A system where 'only the stupid are not on the fiddle'

Fraud/ social security cheats

"EVERYBODY on benefits around here is fiddling in some way - either that or they are stupid." That view came, not from a hardened dole cheat, but from a claims officer, responsible for ensuring that benefits go to the people who ought to have them.

It supports the assertion that fraud is now endemic in Britain's welfare system which was advanced by Frank Field, the Labour MP who chairs the House of Commons select committee on social security, in a report published last week.

Mr Field revealed that nearly half the households in Britain are on means- tested benefits; and means-testing, he argued, is pushing claimants everywhere into cheating. Drastic action, including "SAS-style squads", was needed to fight fraud, some of it by organised gangs.

The Benefits Agency says its investigators uncovered pounds 654m in bogus claims in 1993-94, a sum approaching 1 per cent of itspounds 70bn budget; and even social security staff themselves were involved in milking the system. The amount is sharply up from pounds 446m four years ago. Prosecutions are up, too, from 4,379 to 7,645. But this may be the result, not of increased fraud, but of greater zeal in exposing it. Nobody knows how much goes undetected.

What is certainly known - and what concerns campaigners such as the Child Poverty Action Group more - is that about pounds 2bn in benefits goes unclaimed. Pensioners, for example, miss out on pounds 400m in income support, and pounds 1.6bn housing benefit is unclaimed.

Campaigners argue that benefit application forms have become more complex and intrusive; the new incapacity benefit form is 35 pages long. And the importance of means-tested benefits - as opposed to universal ones such as child benefit - has increased enormously since the Conservatives came to power.

Martin Evans of the London School of Economics has calculated that, in 1980, just under 17 per cent of social security spending was means-tested. By 1992, that had risen to 33 per cent.

Some 60 per cent of last year's bogus claims came from individuals who did not declare work income or savings. Another 25 per cent was from people who gave inaccurate details about their children or a partner bringing in wages.

Fraud by organised gangs, which particularly concerns Mr Field, is a smaller but still significant problem: it cost an estimated pounds 60m last year. Undercover detectives paid pounds 120,000 for a batch of benefit payment books with a face value of pounds 18m-pounds 20m in a "sting" operation 18 months ago.

"It's a big mark-up," said a regional crime squad source, "but then you've got to find people to cash them. With a cheque worth pounds 60, the person who cashes it gets a tenner; the rest gives a pounds 20 cut for the distributor and pounds 30 for the person at the top who has taken no risk. They'll be three- up in a car, start in one post office and drive around signing a different name in each place. It's nothing to make pounds 4,000 a day that way."

At the beginning of this month Department of Social Security and regional crime squad officers raided an address in Clerkenwell, central London, seizing pounds 5m-worth of counterfeit Giro cheques.

Council housing benefits staff have milked millions from the system. About 50 staff at Hammersmith and Fulham council in west London have faced disciplinary proceedings, it was reported this month, after the council was swindled of some pounds 650,000 in benefits. In the east London borough of Hackney, three DSS officials were bailed in January pending inquiries into an alleged pounds 100,000 benefit fraud, and more than 90 town hall staff from the south London borough of Lambeth have appeared in court after an alleged pounds 1m benefit racket.

Town hall fraudsters often collude with social security staff. A survey into dishonesty by Benefits Agency staff this year found there had been 34 prosecutions for fraud since 1994. Local authorities in London have now set up a co-ordinating body - the London Borough Frauds Investigators' Group - to try to reduce the problem.

The Benefits Agency is working on improving its checking systems, trying to persuade claimants to take payments by direct debit. Post office staff are rewarded for spotting frauds.

But the claims officer said last week that, despite these efforts, staff frequently turn a blind eye to false applications, including those from men claiming for two wives and their respective children.

He said: "It's wrong - they are robbing the system and flaunting it. My neighbour is at it. He comes round to my house boasting about how much money he has got.

"It burns me when he dresses his daughter up in brand new frilly dresses and then sends her round to knock on the door for my two children. It's as if he's flaunting it in my face now he's working again for cash and still signing on. I'd like to dob [turn] him in, but how can I when I used to do the same thing ?"

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