Right now we’re working flat out to pull our economy back from the brink, reducing our deficit so that we can live within our means once again. At a time when we’re having to take such difficult decisions about how to cut back without damaging the things that matter the most, we should strain every sinew to cut error, waste and fraud in our welfare system.
Welfare and tax credit fraud and error costs the taxpayer £5.2 billion a year. That’s the cost of more than 200 secondary schools or over 150,000 nurses. It’s absolutely outrageous and we can not stand for it.
Administrative error alone accounts for £1.6 billion a year. We’ve got to get these payments right. It’s not just that we can’t afford to get them wrong. Incorrect payments hit the poorest hardest, leaving vulnerable people without money they are entitled to or facing demands for repayment of money they thought was rightfully theirs.
That’s why as part of our welfare reforms, Iain Duncan Smith is working to simplify the system so people understand more clearly what they are entitled to and we can cut out the administrative errors of the past.
But we need to do more to stop fraud. £1.5 billion of hard earned taxpayers’ money is being stolen from the taxpayer. This is simply not acceptable.
Nor is it right that only £20 million of benefit fraud-related debts are recovered each year. Or that 3 in 4 of those caught don’t get prosecuted.
It’s quite wrong that there are people in our society who will behave like this. But we will not shrug our shoulders and let them get away with it any longer. We will take the necessary measures to stop fraud happening in the first place; root out and take tough action against those found committing fraud; and make sure the stolen money is paid back.
So we are looking urgently at different options for reform. Tougher penalties for fraud, more prosecutions, encouraging those who know fraud is taking place to come forwards and making greater efforts to reclaim money that’s wrongly paid. We will look at all these things and more. Including, for example, using more information from third parties such as credit referencing agencies to identify circumstances which are incompatible with the benefit claim. I have asked Iain Duncan Smith to draw up an uncompromising strategy for tackling fraud and error which we will publish in the Autumn.
We’re determined to get the welfare system right. It will always be there for those who need it. But it won’t be a soft option. Under our reforms we’re going to make more use of employment providers and voluntary bodies in helping people get back to work. Groups like the inspirational St Peter’s Partnership in Ashton-under-Lyne, in Greater Manchester. The more we tackle fraud and error the easier it will be to support more groups like this.
The first port of call in cutting spending is to stop paying money to people who shouldn’t receive it. Cutting fraud and bureaucracy in welfare should be the first and deepest cut that we will make.