Benefits Fraud: would the taxpayer save money by giving every citizen their due, not a penny more, not a penny less? Actually, it would cost £12.7 billion EXTRA!

Moral outrage is about something that doesn’t affect you personally. If someone pulls the leg off your teddy bear, it’s not moral outrage you are feeling – just rage. (No, really, I forgave you years ago. You know who you are!)

Moral outrage is all about the principal. And is magnified more by how close the offender is to you than by the magnitude of the offence.

• Morally Outrageous:            Someone who is about the same as us, same habits, same social group, doing something naughty. Outrageous because they are getting away with something we could get away with, if only we could be a bit more immoral:
• Jumping the queue
• Driving like an idiot
• Benefits fraud

  

• Just Damn Annoying:            Someone very different to us: e.g. a celebrity, top company executive, or banker. Less outrageous, because their naughtiness is something we could only aspire to in our dreams/nightmares:
• Getting let off by the police for extreme bad behaviour, including assault and substance abuse
• Taking multi-million bonuses while wrecking the world economy
• Asset stripping companies, and throwing pensioners onto the streets

When Ed Miliband, the leader of the UK Labour Party, wanted to give his outraged morals an airing in a speech earlier this month, he picked on two sets of bogeymen.

1)      A man he had met who “hadn’t been able to work since he was injured doing his job. It was a real injury, and he was obviously a good man who cared for his children. But I was convinced that there were other jobs he could do.”

2)      The executives of “Southern Cross care homes - where millions were plundered over the years leaving the business vulnerable, the elderly people in their care at risk and their families feeling betrayed.”

Miliband went on to say “We must be once again the party of the grafters” rather than, as before, of grifters. And continued “..there is a link between the man on incapacity benefit and those executives at Southern Cross. What is that link? That these are people who are just not taking responsibility - and the rest of us are left picking up the pieces.”

How did a “good man who cared for his children”, claiming £71.10 a week in incapacity benefit while looking pretty fit to Miliband, find himself in the whiffy company of unashamed slash-and-burn executives who pocketed an estimated £500million at the expense of pensioners?

The sad truth is the thought of some individual scamming us taxpayers out of £71.10 per week in incapacity benefit while actually being capable of flipping hamburgers for minimum wage is enough to blow all our other troubles away. We will soon forget about Southern Cross, but the bitterness for benefits cheats will stay with us.

No matter that we can’t afford a proper armed forces or a health service, we need to hand our schools to private companies, have to work until we are older and get less pension. Misfortunes caused by avaricious bankers who were let off the leash, self-serving politicians who got rid of the leash, and incompetent regulators who wouldn’t know how to use that tricky-dicky catch on the leash even if they had a leash and the inclination to use it.

What we need to do, we are told by politicians to the left and to the right, is tighten up on the benefits system. Make sure that everyone gets just what they are entitled to, not a penny more and not a penny less.

But would tightening up save us any money? The figures show that it would actually cost us billions.

In these straitened times, saving money is what it’s all about. After all, did we scrap HMS Ark Royal because we didn’t need it? If so, why did we have it?  By taking out the Ark Royal, bankers did something last achieved by a German U-Boat in 1941. 

All that bad banking is overlooked, but benefits fraud is not. So let's take a closer look at those benefits fraud figures:

In 2009-10

• £3.1 billion was overpaid, of which £1 billion was fraudulently taken in benefits. The rest was due to errors by the DWP and by the customers.
• £1.3 billion was underpaid, all of which was due to DWP and customer errors.
• NET Overpayment = £1.8 billion

On the other hand, the amount that was simply not claimed at all is many times this.

The fact is, if everyone got what they were entitled to, nothing more and nothing less, then Department of Works and Pensions figures show it would all cost us £billions MORE!

The last thing governments want is to be clear about the uncomfortable truths. So, here are the meanings of key bits of official-ese you will need for the next bit:

Caseload take-up compares the number of benefit recipients - averaged over the year - with the number who would be receiving [benefits] if everyone took up their entitlement for the full period of their entitlement.

Expenditure take-up compares the total amount of benefit received - averaged over the year - with the total amount that would be received if everyone took up their entitlement for the full period of their entitlement.

Income Support & Employment and Support Allowance

• Take-up between 78% and 90% by caseload.
• Take-up between 85% and 94% by expenditure.

Pension Credit

• Take-up between 62% and 73% by caseload.
• Take-up between 71% and 81% by expenditure.

Housing Benefit

• Take-up between 77% and 86% by caseload.
• Take-up between 82% and 90% by expenditure.

Council Tax Benefit

• Take-up between 63% and 70% by caseload.
• Take-up between 65% and 73% by expenditure.

Jobseeker’s Allowance (Income-Based)

• Take-up between 47% and 59% by caseload.
• Take-up between 49% and 63% by expenditure.

And here are the totals in folding money:

“Taking all six income-related benefits together, [Income Support, Pension Credit, Housing Benefit, Council Tax Benefit, Jobseeker’s Allowance (Income-Based) and Employment and Support Allowance (Income-Related)] there was between £6,930 million and £12,700 million left unclaimed in 2008-09; this compared to £38,110 million that was claimed and represents take-up by expenditure of between about 75 per cent and 85 per cent.”

Department of Works and Pensions, research published in June 2010.

Fraud in 2009/10 cost £1billion, which was less than 1% of total benefits payments. The reality is that if the government ran a campaign to ensure everyone took only what was coming to them, it would cost up to an extra £12.7 billion. How likely are they to do that at a time like this?

Politicians are overwhelmingly from the comfortable middle classes. Brought up traditionally, they will have all watched all those optimistic Hollywood musicals repeated over the years at Christmas. Few were repeated more often during the childhoods of this current generation of politicians than this song from “The King and I”.

Whenever I feel afraid

I hold my head erect

And whistle a happy tune

So no one will suspect

I'm afraid.

While shivering in my shoes

I strike a careless pose

And whistle a happy tune

And no one ever knows

I'm afraid.

The result of this deception

Is very strange to tell

For when I fool the people

I fear I fool myself as well!

Singing the song of benefits fraud finds plenty joining in from the broadcast, online, and print media. Politicians, always afraid of being found out, are happy to take cover and comfort wherever they can find it. 

Benefits fraud, certainly a problem in itself, has proved successful in diverting Ripped-Off Britons from the much bigger problems in their lives. Politicians hope that by making ordinary Britons suspicious of and annoyed with their neighbours, they will forget they are getting ripped-off far far more by utility companies, banks, insurers, the taxman, and the government itself. Bigger problems that the politicians are too afraid, or too complicit in, to deal with.