Universal Credit Fraud

Margaret Greenwood Excerpts

Wednesday 10th July 2019 Commons Chamber

[Justin Tomlinson]

I thank my hon. Friend, who works tirelessly in this area. This is yet another example of a really helpful, constructive and proactive suggestion. I know the Secretary of State is very keen to see that brought forward, so that is a big yes from us. In terms of raising awareness, we are increasing training and guidance for frontline staff. Working in partnership with Action Fraud, we will be doing further national and regional press releases, social media and stakeholder engagement to raise awareness of the potential risk of fraud and of how to report it as quickly as possible.

[Margaret Greenwood (Wirral West) (Lab)]

The Government claimed that universal credit would reduce social security fraud and error by £1.3 billion. Now we know that they are clearly failing to do that, just as they are failing to protect people from poverty. The Government’s own figures show that the rate of fraud in universal credit is far higher than the rate of fraud in the benefits it is replacing. According to the BBC, fraudulent applications for advances are leaving claimants scammed and at risk of destitution, costing millions of pounds of public money.

Labour Members have repeatedly highlighted the hardship that the five-week wait for an initial payment causes, pushing many people into debt and rent arrears or forcing them to turn to food banks to survive. The Government’s stock answer is that people can apply for advances—indeed, on 28 March, the Secretary of State said that he felt the system of advances was working well. What does she think of it now?

When the National Audit Office highlighted delays in paying people last year, the right hon. Lady’s predecessor claimed that they were largely due to the need to verify identity. In June 2018, she said:

“Verification is a necessary part of any benefits system…We need to make sure we are paying the right people the right amount of money.”

How is it, then, that advances have been made to claimants with names such as Lisa Simpson, Bart Simpson and Homer Simpson?

Will the Minister tell the House how much the Government estimate this fraudulent activity is costing the taxpayer? How does that cost compare with the cost of abolishing the five-week wait? What action are the Government now taking to make sure they verify correctly the identity of people who request an advance? What action are the Government taking to support claimants in financial hardship who have clearly been the victim of a scam?

It is clear from this report that advances are not the answer to the five-week wait; they are loans that have to be paid off by claimants—in this case, the victims of scams. The Government must finally listen to the evidence and stop the roll-out of universal credit.

[Justin Tomlinson]

I am afraid there was a bit of a muddle, mixing the difference between the verification process with advance payments and the main claims for universal credit. As a Government, we take the issue of fraud, error and overpayments seriously. We anticipate that by the time we have full roll-out of universal credit, there will be a reduction of over £1 billion.

[Margaret Greenwood]

How did Bart Simpson get in there?

[Justin Tomlinson]

Be patient. I am answering the questions. I can only address one point at a time.

The legacy benefits system was complex. Claimants had to deal with local authorities, HMRC and the DWP. The majority of welfare issues that led to fraud, error or overpayment related to failing to provide information on changes of circumstances. Under the legacy benefits, there was an increased likelihood that people would fail to report changes of circumstances. Universal credit, however, with a single point of contact on a digital interface, makes it easier for claimants to report changes once, and it is easier for us to proactively identify when there are changes. The Government are still on target to see, with the full roll-out of universal credit, a reduction of £1 billion.

We talk about the principle of advance payments, but remember that under legacy benefits at the end of the claim the payment came too soon. We saw that claimants would in many cases be going into work, having spent a long time out of work, being anxious. They were often paid in arrears at work, so would not have access to funding. People who were desperate to work and do the right thing were financially unable to do so. Under universal credit the wait for the money is at the beginning, but with advance payments to bridge that wait. That is vital to ensuring that claimants can transition into work. As I said in my earlier response, it is the need to balance making advances available to claimants quickly and ensuring that payments are paid based on the correct circumstances.

The shadow Secretary of State raised a point about children. When verifying advance payments, we will verify identity, bank accounts, national insurance and, where they are declared a non-UK national, nationality. However, to make sure we can provide support to those who are often the most vulnerable people in society, there is manual checking of housing and children. That is the bit that can take time beyond when we have issued the advance payment, although it would be checked before the actual main claim. As I have said, by using greater access to real-time information and data matching, we will be able to speed up that process to improve confidence that all claimants for advanced payments are valid.