Universal Credit Fraud

(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement on the universal credit fraud that has been uncovered by the BBC.

Universal credit is now in all jobcentres, with around 2 million people claiming this benefit. In accordance with our approach to test and learn while rolling out universal credit, we have made several changes to the advances claimants may receive while they wait for their first payment. If they need it, people can now claim an advance from day one of their claim. They can apply in person, by phone or online—a facility we introduced in July 2018. On Monday, the BBC published an article that described cases where fraudulent applications had been made to acquire advance payments. The figures quoted are unverified.

Those who defraud the benefits system take taxpayers’ money from the poorest people in society. We have a dedicated team of investigators working on this issue, and are working with the Crown Prosecution Service to ensure that, where appropriate, perpetrators will be prosecuted: we have in fact already secured our first successful prosecution. We frequently raise awareness among frontline staff to be vigilant to fraud risks, and raise concerns where appropriate.

I remind hon. Members, and their constituents, that DWP staff will never approach a claimant on social media, or in the street, to discuss their benefit claim. Claimants should never give out personal or financial information to a third party unless they are certain they work for DWP, and have followed a password or security protocol. Anyone with concerns about their benefit claim should contact their local jobcentre directly.

I am grateful to you, Madam Deputy Speaker, and to Mr Speaker for granting the urgent question. I am also grateful to the BBC whose investigative journalism uncovered this scandalous situation. The cases we have seen in the news are truly alarming and heart-breaking. The Minister says that the figures are unverified, but according to the BBC the figures come from a member of his jobcentre team, who released them to the BBC. One jobcentre reported that a third of all claims are the result of such scams by criminals operating on behalf of claimants, while at another £100,000 a month is being lost to criminals and not going to claimants who actually need it.

Those people already desperately need help. They have been pushed into serious debt by the actions of those appalling scammers and it is clear from the leaked communications that staff, and perhaps Ministers, in the Department for Work and Pensions were aware that the scams were happening. It is also worth pointing out that, from the cases that we have heard about, claimants have been doubly hit by their money being stolen by the scammers and then having to pay back the advance payment, which— as we all know—is in fact a loan. The SNP has consistently condemned the system of advance payments and feels that it is counterintuitive. The advance payment needs to stop being a loan.

The BBC has uncovered what we have been talking about for years—people being left in desperate straits by cuts to universal credit, which have seen increased food bank use and, now, people being driven unwittingly to criminals to help them to get the money they need to survive. The cases highlight the failure of universal credit to protect those who most desperately need the support that it is supposed to offer. Can the Minister not see that until universal credit is properly fixed, such desperation will continue?

The DWP says that it has already secured its first conviction, so it already knew about this situation. The Minister was quoted in a BBC article on 20 May about another heart-breaking individual case. Why did the Department not identify the loophole and attempt to correct it sooner? Why was a statement not made to the House so that we could have helped to advise our constituents? What is the scale of the fraud? When were Ministers informed? Has this activity gone unnoticed or unchecked because of the 21% cut in staff numbers reported by The Independent? Of course, Social Security Scotland has a clear commitment that when an error or fraud occurs that is not the fault of a claimant, they will not be penalised or out of pocket. Will the Minister follow that lead for the people who have been affected?

I thank the hon. Gentleman, who has taken a proactive approach to this important issue. I share his comment that it is alarming. These are criminal actions by what are, frankly speaking, parasites who target some of the most vulnerable people in society. I give the House an assurance that the Department will do everything in its power to protect those vulnerable people, and I am sure that all hon. Members would support that.

There have been 4.4 million universal credit claims and, as it stands, 42,000 staff referrals for fraud have been made, which is less than 1% of all universal credit claims. That said, each and every one of those has the potential to be a serious case. We take them seriously, they are all fully investigated and, where appropriate, we will take action. We are in talks with the CPS on several cases and, as I have said, we have already had a successful prosecution. We will look at each of the cases raised and, where it is clear that the claimant is an innocent victim who has been targeted, there would be an expectation that they would not pay the money back.

I refute, however, the broader point about universal credit. We will spend £2 billion more than the legacy system, and I very much welcome the introduction of the help to claim scheme to provide an independent additional tier of support across the jobcentre network, provided by Citizens Advice.

We are actively making improvements to the system. We are using more real time information. We are working with data suppliers. We are doing more data matching. We are using the DWP landlord portal to verify housing costs and we are developing risk models to help to assess confidence in information that is provided. There is a balance, however. In debates we have had in recent years, hon. Members have rightly pushed to make advance payments available as quickly as possible. It is the balance between being able to support people who need funding—under current rules, a vulnerable claimant in need of financial assistance can access that funding on the first day of their claim—while ensuring that we have 100% confidence that the money goes to the right person.

There are people offering help to those applying for benefits in exchange for a cut of what they subsequently receive—sometimes a very big cut. Will my hon. Friend consider outlawing that activity, and consider a public awareness campaign to warn people against this harmful exploitation and to signpost people to free, qualified benefits advisers such as Citizens Advice?

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.

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?

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.

How did Bart Simpson get in there?

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.

It is vital that we crack down on fraud, but will the Minister reassure us that he will protect the vital advance system, which provides a vital financial lifeline for many, many of my constituents?

My hon. Friend is absolutely spot on. It is absolutely vital that we strike the balance between having absolute confidence that money is being correctly paid out and ensuring that we do not leave vulnerable claimants without access to money. Rightly, the Government have listened to the constructive work with stakeholders to ensure that on the first day of a claim people who need financial support can get it. That is the right thing to do.

The Department has a risk register to safeguard taxpayers’ money. Is this fraud listed on the risk register?

I will have to write to the right hon. Gentleman to give him a specific answer. Any case that is referred is treated seriously. We have a dedicated team—[Interruption.]

Order. Do not shout at the Minister. Members are supposed to ask questions and get answers. Shouting at the Minister is not a part of that, and certainly not while I am sitting here.

Thank you, Madam Deputy Speaker. We treat every case seriously and we encourage claimants who feel they may be a victim of fraud to report it immediately either directly to jobcentre staff or to Action Fraud, with which we work very closely. I will write to the right hon. Gentleman with a full response.

It is obviously really important that people who need benefits should not have to wait for long periods with no money in their pocket. Will my hon. Friend confirm that any new measures to prevent fraud will not prevent our constituents receiving the advance payments they desperately need?

My hon. Friend makes a really important point. We must not forget the need to balance making advances available quickly to claimants with ensuring that payments are paid based on current circumstances. We must not lose sight of that.