Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 160-179)



  160. You may have a whole bundle of people we are spending much more on than we are getting back and we are not taking them to court because they are minor offences linked to some people going in and out of decorating and painting or whatever they are doing.
  (Ms Cleveland) If you are working and signing that is actually big amounts because it involves a whole week's benefit and whether someone is entitled to it or not. If anyone is working and claiming Jobseeker's Allowance or claiming Incapacity Benefit and Income Support that would be pursued.

  161. Are there many incentives in the system to defraud? In the case of somebody who has been out of work and then somebody comes along and says "Fred, will you paint the living room for 100?" or something like this, would that mean that if Fred went to you and said that he had 100 from a bloke up the road, it would involve him in all sorts of complexity, form filling, cessation of his benefit and all this stuff which would make him think he could not be bothered to do any work or else he would just forget it this time?
  (Ms Cleveland) He would declare which days he had worked and the amount and there would be a recalculation of that week's benefit, but he would not have to claim again.

  162. So in the case of Fred and the 100 for a day's work, for argument's sake, and he was some person on Income Support, how would that affect him?
  (Ms Cleveland) It would count as income in that week and be offset against the benefit.

  163. What would his normal benefit be as a single man?
  (Ms Cleveland) I knew someone would ask me this question. It is something like 55.

  164. So he would lose two weeks' income basically.
  (Ms Cleveland) No, it would just be the one week.

  165. He would get 100, lose 55, so he would make 45. Is that it?
  (Ms Cleveland) Yes; probably.

  166. Would he have continuity of income?
  (Ms Cleveland) I am not an Income Support assessor.[4]

  167. What I am trying to get at—and I know you may not be able to answer this question because your job is too important—is whether there is a system that means people know that if they go along it is not simple. They either cannot be bothered to do any work or they want to dip in and out in a flexible process. Are you reasonably satisfied that people can have a life with you where they can go in and out of casual work?
  (Ms Cleveland) That is very much at the heart of what we are trying to do with Jobcentre Plus, to have personal advisers who can work with people. Getting people and keeping people in contact with the labour market is the best way they will find into new jobs longer term.

  168. The other side of that coin is the issue of sanctions. If we are inadvertently having this huge black market economy, the people feel on the one hand that if they do it and report it they can carry on their work, on the other hand if they are caught, they get punished. So if this man Fred, who is doing the 100 job, is found out, what would happen to him?
  (Ms Cleveland) The benefit would be suspended for that week but he would be free to claim again later on.

  169. So Fred might have been doing this on and off for months and years. What would you do to investigate whether he had?
  (Ms Cleveland) It is very difficult for the informal economy to track back. It is almost impossible to identify that type of long-term fraud.

  170. He would lose his benefit for how long?
  (Ms Cleveland) It may just be for the week.

  171. So if he is honest, he would lose a week's benefit and if he is dishonest he loses a week's benefit, unless he is not caught, in which case he gains 55 or whatever.
  (Ms Cleveland) Thus the powers we have sought in the Fraud Act to disqualify someone from benefit for 13 weeks.

  172. What do you reckon, Mr Codling? You are looking a bit serious. Do you reckon Fred is reasonably treated?
  (Mr Codling) That is a policy judgement.

  173. I am not trying to make this very simplistic but at a very low level this is what the world consists of. If Fred is caught, then a few months down the line it happens again, someone phones up in response to one of your publicity campaigns on the television, spending millions of pounds on that, and says he is painting someone's house again. He is doing it again, he gets 100, what do you do the second time?
  (Ms Cleveland) That is why we are looking for the two strikes. We have not had much in the way of powers to be able to address these other than the immediate benefit sanctions.

  174. You do not have them or you are going to get them?
  (Ms Cleveland) We have them under the Fraud Act 2001 but they have not been brought into play yet.

  175. Once they are brought in, what happens then? Fred has done it again.
  (Ms Cleveland) It is two strikes and then you would be disqualified.

  176. For 13 weeks?
  (Ms Cleveland) Yes.

  177. So he is earning in one day twice the benefit, so it is really six and a half weeks.
  (Ms Cleveland) If he had a personal adviser, we might advise him, if he was doing this on a regular basis, that Working Family Tax Credit might be more appropriate.

  178. Then if he did it again, having lost 13 weeks, comes back, claims benefit and back painting, what do you do to him then? Do you put him in prison or anything?
  (Ms Cleveland) That is where we begin to look at prosecution.

  179. When you were answering Mr Gibb and mentioning the 11,000 prosecutions, I assumed, correct me if I am wrong, that these 11,000 prosecutions were a much higher proportion of the value fraud and you were targeting big amounts. What is the threshold for prosecution, assuming you have evidence? How much money are we looking at? We are not looking at the 100 door I mentioned, are we? What are we looking at? What sort of figure? What is the minimum transgression which would provoke you into pursuing a prosecution?
  (Ms Lomax) I am not sure that there is a minimum amount.


4   Note by witness: If a customer reported part time casual earnings, we would disregard the first 5 of his earnings (in the benefit week) if single; 10 if one of a couple; 20 if disabled, a lone parent or a carer. Further claims would not be required. If a customer started full time work or his earnings (less the disregard) exceeded his benefit, a fresh claim would be required. A new rapid re-claim process is being introduced to make this easier for customers. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 11 September 2002