Universal Credit Fraud

Statement

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given to an Urgent Question in another place on universal credit fraud. The Statement is as follows:

“Mr Speaker, 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 which described cases where fraudulent applications had been made to acquire advance payments. The figures quoted are unverified anecdotes.

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 front-line staff to be vigilant to fraud risks, and raise concerns where appropriate.

I would like to remind honourable 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 the DWP, and have followed a password or security protocol. Anyone with concerns about their benefit claim should contact their local jobcentre directly”.

My Lords, I thank the Minister for repeating that Answer. Claimants need these advances because they have to wait five weeks to get their universal credit in the first place, and that money must be repaid. Now the BBC tells us that tens of millions of pounds have been stolen in fraudulent advance claims. It saw DWP messages on an internal forum describing lots of suspicious claims, from a 19 year-old with six blind children to those inventing street names or people, where the landlord was called Harry Kane and the kids were Homer, Bart and Lisa.

In other cases, a genuine claimant has been conned into giving their details to someone who says that they can get them a government grant or payday loan. Instead, that person applies for universal credit in the claimant’s name, and they find out only when they are taken off their old benefits and put on to UC; the claimant then finds themselves worse off and may have to pay back a debt of £1,500 in the bargain.

Can the Minister tell us two things? First, assuming that the Government are not about to stop the rollout—which I think they should—where a legacy benefit claimant was scammed and a UC claim was made without their knowledge, will the DWP allow them to return to legacy benefits, especially if they are worse off? Secondly, eight leading banks have signed up to a new code to reimburse victims of fraud on a no-blame basis. Will the DWP do the same?

My Lords, I repeat that we take this issue incredibly seriously. First, there is no question of us stopping the rollout; we will not. It is already completed in that it is now in every jobcentre in the country. The termination of legacy benefits is triggered simply where a UC claim is made, not where it is treated as made. It is essential for a smooth transition from legacy benefits to universal credit that the trigger for the move is simple, and that legacy benefit overlap is avoided as far as possible or is otherwise accounted for. The chief goal is prompt and accurate payments of UC to claimants, and, where fraud is alleged, a fraud referral is raised so that the case can be investigated to assess the evidence to establish the facts and determine who was involved, including any third parties. In deciding whether the claim is valid, the consideration needs to factor in whether, or the extent to which, the claimant is involved in the claim.

We at the Department for Work and Pensions are doing all we can to take this matter extremely seriously. We are talking about crime and the money of the poorest being taken away and going to the wrong people. It is important to properly investigate every circumstance; we deal with this on a case-by-case basis.

My Lords, I read that less than 1% of claims are defrauded in this way. Is that correct?

It is entirely correct: 1% of all claims referred by staff are fraud claims. It is important to make it clear that we have trained our staff properly to investigate those claims when they are received, to make sure that the work coach can assess the claims and transfer them on to our fraud and investigation service.

My Lords, is it not very sad that certain claimants say that they are being penalised in cases of fraud? Can the Minister guarantee that this does not happen? Is it not the answer that, until the fraud is sorted out, loans must be made face to face with a JCP official? This matter would not then arise. Until it is sorted out, is that not the safest thing to do?

My Lords, where that is possibly the case, as the noble Baroness rightly said, it is important that we approach each and every case carefully on a case-by-case basis. Each case appears to be different. We do not intend to penalise people who have been duped by others; that is, those who have honestly received benefits incorrectly. We do all we can to support those people throughout the process, working closely with the CPS.

My Lords, when the Minister repeated the Statement, she referred to the BBC relying on “unverified anecdotes”. That sounds remarkably complacent—particularly given that, in her answer to her noble friend, she said that 1% was about right for the level of fraud. Will she give us her estimate if we cannot rely on the BBC’s figures?

My Lords, I am amazed if the noble Lord seeks to rely too heavily on the BBC. I am grateful that he is asking me, acting as a Minister for the department. To date we have received around 42,000 fraud referrals from staff relating to potentially fraudulent advance claims, and there have been around 4.4 million claims for universal credit; I say that because it is important to put this in context. As my noble friend said, this equates to less than 1% of claims taking out a fraudulent advance. We are unable to break this down to jobcentre level, but we know that the majority of those claims, 55%, are in the north-west. However, we are seeing an increase in the north-east, 14%, and the Midlands, 12%. This is entirely unacceptable, of course, so we are looking at the whole system at the moment to see what we can do to improve the situation.

Will my noble friend confirm that her department has prosecuted people for these offences and will continue to pursue fraudsters?

My Lords, I absolutely agree with my noble friend. We have had one successful prosecution, and something like 1,420 other cases are live at the moment. I take this to heart, as this area is in my portfolio at the department. We are doing all we can to make sure that we up our game in taking on the whole issue of benefit fraud. Another key point is that universal credit is part of the process of reducing claimant fraud; unlike with the complex legacy system, where it was much more difficult for people to inform the DWP of changes of circumstances, people can now do that. They are in constant touch with their work coach. We also have real-time information. We know what people’s earnings are, so we are now far better able to tackle issues of fraud.

I ask the Minister for a bit of clarification. I do not pretend to understand all the ins and outs of this, but I see a lot of suffering, which now seems to be added to by crime. On the one hand, it is good to hear that it is less than 1%, but that would be no consolation for me if I was one of those people who now has to pay back for the fraud perpetrated against me by someone else. I am sorry if I did not understand the answer. I suppose I am asking the Minister to explain what help those victims will get in the terrible situation they find themselves in.

My Lords, of course we take this extremely seriously, as I say. We have to be extremely careful to ensure that victims are properly looked after and supported through the process, but also that those who have committed fraud have the full force of criminal justice thrown at them. This is crime. I look forward to the latest British attitudinal survey being published imminently, because the last survey showed that people on the whole felt that some crime was fine, as long as it was not a lot of crime. We have to confront this, look after those who need our support and use our brilliant fraud and investigation teams, working with the CPS, to make sure that those who have committed the crime are brought to justice.

My Lords, like the right reverend Prelate, I am a little confused. If there is a brilliant fraud and investigation team and the Minister is genuinely concerned, why did it take a BBC investigation to draw it to our attention?

My Lords, in the department we were already aware that there was an issue, and we have been working on this. We have a strong team of investigators—125 people dedicated to working out what we do about incidents relating to advances. It is very difficult. As for support—I return to the right reverend Prelate—we are taking every step we can to ensure that people have access to money with ease when they need it on their first day. When they come into a jobcentre, people are often in trouble—they need our help—so there is a balance to strike, allowing ease of access and ensuring that those people have the money they need but, at the same time, do not take advantage. That is very hard to get right, and that is what we are working to do what we can to improve, working with others across Whitehall to make sure that, with data, we are doing the right thing to reduce cross-welfare losses to fraud and error.