Crackdown on benefit cheats begins.......

Homelessness warning over new powers to tackle benefit and tax fraud

DWP crackdown to recover £1.1 billion

29/10/2010 | By Martin Hilditch

Homelessness departments face picking up the cost of a new drive by the Department for Work and Pensions to reduce fraud and error.


The DWP and HM Revenue & Customs published a joint plan last week outlining how they would work together to tackle fraud and error in the benefit and tax credit system.

It outlines how the government is planning to increase the amount it recovers by £1.1 billion by introducing new powers that allow the DWP to recover debts incurred through official error.

The DWP loses £1 billion to fraud, £1.1 billion due to official error and £1.1 billion due to customer error every year (see graph), the document reveals. The £3.1 billion lost is equivalent to 2.1 per cent of total expenditure.

The plan states: ‘While the department must take responsibility for payments made mistakenly by our staff, that does not give claimants the right to keep hold of public money not intended for them.’

The new plan states that the government feels its current debt recovery regime is ‘too slow’ and ‘does not provide a significant return for the taxpayer’.

New powers could lead to an increase in homelessness because the DWP will be able to seek a court order requiring debtors to sell their house to pay off debts or seize the assets of people who have consistently refused to pay.

In future the DWP will also seek powers to increase the rate at which it can recoup fraud-related debts from means tested benefits from £13.20 per week to £16.50 - a 25 per cent increase.

It will also introduce a system that allows it to require that money is deducted from an employee’s earnings. It can currently apply to a court for this option but it will seek powers to allow it to introduce a new ‘fast track’ system that bypasses the need.

Council homelessness officials, however, are understood to be alarmed that the tough new regime will see their costs jump dramatically. The increasingly tough approach has already had an impact in some local authority areas.

One source said that he has already seen an increase in contact from people who have been pursued by HMRC and have lost their homes as a result.

‘The end result is those claimants end up here,’ he said. ‘We then pick up the costs via housing benefit.