DWP & HMRC Benefit Fraud Solution – It’s like chopping off your Hand to save a Finger

Earlier this month the BBC reported that the Bishop of Manchester, the Rt Rev David Walker, had made a radical suggestion that the government ought to let benefit cheats get away with fraud.

It would appear that the BBC in this case is scandalising what was actually a quite benign statement, which was: “We have to let a few manipulative people get away with it if we’re not going to have too many innocent people punished”, which as you can see is a very long jump from saying that all benefit cheats should be let off, as the headline implies.

Obviously it would be a crazy policy to completely disregard all benefit fraud, and that is clearly not what the bishop was suggesting should be the case. In fact, what he was saying is that the government is being obsessive in investigating and prosecuting benefit fraud to the point that it is causing more problems than it solves.

Chopping off a hand to save a finger doesn’t make any sense at all, does it? But that is very much how the current policy against benefit fraud works. Huge amounts of money and resources are being poured into “getting tough on fraud”, but is it really providing us (the government’s employers) with a good return on investment?

Looking beyond the money directly invested into the benefit fraud issue, the answer would have to be negative, based on the enormous social cost that has resulted from the tough policy. For a start, as the bishop quite rightly points out, thousands of people have been inconvenienced and harassed as a result of the policy. Innocent people being indirectly punished was the focus of his speech, but actually that is just the tip of the iceberg.

The problem is that some people have their benefits frozen while DWP or HMRC are investigating their circumstances (if this happens to you, and it is in any way unlawful, we can help get your income “unfrozen”). That creates massive social problems that affect communities all across the UK, such as:

• Increased strain on already over-stretched charity organisations
• More people at risk of homelessness, including the elderly, the disabled, and children
• Potential rise in serious crime as people are driven to desperation
• Overcrowding in prisons and increased prison costs
• Increased risk of suicide, mental illness, and depression among those affected
• Burden on our health system due to ailments resulting from exposure, etc.
• Burden on the legal system, which will struggle to cope if too many petty cases are prosecuted
• Increased dependency on the state by those convicted, as conviction may limit their future employment prospects, and create a costly cycle of recidivism

The combined costs of all of the above, plus the cash directly being poured into investigations and prosecutions (which as we discussed in a previous post is not an unsubstantial amount), are clearly going to require that massive sums are saved as a result. Yet we already know that the vast majority of people investigated for fraud are for sums of less than £1000, and only 3% of all fraud cases involve amounts greater than £5000.

It costs around £140,000 to keep somebody in prison for a year, and with hundreds of people receiving custodial sentences for benefit fraud every year even before the real crackdown started, the cost is really going to begin having an impact before much time passes. Given all the above data, it suddenly seems like Reverend Walker wasn’t being quite so radical after all. Maybe, just maybe, he was saying that the most conservative thing the Conservative Party could do is to ease up a little on their keenness.

The very small number of extravagant benefit frauds are what the government should focus its efforts on. Basing our system of benefit fraud reporting on the American model was a mistake, because we have inherited all the same problems such as malicious reporting. Only around 20% of the cases reported are thought to be genuine enough to be worth investigating, and even fewer actually turn out to be genuine cases of fraud.

Maintaining the hotline is an expensive operation, and sending investigators on early morning stakeouts is even more expensive. After spending considerable amounts of money on these things, there is no guarantee that the subsequent (also expensive) court proceedings will result in a conviction.

This month, quite a few high profile benefit fraud cases have come to light, demonstrating the need for continued vigilance against fraud. It just seems like a logical step for DWP and HMRC to focus more narrowly on these clearly blatant frauds, such as:

• Joy Taylor, a woman who fraudulently claimed between £70,000 and £95,000 for disability and posted social media pictures of herself partying and taking expensive holidays.
• Vaughan Dodds, who was once a police officer and worked closely with former PM Tony Blair, claimed he had a serious disability. His wife also received benefits for severe disability. But they spent their benefits on expensive holidays, beauty salon visits, and private education for their children. Of particular note is the fact that despite claiming being barely able to walk, “secret footage was made of them both working out in a gym and pictures [were taken] of them on holiday riding a camel and frolicking in a cruise ship cabin”.
• Alun Jones, a former Powys County Council worker, who claimed £24,000 in ISA and DSA, while already collecting pensions from PCC and DWP.

The Dodds case in particular is interesting because it highlights what I said earlier about the costliness of benefit fraud investigations. Even though the amount alleged in the report is only £50,000, the investigators apparently spent a long time following the couple around, even on an expensive cruise holiday where their privacy was grossly invaded. Even criminals should not have to suffer having telephoto lenses thrust through their bedroom windows, especially when investigators already have enough evidence to proceed without doing so.

The case of Alun Jones was also very interesting on the basis that there does not seem to be strong evidence of fraud, and his excuses that his medications had side-effects including difficulties with concentration and memory could possibly hold some merit. The difficulty is explaining how a lapse of concentration could extend over a very long period of time, but as we’ve mentioned in other blog posts, people can sometimes be afraid to correct problems once they become aware of them out of fear that their excuses will not be believed.

Just before I wrap up this week’s post, let’s take a look at a few notable situations that we recently helped to resolve.

First we have the case of Mrs M. Recently widowed, she suddenly found herself in the position of having to manage the household finances, a responsibility that she had previously entrusted entirely to her husband. She found this new role difficult to manage, and began to fall behind in paying bills, including the mortgage on her home.

All of the £12,000 left to her by her husband had to be used to pay off debts. Mrs M was struggling so much with debt that even after increasing her part-time working hours she was largely dependent on tax credits to help her get by. Because of the extreme financial difficulties she was in, she made the grave error of not declaring her increased work hours.

Although she knew it was wrong, she “didn’t think anyone would notice” because it was such a small sum of extra money she was claiming above the amount she was entitled to, but nonetheless in her mind that small sum was essential to her survival.

Hylon-Potts was able to help in this matter by straightening things out with HMRC and negotiating a repayment plan. We also provided contact details for an organisation that provides free financial advice to citizens struggling with debt problems.

Mr A was a zero hour contract employee, generally averaging 15 to 30 hours per week, and claiming working tax credits. Eventually his zero hour contract was upgraded to full time work, and he was on a salary of £18,000 per year, but he still continued to claim his tax credits. He knew he should have declared his change of circumstances, but he had numerous payday loans to clear. He planned to stop his fraud as soon as he had cleared all the debts, and only did it because he could see no other way out of his predicament.

Hylton-Potts helped Mr A firstly by getting the debt collectors to stop harassing him (as it was this action that prompted his desperate move). Debt collectors frequently step over the line of what they are legally allowed to do, but they will usually desist very quickly once you have a legal consultant assisting you. We then also made arrangements for Mr A to repay the money he had illegally claimed, as well as an administrative fine for his misconduct. By coming to us, Mr A avoided more serious actions being taken against him.

Miss T was living in a relationship with a man. After their relationship broke down, her partner moved out, but continued to have his mail sent to her home address as he did not trust anyone else with handling his mail.

Because of this, investigators believed that she was still living with her partner. I want to be clear here that neither of the parties had actually done anything illegal, but investigators still acted as though they had. The consequences included stopped payments and nasty accusatory letters, demanding repayment of benefits with threats of further legal action.

The problem for people who find themselves in a similar situation to Miss T is that if their case is presented in court, they have a fair chance because the state must prove that the two parties were actually living together. This means that evidence is required that the male partner stayed overnight in Miss T’s home (or vice-versa), and normally there would be a requirement to demonstrate that this happened regularly and was not just a one-off event. But until the case reaches court, Miss T is in a difficult position where her payments can be suspended unless she proves that she is not living with her former partner, and this is more difficult than you may think.

Hytlon-Potts was again able to help in this situation because we were able to secure sufficient evidence to satisfy the investigators that no fraud was taking place. Miss T had her payments restored and also back-dated, and was only temporarily inconvenienced by the government’s error.

If you are accused of benefit fraud, Hylton-Potts can help you, even if the situation seems hopeless. We are experts in finding solutions to even the most difficult benefit fraud problems. Give us a call on 020 7381 8111 or send an email to [email protected] and tell us about the problems you are facing.

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