Tax fraud and error at £1,200 a second dwarfs benefit fraud

9.04.10

Commenting on the need to tackle fraud and proposals for a three-strikes rule by the Conservative party, the Head of Policy, Rights and Advocacy at Child Poverty Action Group, Imran Hussain, said:

“The danger with these proposals is that they talk up benefit fraud, ignore the bigger issue of tax fraud and, if they lead to benefits being stopped, could plunge children into poverty.

“Benefit fraud is at an all-time low, costing £1.1 billion a year, less than 1% of claims. Overpayments cost £1.9 billion a year, underpayments £1.2 billion and £16 billion goes unclaimed which should be helping the poorest households. Rather than recycling myths about ‘benefit scroungers’, we want all the parties to pledge to tackling error and helping those who are entitled get the support they need by making the system simpler and easier to understand.

“The truth is that tax fraud is a much bigger issue for the public finances. Every year £15 billion is lost to tax fraudsters, which could be making a major difference to Britain’s poorest families who have been hit hardest by the recession.

“More money is lost every second to tax fraud and error than a family gets paid for child benefit in a whole year.”

Notes for editors

• The Conservative’s policy announcement today leaves many questions unanswered.
  - Can a partner continue to claim?
  - How will the wellbeing of dependent children be protected?
  - Will passported entitlement, like children’s school meals be taken away?
  - Does it apply only to convictions, or to people accepting a fine under measures in the Welfare Reform Act 2009, who may be vulnerable claimants pushed into accepting a fine to avoid court proceedings when it was really an error rather than fraud?
  - How many people have been convicted 3 times or more? (figures have only been given by the party for multiple benefit sanctions, which is different to benefit fraud).
  - This will not impact on landlords committing housing benefit fraud who are not the benefit recipients.
  - This will not impact on in-house fraud by benefit assessment officers.
• Information on both public and private sector fraud can be found in the National Fraud Authority’s 2010 annual indicator report: http://www.attorneygeneral.gov.uk/nfa/GuidetoInformation/Documents/NFA_fraud_indicator.pdf
• Child Poverty Action Group’s manifesto, published in March 2009, can be found at: www.cpag.org.uk/manifesto
• For up-to-date background facts and stats on UK poverty, visit: www.cpag.org.uk/povertyfacts/
• CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.
• CPAG is one of over 150 member organisations of the Campaign to End Child Poverty, campaigning for public and political commitment to ensure the goals of halving child poverty by 2010 and ending child poverty by 2020 are met.

For further information please contact:
Tim Nichols
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302 
tnichols@cpag.org.uk