiling, on the other hand, means deciding to investigate someone because they are part of a high-likelihood group, which one would hope is both more accurate and less affected by public whims.

Of concern though is not just whether this is the best way to tackle fraud but the culture it creates. Everyone knows fraud is wrong, that doesn’t need changing. The public already (wrongly) thinks fraud is very high, that doesn’t need changing either. The hotline seems to be doing pretty well at receiving calls (even if over 95% are wrong) so maybe that doesn’t need changing either. What does need changing is the stigma and demonisation of claimants, and this campaign won’t help that.

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