Benefit fraud penalty could more than double to £5K

Benefit fraud

The maximum penalty for benefit fraud could be more than doubled from £2,000 to £5,000 if Parliament agrees to the change today.

The proposed increase in the administrative charge – which serves as an alternative to prosecution – would be in addition to repayment of any money falsely claimed, plus the loss of four weeks worth of benefits.

The most serious benefit fraudsters would still be prosecuted but ministers say the beefed up penalty would give enforcement agencies more flexibility in the way they tackle benefit fraud.

The Department for Work and Pensions explained that the plans would mean administrative penalties are set at 50% of the benefit a fraud suspect has been overpaid, up to a maximum of £5,000. "Therefore, this change will affect cases where a sum of more than £4,000 has been overpaid," it said.

The DWP added that penalties will only be levied in cases where is sufficient evidence to pursue a prosecution for benefit fraud and "not in cases of genuine mistakes or error".

Under the existing debt recovery processes, which would continue under the new plans, penalties and overpayments can be clawed back through future benefits and deducted from earnings.

Pay a heavy price

Work and pensions minister Mark Harper said: "The amount of money lost to benefit fraud stands at some £1.2 billion – cash which otherwise could be spent on supporting those in genuine need, improving public services or reducing people's taxes.

"There are still too many people who continue to ignore the warnings and steal from the benefits system. They deserve to pay a heavy price for doing so and that is why we are taking action. I hope this new measure attracts widespread support in the Commons."

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Benefit fraud eh?  I wonder if this includes MP's stealing from the state, which has to be tantamount to benefit fraud.  Sure as hell is fraud, anyway!

This really does need to be put into perspective - and a little more digging on the part of the authors would be appreciated. The figure of £1.2 billion lost to benefit fraud is nothing in comparison with other losses - like tax fraud, which last year accounted for a staggering £35 billion.

From the Citizens' Advice Scotland website:
"The UK government estimates that total fraud across the whole of the economy amounts to £73 billion a year. UK government figures for 2012 estimate benefits overpaid due to fraud is £1.2 billion and tax credit fraud is £380 million. So just under £1.6 billion in total; less than 1% of the overall benefits and tax credits expenditure and less than benefits underpaid and overpaid due to error.
It's a lot of money, and it’s never right, but unfortunately fraud happens in many walks of life. Sometimes it helps to compare the figures with other fraud or error. More than this amount was overpaid in benefits due to claimant and official error. That was £2.2 billion in 2011/12 and is recovered by the UK Government. Equally claimant and official error led to £1.3 billion benefits being underpaid.
So to get some perspective, benefit fraud represents 2% of the estimated total annual fraud in the UK. Public sector fraud, which includes benefit fraud, is £20.3 billion a year, so within this category it accounts for just under 8%. The majority of this £20 billion is tax fraud which costs the economy £14 billion annually, or 69%. So we can see that both in absolute and percentage terms tax fraud is a much bigger issue than benefit fraud. In fact, out of all the categories of fraud calculated by the UK Government, benefit fraud is the second lowest. Only identity fraud which costs individuals £1.4billion a year comes below it."
Perhaps the government's efforts could be more valuably directed into recovering the money lost in tax fraud and to multinationals like Amazon and Apple?

Benefit fraud is a minor cost, already the investigators cost more than they save.  The biggest problem is the complexity of the rules and the ability of govt an dnow private agencies to penalize people without any appeal by those accused. Financial fraud by the Citry and the top 10% far outstrips the small amount by those claiming benefits.
Nationwide stole all my savings and they remain free, even though they admitted to stealing my money

Why limit it to £5,000 it should be double the amount found to be defrauded and all state benefits stopped immeadiately until the debt is repaid.
This kind of fraud hurts us all so should be punnished harshly, i.e. if found guilty the punishment is automatic and the judge cannot reduce it, he should however be able to increase it.
This may be the only deterent.