Fraud, dishonesty, and exaggeration

It’s depressing. By now I should be used to it, but it’s still depressing. The past week has seen another couple of high-profile programmes dedicated to demonising benefit claimants by concentrating on different types of fraud – by the BBC of all people, obviously keen to shed the reputation ‘left-wing bias’ that is thrown at by right-wing politicians (and indeed some ex-journalists).

The first programme was The Future State of Welfare, by one of the flagship BBC radio current affairs presenters, John Humphrys – more of which next week. This week I want to concentrate on the documentary series Panorama‘s expose ‘Britain on the Fiddle’, about the most outright forms of benefit fraud.

So what was news?

This being the UK, it’s hardly news to focus on benefit fraud, which is a regular preoccupation of the right-wing press. What’s new about this is their estimate about the level of fraud in the public sector. The exchange in the programme goes like this (about 10mins in):

“Expert: We estimated that £22bn of public expenditure was being lost to fraud and error.

Interviewer: That’s way more than people imaginged isn’t it? 

Expert: Yes it is.  And that’s because we applied the best available data, so we’re confident in that figure.”

The expert in question here is Jim Gee, ex head of counter-fraud at the NHS, and now working for PKF accountants as well as ‘advising ministers’. The estimates come from work PKF have done with the Center of Counter Fraud Studies at Portsmouth University, primarily this report which is based on this data.

There are two things that are wrong with this figure.

  • Firstly, by implication, the programme is saying that this is about benefits fraud (broadly defined, including unemployment/disability, tax credits and housing benefits/social housing). This is why the Daily Mirror – by far the biggest-selling left-wing newspaper – led with stories that ‘benefit fiddles’ were costing the country£22bn. 
This is actually a complete misreading of the data – although an understandable misreading in the context of a programme that focused on this kind of fraud. In fact, £22bn refers to the entire figure for public sector fraud, most of which is in the rest of central government (the NHS, schools, bin-cleaning, civil service offices etc). Only £4bn is claimed to be from the benefits system.

Moreover, no-one as any idea where even this £4bn figure comes from, as the admirable Factcheck organisation have promptly chased up (incidentally, please give money to Factcheck, they’re fantastic). The Department of Work and Pensions (DWP) are described by the Centre for Counter Fraud Study’s report as “measuring their losses accurately since the late 1990s and undertaking a range of work to reduce them over an even longer period” [11]. The DWP should be heartened at receiving such glowing support for their fraud measurement, and their estimate of fraud is only £1.2bn in the latest period – not £4bn.

Judging from Factcheck, it appears that the £4bn is achieved by adding another £500m for tax credits fraud (reasonably enough), plus £2bn for fraud in social housing. Except that the value for housing benefit fraud is for the total value of the houses that are being fraudulently occupied, not the value of renting them at below-marked rates for a year. So even the £4bn is far too high, let alone the £22bn.

  • Secondly, and more simply, the estimates for public sector fraud outside the benefit system are a lot more fragile than the programme makes out. The exchange reported above makes it sound like these figures are solid, dependable – ‘we’re confident in that figure’, they say.

Well, actually they have no new data whatsoever on UK public sector fraud.  Instead, they review ‘the latest global data’, which shows 3-9% fraud levels. “If we accept for a moment that the UK is probably no worse or no better than most countries, then we are losing £22.407 billion in respect of public sector expenditure” [10].

This isn’t unreasonable in itself. What’s unreasonable is to pretend that these data are solid and dependable, rather than speculative. (£22.407 billion is a hilariously inappropriate level of precision!).

As an aside, there’s a black comedy in a report about fraud and dishonesty being based on data that entirely lacks transparency – they seem to provide no details whatsoever on where these ‘global surveys’ come from, so we can’t analyse them ourselves. Except that this is the idea, because the figures come from an accountancy firm (and associated university centre) that are clearly touting for business.

The other new claim they come up with is that fraud has increased by 30% since 2007. Factcheck chase this up, and while it comes from this data again, it’s impossible to tell exactly where the data come from, nor how robust it is.

Benefit fraud in context

Benefits fraud violates the spirit of give-and-take underlying the welfare state, and obviously I have no sympathy for most of the people featuring in the programme – the man claiming incapacity benefits while having a house in France and a yacht, or the guy in social housing who goes to the cash-and-carry for the pub he owns in his Bentley.

Yet it’s important to put these figures in context. The latest DWP evidence is that only 0.8% of the total benefits bill is due to fraud – an impressively low figure that most organisations would probably be proud of. A further 0.8% (£1.2bn) is lost in customer error, plus 0.5% (£0.8bn) in official error.

This can be set against (i) 0.8% (£1.3bn) in underpayments in the same year – this ignores people who are entitled to claim and don’t, and is simply the figure due to the DWP screwing up its payments to people; (ii) £15bn in uncollected tax cited (HMRC official estimate) and an estimated £1bn in uncollected local government tax from the Centre for Counter Fraud Studies report; and (iii) legal tax *avoidance* (rather than fraud), where a Guardian editorial noted that “no one has the vaguest clue” how much this is but that a Government stab in the dark was £4-14bn, while the Trades Union Congress puts it at £25bn.

But still…

So behind the headlines here there’s little new, and in fact a glowing endorsement of the DWP’s benefits fraud measurement. Yet there is another claim here – that rather than being outright fraud, there are people who are genuinely sick/unemployed, but are refusing to work in the worst jobs in the economy. It’s this claim that lies at the heart of John Humphrys’ programme, and it’s this that I’ll focus on next week.

36 responses to “Fraud, dishonesty, and exaggeration”

  1. Ben, thank you for this – the mounting campaign of misinformation needs robust counter sources lest Daily Mail and, alas, the BBC come to be regarded as informers of hard fact.

    One point that is missing from the whole ‘debate’ is any insight into where all this money goes. Do you know of any research that shows that money paid in benefit stays within the (local) economy versus that lost to tax fraud which is taken out of circulation, locked up in land or off-shore accounts?

    • Thanks Warriet, I think it’s an interesting question; while I don’t think this argument will get any where in the public debate, it’s an important point to raise with politicians who may well take it more into account. I’m sure I’ve seen something about this (from memory I think there was something about this on Left Foot Forward relatively recently, but I might be wrong…)

      Post a reply if you find it!

      • Ben, will look – I get very annoyed by the propagandists’ unvoiced assumption that the money paid in benefits magically evaporates and is lost forever to the economy. OK, some ends up in Afghanistan or Holland but I suspect that most is spent very locally.

  2. This tendentious blog entry is very sad… perhaps we should ask the real questions! How can people stay on benefits for a life time in the first place? What gives them the right to live at other people’s expense when many single mothers have to get up in the morning to work in Tescos behind the till? What’s fair about this? The fact is that Humphreys and the Panorama programme revealed the lazy underbelly of society that takes us for a ride! We should stop allowing them to do this to us!

    • “Humphreys revealed the lazy underbelly of society”
      Axel, why don’t we just copy what they do in the good old USA, Oh I forgot that’s just what where doing, increasing poverty, making more people homeless stigmatizing the disabled, the sick, the unemployed as benefit scroungers and malingerer’s, I think your getting your wish Axel?

      The only people taking this country for a ride as you call it are the Privatised companies, the city bankers, the political elite, those are the people with their noses deep in the trough, not the ordinary man or woman of this country, that’s where the real fraud is, Cameron has suddenly come up with 40 Billion for the IMF, I thought we were broke? That’s what all the cuts are for supposedly? The poor and the vulnerable always suffer for the avarice, greed, and incompatence of the elite, very soon things will change….

    • Hi Axel – I’ll explore this more in my post next week, if you’re interested. I don’t disagree with your view of moral behaviour (or at least, I only disagree a little); I just disagree about what a truthful picture of benefits in the UK looks like. Anyway, more next week: there’s only so much I can cover in a single 700 word post!

    • Yes excellent programming. It struck me that 25 years ago the BBC would never have screened this. Highlighting the facts about benefit dependency was dismissed then by them as “scrounger-phobia”. Denying these facts was presented as objective analysis. At last, the BBC has shed this left wing tendency to rhetoric, and is presenting things as they are. At last, the BBC is performing the public service we pay them for. I may even reconsider my desire to see them privatised

      • BBC left-wing? Another one of those myths propagated by the Daily Fail. At the moment the BBC seems to be going through one of those bending over backwards phases presumably because it fears further cuts or that its survival depends on lowest common denominator opinion. Public service is just that and applies to the whole public, not just what you think. Desire to see them[sic] privatised, you mean like the resounding successes that were the rail network, energy suppliers et al

  3. Hi
    Excellent post. You might find this research report we recently completed of some interest:

    Bad News for Disabled People: How newspapers are reporting disability.

    This report report reveals the extent of media misrepresentation and how the media are reporting disability in the context of government spending cuts. it shows a major shift in how disabled people are portrayed and the negative impact this is having on public attitudes and on disabled people themselves.

    A word version is available here:

    • I’d seen it already, but I wholeheartedly recommend it to other people – it’s a really important bit of work. (btw, Nick, I’d be glad to chat about this sometime in London if you’re still working on disability issues)

  4. Hi Ben
    An excellent post. Im a Criminology degree student, and I’m just at the planning stage for a research project on this subject. I’m looking at the differences in how the public perceives benefit fraud against how they perceive tax avoidance. I then want to examine how these perceptions measure up to statistics, to see how far apart (if at all) the two are. Somebody at university recommended that I watch the program; your post has given me some ‘between the lines’ detail that probably would have took me many stressful days to work out myself! Your post has really given me some ideas to reflect on. Thank you.

    • Hi Gary,

      Much needed research, good luck with it! I notice your use of the expressions “benefit fraud” and “tax avoidance” – I assume you meant “tax evasion” as avoidance is not illegal and could be regarded as analogous to benefit claim optimisation i.e. the use of all available advice ton maximise payment while staying within h the letter of the law. Minor pedantic point I know but the language used is an integral part of this debate?

      • Not pedantic at all David. I did mean “evasion”, not “avoidance”. I’m glad you pointed it out though, as confusing one for the other in my finished work would compromise the entire thing and no doubt lose me a fist full of marks!

        Thanks for the good luck message; its my first piece of research so I’m going to need all the luck I can get. I’m sure in the end it’ll all come together nicely, it just doesn’t feel like that right now at the foot of the mountain!

  5. This whole BBC/media left-wing bias thing really makes me laugh. Is there even a single major media outlet with a left-leaning focus?

  6. More as a reminder to myself than anything else – the DWP have stopped publishing statistics on fraud in incapacity benefits while IB claimants move over to ESA (see this document, section 1.20ii). They’re going to start again in May 2013. In the meantime, we have to go back to 2009/10 to look at incapacity benefits. All of which seems perfectly reasonable – it’s not a criticism of the DWP statisticians!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: