Housing benefit fraud hits pounds 1bn

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The Independent Online
Urgent action is needed to combat housing benefit fraud, with pounds 1 in every pounds 10 being paid out incorrectly, a study by two public-spending watchdogs warned today.

Fraudulent claims for housing benefit cost the taxpayer nearly pounds 1bn a year and such is the level of fraud and error that one in five claims leads to an incorrect payment.

While big sums continue to haemorrhage from the public purse, housing benefit has doubled in the past five years and is set to rise by another pounds 1.7bn in the next three years. It now accounts for more than 3 per cent of total public expenditure.

The Audit Commission and the National Audit Office, which carried out the study, said as few as one in three frauds are being detected. While central and local government have done much to combat fraud the current emphasis on detection rather than prevention means the problem is not being solved.

Complexities in claiming benefit mean many people are confused and make errors, while the determined fraudster can exploit opportunities to lie to a local authority about circumstances.

At present there are as many as 67 different factors that have to be taken into account. Added to this, most claimants are eligible for housing benefit because they receive Income Support or a Jobseeker's Allowance, so errors and fraud in these benefits have a knock-on effect when claiming help with housing.

Housing benefit awarded to people living in privately rented accommodation can also be paid directly to landlords or managing agents. This creates opportunities for landlords or agents to set up false tenancies or to continue to take money for people who have moved away.

In one case an authority paid pounds 2,000 in benefit over nine months to a woman who said she was a single mother paying rent to a landlord. She was in fact living with the "landlord", who was the father of her child and owned the property, although a more thorough check would have established that father and child had the same surname.

Brent council saved pounds 77,600 and found over-payments of pounds 14,200 when it investigated 80 "single fathers" who were claiming for children while not having a partner.

The cases were investigated after a database search revealed siblings born less than nine months apart, easy-to-remember dates of birth (such as 8.8.88) or spellings of the children's names varying from claim to claim.

The reports call for the Department of Social Security to simplify housing benefit rules and provide councils with better incentives to prevent fraud.

Fraud and Lodging: Tackling Fraud and Error in Housing Benefit; pounds 20; Audit Commission Publications, freephone 0800 503020: Measures to Combat Benefit Fraud; the Stationery Office.