Anti fraud goes into overdrive

The Government has launched new anti-fraud initiatives which are estimated could save over 3bn in dishonestly claimed benefits. The DSS announcements coincided with a National Audit Office (NAO) report which estimates that errors and fraud still drain the public finances by 1 billion per year. The Benefits Agency's systems of detection have been so poor, that its accounts have been qualified by the NAO's annual examination in each of the last eleven years. The Agency - having been set a target of almost 1.8bn - only turned in savings of about 1.1bn for for 1998/9. The auditors however were not convinced and revised the claimed savings figure downwards by 525m. As a result, the Agency only achieved a third of its target last year.

That's why much of 1999 was filled by DSS announcements of its many measures to crackdown on fraud. And the promised results will be impressive. Over a seven year period, the Agency should achieve a 30% reduction to benefit losses from both fraud and error in Income Support and Jobseeker's Allowance. Tighter checks on new IS claimants' identity will save around 1 billion in Income Support within 3 years.

In the 2 years since the new Government's election, the Benefits Agency's performance has improved. Between 1997-98 and 1998-99, the proportion of fraud and error-free claims for Jobseeker's Allowance improved from 85% to 88%. The accuracy of payments for Income Support also improved from 81.7% to 83.4% (although this is still below the Government's 87% target).

But measured by value the estimated gross level of error for Income Support claims has significantly worsened from 555m to 637m (equal to about 5% of all Income Support expenditure).

So the point about the Government's campaigns is clear. Fewer claims are wrong but they are costing more. And organised criminal action seems to be behind a significant number.

Hence the almost hysterical rhetoric. According to Social Security Secretary Alistair Darling, the Government is "stepping up the war against benefit fraud" to fight the "growing menace of organised criminal gangs ripping off the benefits system". The "con artists and criminals who have regarded the benefit system as a soft touch will be identified and punished." This is the toughest talk ever.

At the heart of the Government's "zero tolerance approach" will be a National Benefits Intelligence Unit that pools information and resources from many Government agencies. Spearheaded by the Government's best fraud investigators Ministers say that it will be aided by intelligence from other agencies, including the police, local authorities, the immigration service "and others". Un-denied speculation suggests that this may even include the security service MI5.

Most of this action to combat fraud is practical and thorough-going. It involves cross-checking records, improving data transfers, analysing claim patterns, checking address information and claimant identities. Most importantly, it concentrates on the benefit system's weakest point - the "gateway" - and getting initial claims correct.

But one important strand will be public opinion. Darling says that their "greatest ally is the public" and that a major fraud publicity campaign will be launched in the Spring "to help shift public attitudes towards benefit fraud." The campaign will include "hard-hitting" TV advertisements that emphasis that fraud is "not a victimless crime" and that money stolen from the benefit system could "be spent on schools, hospitals or other public services".

But a campaign to induce a culture of compliance can still undermine the legitimacy of benefit receipt. The Government's forthcoming campaign needs to carefully differentiate the callous criminal theft of benefit expenditure - by dodgy landlords or corrupt Housing Benefit staff - from the people claiming benefits as of right.

During the Nineties, the Tories engaged in a gratuitous campaign that stigmatised claimants and undermined the legitimacy of the benefit system. The Tories did little to actually improve benefits administration. Alistair Darling's approach strikes back at the criminals who systematically steal benefits. But in doing so, there may be some collateral damage: the source of income and the sense of self respect of people who need to fall back on a safety net that - as needy citizens - they have an unqualified entitlement to.