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."