Report finds introduction of Universal Credit will increase fraud by £1.3bn by 2025

DWP sign

From The Guardian, 9th of July 2019 (Edited)

After the reveal of a new Universal Credit advance loans scam hitting benefit claimants that is estimated to have cost the taxpayer £20m, the National Audit Office (NAO) revealed that benefit fraud was at its highest level for a decade, driven mainly by universal credit.

Although ministers hoped universal credit would reduce fraud by £1.3bn by 2025, the NAO found it would instead increase it by £1.3bn by the same date.

Although the most recent scam has been known about since at least last November, and ministers promised in May to “look into it as a matter of urgency”, it is not yet clear what changes the DWP has made to the universal credit system to counter it.

A statement by the DWP minister Peta Buscombe said fraud in the benefit system remained low and staff were working hard to identify and tackle any instances and to bring fraudsters to justice. However, so far only one person has received a conviction for this type of fraud.

She added: “We’re encouraging people to listen to their instincts. If someone offers you a low-cost loan from the government they may be trying to steal your identity. Treat your personal information for benefits in the same way you would for your bank. And if you think you’ve been targeted, we urge you to report it urgently.”

Advance loans were introduced by the DWP after it emerged huge numbers of universal credit claimants were forced to use food banks and run up rent arrears because they did not have enough money to see them through the five-week wait for payment.

Margaret Greenwood, the shadow work and pensions secretary, said: “The government claimed that universal credit would reduce fraud and error. Now we know it is clearly failing in that, just as it is failing to protect people from poverty.

“Time and again the government has claimed that advances are the answer to the five-week wait. The reality is that they are loans that have to be paid off by claimants, often alongside debts built up during the five-week wait. Meanwhile, fraudsters and loan sharks prosper.”

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