Saving £5.2bn from benefit fraud?
This week the Prime Minister has been keen to tell us about the massive savings that are available should fraud and error be completely removed from the administration of tax credit and benefit payments, promising that this would be “the first and the deepest” of forthcoming spending cuts.
Channel Four’s Fact Check does a good job of breaking the figures down, and pointing out the low probability of the entire £5.2 billion being saved. But the DWP’s recently published ‘draft structural reform plan‘ does even better, setting out the Department’s aim to ‘reduce fraud and error in the benefits system to a maximum of 1.8% of expenditure’.
A few quick calculations therefore reveal the scale of what is actually being promised.
The National Audit Office reports that last year a total of £3.2 billion was lost to fraud and error. Reducing this level to 1.8% would cut the amount lost to £2.7 billion – saving £500million. Significant, but only 10% of what the Prime Minister has been promising – and a number that is likely to fall further once new ‘bounty payments‘ to private companies are factored in.
The DWP’s remit does not include tax credits, so reducing errors in this area could bring further savings – but given the system’s complexity, and the Government’s recent reforms to income disregards which will make overpayments more likely, it may also be that errors increase.
Overall, the likelihood of £5.2 billion being saved from fraud and error is extremely low. But while the Government has been keen to emphasise these non-existent savings, they have been slower to continue public debate about their proposals that will, if implemented, have real impacts on reducing benefit expenditure: cuts to Housing Benefit, the Health in Pregnancy Grant, the Sure Start Maternity Grant, Disability Living Allowance, Child Trust Funds, Child Benefit and access to Tax Credits for working families.
While ‘scroungers’ are an easy target, the real losers of this Government’s benefit reforms will be millions of families across the country.