Staff cuts lead to increase in benefit fraud

Drop in levels of scrutiny enables more fraudulent claims to be approved, warns National Audit Office

East Jaywick, Essex, where many claim housing benefit (Getty)

Government cuts and the strain on the benefits system have made it easier to commit housing benefit fraud than ever before, according to experts.

The warning follows a report from the National Audit Office (NAO) which revealed that the Department for Work and Pensions (DWP) lost £1.4bn in overpayment of housing benefit due to fraud or error in 2013-14 – up from £980m in 2010-11.

Council staff and benefit advisers report that local authorities are being encouraged to cut corners when processing housing benefit claims in order to hit monthly targets imposed by the DWP. Councils are also under growing pressure due to dwindling staff numbers and a rise in the number of in-work claimants of housing benefit.

Housing consultant Peter Barker said that council staff were forced to rush through claims to meet arbitrary targets set by managers and central government.

This required processing the most straightforward claims without double-checking their accuracy. "That type of approach is pretty widespread. They call it risk-based verification," he explained. "Sometimes they use IT gizmos to help, sometimes local authorities just devise their own methodologies."

Cuts to the number of staff working in council housing benefit departments, as the Government reorganises how the benefit is administered, have also taken their toll on working practices, Mr Barker said. "If you're going to do something properly it takes time to do it and it needs more staff to do it. It's inevitable that corners will be cut sometimes."

The vast majority of housing benefit payments made in error are the result of mistakes rather than deliberate fraud on the part of the claimant. However, fraudsters have identified and are now exploiting these loopholes.

One frontline housing worker based at a London council, who asked to remain anonymous, said he had uncovered a large-scale housing benefit fraud executed by claimants who had identified that employment records would not be fully checked if they had demonstrated earnings of only £348 a month – or no more than 16 hours a week in work.

"It would appear that nobody in any council does any checks on new housing benefit claims, as long as they have a tenancy agreement and payslip. The claims get passported through without a check as to whether or not the documents are genuine or the landlord's bank details are as claimed, the reason being the Government's requirement for local authorities to show they are processing X amount of claims in a prescribed time," he said.

"Double-checking takes time and resources which they don't have. Housing benefit fraud has never been easier.

"What irks us council bods is that everyone is facing more job cuts this coming year whilst millions [of pounds] are being wasted because of pressure to perform which results in minimal checks."

The NAO's report revealed that although the number of people claiming housing benefit has risen by 5 per cent since 2010-11, funding provided by the DWP to support councils administering the system had been cut by 17 per cent.

Joe Halewood, a supported housing adviser, said that the pressure on housing benefit staff was not only in large urban councils but also in areas such as Derby and Stoke-on-Trent, where families had been placed after being moved out of central London to avoid the benefit cap – the "housing benefit diaspora".

Gavin Isham, advice services manager at Direct Help and Advice in Derby, said that Derby council was already dealing with huge backlogs meaning his client's claims were taking at least eight weeks to process. "They have lost a lot of their staff. A lot of people have jumped ship. They have got agency staff in. The Government are also pressuring [staff] to get more back in overpayments. They're overstretched," he said.

A spokesperson for the DWP said overall losses to benefit fraud and error were falling, but added that there was "more to do to crack down on benefit fraud".

The DWP hopes that new IT systems to check housing benefit claims and the rollout of the universal credit system will cut fraud by at least £1.5bn. Mr Barker remains sceptical. "People in local authorities say that the data needs a lot of cleansing. It's a labour-intensive task," he said.