MEASURES TO COMBAT HOUSING BENEFIT FRAUD
THE SCALE
AND NATURE
OF HOUSING
BENEFIT FRAUD
The Scale of Housing Benefit Fraud
9. In February 1990 the Committee of Public
Accounts reported the results of their examination of a report
by the Comptroller and Auditor General on Housing Benefit fraud.
They found that there was a wide variation between local authorities
in the amount of fraud investigation undertaken, with many authorities
doing none at all. The Committee noted the action taken by the
Department to encourage local authorities to control fraud and
abuse. They expected the Department to review promptly the impact
of their action so that any further steps necessary could be taken
without delay.[6]
10. In May 1996 the Social Security Select
Committee published a report on Housing Benefit fraud, debating
the extent of fraud and making recommendations to ensure that
"countering fraud is given equal weight with the control
of public expenditure". [7]The
government implemented a number of these recommendations, some
through the Social Security Administration (Fraud) Act of March
1997.[8]
11. The Department's Review of Housing Benefit,
published in January 1996, concluded that fraud could be in the
region of £905 million, about 8 per cent of total expenditure
on the benefit.[9]
12. The Committee asked the Department how
this compared with levels of fraud in other benefits. They said
that the figures for Income Support and for Disability Living
Allowance were higher-at 11 per cent and 12 per cent respectively.
They pointed out that means-tested benefits, such as Income Support
and Housing Benefit, were likely to be more vulnerable because
there were so many changes in claimants' circumstances.[10]
13. The Department also admitted that they
did not know whether Housing Benefit fraud was increasing, but
that they were undertaking a second national Review which would
report in Spring 1998, and this would give an indication of whether
Housing Benefit fraud had gone up.[11]
14. In addition, they were conducting a
serious of local reviews which would establish whether it was
possible to measure changes in local levels of fraud over time
in a way that was both valid and cost-effective, to form the basis
of targets for reductions in the level of fraud. The final results
of this project would be known in March 2000, but they expected
interim findings from March 1998.[12]
THE NATURE
OF HOUSING
BENEFIT FRAUD
15. There are many kinds of fraud against
Housing Benefit, but the most common are: claiming benefit for
an address while not resident there; claiming while working; and
understating income and capital. And the vast majority of fraud,
70 per cent, arises not from fraudulent initial claims but from
the failure of claimants to report a change in circumstances that
could affect their entitlement to benefit.[13]
16. The Committee asked the Department whether
they had sufficient information to target their anti-fraud activity.
They stated that their Housing Benefit Review had given them information
about the kinds of fraud which were most prevalent and the groups
of claimants who were most involved in fraud. As the C&AG's
report noted, the most common kinds of fraud were in people not
declaring earnings, either where people were not stating the right
amount they earned or not stating that they were working. After
that was fraud where claimants were not living where they said
they were. In terms of groups of claimants, the Department said
that the highest incidence of fraud was among the unemployed,
followed by lone parents.[14]
17. The Department added that the main analysis
of data from the second Housing Benefit Review would be available
by the end of March 1998. In addition to estimates of the percentage
of fraudulent claims and the amount lost through undetected Housing
Benefit fraud, the Review would also provide analysis by type
of fraud, by type of claimant as well as by type of fraud by type
of claimant. Other detailed analyses including work on regional
variations and on landlord fraud might not be ready until the
end of May 1998.[15]
LANDLORD FRAUD
18. In 1996-97, local authorities paid Housing
Benefit totalling £5,887 million in respect of private sector
tenants.[16]
There has been much debate about the level of landlord fraud,
but the Department have estimated that up to £150 million
of the £905 million estimate was lost in fraud by landlords.[17]
19. The Committee asked about the level
of landlord fraud and how much of this was organised fraud. The
Department said that in 60 per cent of rent allowance cases benefit
was paid direct to the landlord,[18]
but that not all landlord fraud was organised fraud.[19]
A lot could be by individual landlords, as many would be people
with only one property. They pointed out that the amount of landlord
fraud would be hugely different in different local authorities
because it was more apt to occur in places where there were lots
of houses in multiple occupation, but they did not have figures
on how many of the payments went to landlords with multiple properties.[20]
They acknowledged that when organised fraud happened it tended
to be big money, but they pointed out that it was not the major
source of benefit fraud.[21]
20. The Department admitted that they did
not have enough information about landlord fraud because the first
Housing Benefit Review did not major on it. [22]The
next Benefit Review would produce a more reliable estimate of
the extent of landlord fraud because the methodology as a whole
had been improved and because they were collecting more detailed
information about landlords and tenancies.[23]
Conclusions
21. It is totally unacceptable that seven
years after we last looked at this issue, Housing Benefit fraud
should exceed £900 million, and the Department still do not
have information to show whether fraud is increasing, or all the
information they need on the types of fraud, including landlord
fraud, and variations at regional and local level. The absence
of reliable information must cast doubt over the decisions the
Department have taken to invest in anti-fraud work and over the
achievements they have claimed.
22. The Department expect to have better
information once the second Benefit Review is completed shortly,
and they are also looking at the feasibility of measuring changes
in the levels of fraud at local level over time with a view to
setting targets for reductions and providing incentives to deter
and prevent fraud. We are concerned that this essential work is
so late, and that the final results of the local reviews will
not be known until March 2000. In our view, the Department must
make faster progress on this important issue.
6
Committee of Public Accounts Third Report, Session 1989-90 (HC 207)
Back
7
HC 90-II Session 1995-96: Third Report from the Social Security
Select Committee: Housing Benefit Fraud Back
8
C&AG's Report (HC 164 of Session 1997-98) paras 1.48
to 1.49 Back
9
C&AG's Report (HC 164 of Session 97-98) para 1.32
Back
10
Q 61-63 Back
11
Q 18 Back
12
Qs 24-25 Back
13
C&AG's Report (HC 164 of Session 97-98) paras 1.28-1.29
Back
14
Q 119 Back
15
Evidence, Appendix 1, pp. 25-26 Back
16
Evidence, pp. 1-4 Back
17
C&AG's Report (HC 164 of Session 1997-98) para 1.37 Back
18
Qs 131-132 Back
19
Q 24 Back
20
Qs 28, 93 and 130-133 Back
21
Q 10 Back
22
Q 26 Back
23
Qs 24 and 25 Back
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