New fraud figures

A new government report explains that fraud costs the public sector £21.2bn a year. It claims that “The majority of the fraud loss is due to fraud against the tax and benefits systems”. That presumably is why Panorama recently mis-reported benefit fraud as being £22 billion. What the report’s introduction does not explain – and what the statement disguises – is that the benefits systems does not belong with the larger figure at all. Tax fraud is estimated at £15 billion; the next largest loss is through procurement fraud, at £2.4 billion; and benefit and tax credit fraud together come to £1.5 billion. Annex 1 has the estimates.

The case for exempting some people from reassessment

On 8th February I suggested that some groups might reasonably be exempted from the process of reassessment for ESA, and mentioned in particular “young people with severe disabilities from early ages or people with defined conditions like cancer”. The recent statistical release tells us that these groups have a quite different profile from most other claimants. As things currently stand 12% of all claimants are being placed in the “support group”, those who are not expected to work. In the case of “neoplasms”, or cancer, that rises to 67.7% of assessed claims; in the case of “congenital” or “chromosomal” conditions, it is 66.7%.

ESA Appeals

I have been looking at the January 2012 statistical release for the review of Employment and Support Allowance. According to the tables

  • 1,023,000 claimants have been reassessed (table 1a)
  • 622,000 have been found fit for work (table 1a)
  • 521,000 of those found fit for work have appealed (table 3), and
  • 38% of those cases heard so far (80,000 out of 210,000) have been successful (table 3).

The implication is that we are are looking at a very large number of decisions that are provably wrong – more than 30% of all decisions that people are fit for work. The DWP and claimants have been forced through an expensive and time-consuming appeal process to set things right. This is a shambles.

Further note. I have amended this entry to remove a predictive figure. This was a quick, back-of-the-envelope calculation. I’ve been delighted – but taken aback – by the interest that my guesstimate attracted, but the more I look at it, the less confidence I have in any possible prediction I might make. In particular,

  • the rate of decision-making has slowed,
  • the statistical information in the tables does not cover the same time periods, and none of the information is particularly up to date
  • the level of new appeals seems to be falling
  • the success rate seems to be falling, and
  • as gwenhwyfaer comments, large numbers of appeals appear to be disappearing from the process without explanation, and I cannot assume that they will eventually have decisions made.

The crime of forming a relationship

This is from a press statement by Lord Freud, reported today.

Pretending you are a single parent to get benefits when you are actually living with a partner is stealing money from the people who genuinely need help. Sometimes these claims can be fraudulent from the outset, but often a person’s circumstances change gradually and they don’t tell the Department. Either way, it is a crime and one we are determined to put a stop to.”

So gradually forming a relationship, and not knowing quite what the position is, is a crime.

Freud goes on to say:

Universal Credit will simplify and automate the benefits system to make it less open to abuse and ensure this money is going to those who need it the most.

It is hard to see how the introduction of Universal Credit will make a difference to the situation – with one main exception. In the past, claimants have only been liable to repay benefits if they have failed to disclose a material fact. Universal Credit is going to include measures to allow the government to recoup overpayments, irrespective of whether or not a claimant has reported their circumstances, or whether they can reasonably be expected to know or understand that an overpayment has been made.

The Greek tragedy

The continuing crisis in Greece has been presented in questionable terms. First, we have been told that the alternative to ‘austerity’ is a disorderly default. Defaults do not have to be disorderly. New York and Cleveland, both members of a different currency union, have defaulted on their debts in the past; the dollar was unharmed, and they were not forced to adopt a new currency.

Second, we are told that Greece will have to leave the Euro. Greece cannot be forced not to use the Euro. Money is what people accept as a unit of exchange, and if people in Greece opt to trade in Euros, they cannot be stopped. Some countries use other countries’ currencies informally; some (like Ecuador, which uses the US dollar) do it formally. Germany might have more success in insisting that Greece should use a different currency from them if Germany itself was to leave the Euro, but that seems unlikely.

The economic policy that the EU, and Germany and France in particular, are forcing on Greece has led to a major depression – and the problem does lie in that policy, not in Greece’s deficit. Austerity is the worst possible answer to an economic depression; and austerity which is targeted on the poor is indefensible morally as well as economically. If France and Germany want to ensure that Greece does not default, to protect their own banks, they need to take steps to shore up the Greek economy. At present, they are doing the opposite.

The review of provision for mortgage interest

In December, the government issued an informal call for evidence about mortgage interest relief. There are still two weeks left of the consultation period. By comparison with the costs of Housing Benefit, which pays a substantial proportion of rent, the cost of mortgage interest payments (£400m) is limited. In just about every case, people who become entitled to it have received much higher incomes, and the issue of incentives to work hardly seems to apply.

Mortgage interest is part of a system of social protection; the aim is to make sure that people are insured against radical changes in circumstances. The government is rebuilding the welfare system around a very different kind of model, which emphasises safety nets and incentives to work rather than the need to protect people. The system stopped protecting owner-occupiers effectively when mortgage interest was withdrawn for most of them; there has been a growth of mortgage protection plans to make up for the deficiency. An important concession to growing unemployment has been the reduction of the waiting period, which had been extended to 26 and in some cases 39 weeks, back to 13 weeks. Among the ideas that are now being canvassed are a two-year time limit for the receipt of help, which would force people to move house, and a charge against the property that could be realised on resale, which may force them not to. Neither fits the the easy certainties which have characterised some other announcements about the plans for Universal Credit. The government is discovering, slowly, that there are different principles for different cases, and that one size does not fit all.

"No business is good business": undermining QE?

The level of money in the economy has an important influence on demand, and so on economic production and growth. The Bank of England has expanded its quantitative easing, injecting money into the British economy, by a further £50 billion, taking the total to £325 billion. At the same time, reports which focus on the rewards given to RBS’s Chief Executive have been emphasising what a splendid job he has been doing in rationalising the bank’s balance sheet, shrinking its holdings by £600 billion to date, with a further £200 billion to come before long. That seems to square with a view attributed to some banks – “no business is good business”. These two figures are not commensurate or directly comparable – RBS is disposing of assets as well as loans, outside the UK as well as within it – but the relationship is close enough to raise questions. While the BoE is injecting money into the economy, RBS is working assiduously to take money out. And that raises the question, not whether Stephen Hester is being overpaid, but much more seriously, whether he is being paid to do the wrong things.

HMRC

Attacking HMRC on a range of issues, a Times editorial comments: “Tax Credits have repeatedly been overpaid because changes in individual circumstances occur too frequently for the bureaucracy to keep up.” That’s quite true. But the Universal Credit scheme, contained in the Welfare Reform Bill currently passing through Parliament, relies centrally on the principle that it will be possible to respond to changes in people’s needs as they happen, “in real time”. It is not possible now, and it is not going to happen like that.

The government has sidled away from the promise of a computer system that will cope with everything – no system could be expected to record changes in household circumstances as they happen. What they are currently relying on is the development of a faster PAYE system, which generally depends on income coming from employment. Changes to overpayment rules mean that claimants who are overpaid will have to repay money regardless of whether they could reasonably have known they had been told the wrong thing or were being paid the wrong amount – a situation which the Ombudsman has previously criticised for the instability it creates for low-income households.

Reassessing claims for ESA

The reports of delays in access to Employment and Support Allowance are unsurprising. The finger of blame has been pointed at Atos Healthcare. Atos has been the subject of a barrage of criticism during the last couple of years; their processes were described by the Harrington report as “mechanistic” and “impersonal”; many of the decisions made about fitness to work are wrong and 40% of appeals have been successful. Atos has issued a statement attributing the delays to the longer, more sensitive assessments introduced since Harrington.

There is however a more general issue about the capacity of the administration to deal with mass reassessment. Governments have not just undertaken in recent years to reassess all the former claimants of incapacity benefit; they also propose to introduce equivalent tests for the Personal Independence Payment, the reformed Disability Living Allowance. As people with disabilities are displaced from the labour market, and as the government requires further categories to be ready for work, including lone parents and those who are bereaved, the demands on the system of reassessment will increase. Current calculations on throughput rely heavily on people not turning up for the assessment.

There are some practical ways of relieving the burden of administration. One is to exempt more groups – such young people with severe disabilities from early ages or people with defined conditions like cancer. Another might be to offer compensation to some people to transfer to JSA voluntarily. A third might be to license a range of independent practitioners to certify the assessment. The procedure needs to be faster as well as fairer.

Stigmatising disability

The stigmatisation of claimants with disabilities is not a new phenomenon – people with disabilities have always prompted a combination of apprehension, mistrust and vilification. Precisely because it is deep-rooted in society, it can be dangerous. Governments which are critical of vulnerable groups are liable to legitimise the process of social rejection and exclusion; in the worst cases, they can exacerbate the process. That is behind the concern expressed by certain charities in a recent Guardian report.

Social security benefits for people with disabilities are not provided for a single purpose. They are provided for many reasons – among them, need, low income, social protection, compensation, earnings replacement, social inclusion and rehabilitation. Part of the problem with “othering” disability – and indeed, part of the problem with treating disability as an issue in identity politics – is that so many different issues are folded up together. Anyone can become disabled; it can happen suddenly as well as gradually. A benefits system needs to protect people from the things that might happen to them, and a system which excludes disability fails in several of its primary purposes.