I was surprised and pleased to see we got a link from a Benefit Fraud blog, which says of us:

This is not because I agree with everything there. But too often the blogosphere is a dialogue of the deaf, with no conversation between people of different views. It’s no good just staying in our boxes.

So thank you to them!

In this post I want to address a comment left by Eve, who said “I’m astounded how much rage people feel towards benefits cheats who make an illegal fifty quid cash in hand, or get a year’s housing benefit when they shouldn’t, yet DON’T express rage towards billionaires like Sir Philip Green who get away with avoiding £300 MILLION tax bills by being resident outside the UK (but still getting knighthoods).”

According to the DWP, intentional benefit fraud costs the UK taxpayer £1.1bn a year. It’s rather more difficult to get an accurate figure on how much business fraud and tax avoidance of the very rich costs.

Richard Murphy of Tax Research UK estimates that abolishing the domicile rule (as used by Sir Philip Green) would raise £4 billion a year. When we turn to corporations, rather than individuals, the figures get even more enormous.

According to the Guardian,

A leading accountancy expert, Professor Prem Sikka, estimates that £25bn is lost to the Treasury each year through multinationals basing themselves in low-tax environments. ‘The precise figure is impossible to work out. Some say it could be as much as £80bn. We don’t know because the Treasury refuses to undertake detailed research to get accurate estimates. It is dodging the issue.’

Rupert Murdoch’s main British holding firm paid no net corporation tax in the UK throughout the Nineties. Some companies are based off shore to avoid paying tax, yet still get subsidies from the British government – “Sir Richard Branson’s Virgin Group is based in the Caribbean, yet Virgin Rail has had £500m in public subsidy over the past year.”

The Joseph Rowntree Foundation says that need, not greed, motivates most cases of benefits fraud. This certainly can’t be said of the mega rich. We could cut taxes for the average working person AND increase the level of benefits if these tax loopholes were closed, but with business interests firmly in control of our politicians this isn’t likely to happen any time soon.

As to why there’s not more rage about the issue, well, it’s not very surprising that the mainstream press doesn’t spend a lot of headlines on it when the companies who own the papers are benefiting to the tune of millions of pounds a year.

Community Links is an excellent resource and their post on Fraud and Error in the benefits system is brief but essential reading.

They point out that giving out statistics that lump fraud and error together is misleading, and causes everyone to focus on the fraud and ignore the error.

Secondly underpayment of benefits (this year running at £1.2bn), is arguably an even bigger problem, because it leaves vulnerable people in a desperate situation, evicted or unable to buy food. They often end up seeking advice at Community Links, because the system has let them down so badly. And don’t forget this is just people claiming a particular benefit but getting less than they’re entitled to. It doesn’t include people who aren’t aware they’re entitled to a benefit at all.

Thirdly, ‘customer error’ is not the fault of the claimant. The report separates out intentional fraud (£1.1bn), unintentional ‘customer error’ (£1.1bn), and ‘official error’ (£0.8bn). Our experience at Community Links shows that claimants make errors because they are left to navigate a hugely complicated system with very little guidance, bombarded with unintelligible forms, and offered very little support. It’s a stressful experience, made worse when DWP tries to claw back money they’ve overpaid. The high level of customer error is an indictment of the DWP (if a business was losing £1bn a year because customers couldn’t work out how to use the payment system, they’d sort it out pretty quickly).

Thank you, Community Links. And don’t forget the evidence that the DWP routinely overestimates the amount it overpays, and lack of proper representation results in hundreds of benefits claimants being falsely imprisoned every year!

And what about that benefit fraud? Community Links has launched the Need, not Greed campaign, to highlight the fact that a number of people on benefits do cash in hand work not because they wish to cheat the system, but because benefits pay below poverty level and people feel forced into being a “cheat” in order to survive.

As they tell us,

With the economic recession, rising living costs and increasing unemployment, more and more people will be on benefits.A life on benefits, even for a short period of time, is tough. Benefits are not enough to live on (benefit levels are paid below the poverty line) There are many traps when on benefits and many barriers to taking up employment. This means that people may turn to cash-in-hand work to provide an income, as well as retain a degree of control and financial independence in their lives. There is no way to gradually move off benefits and there is very little support on offer to remain financially secure when doing so. People quickly hit a brick wall and are left with little choice but to turn to cash-in-hand work.

To take just one circumstance that pushes people into doing cash-in-hand work, consider the fact that most private landlords do not accept housing benefit. You may qualify for housing benefit, but it’s no good to you if you don’t live in council or housing association accommodation (of which there is a major shortage, and for which waiting lists can last for years). My £70 a week housing benefit wouldn’t come close to covering the cost of renting a single room in my area, but more to the point there’s not one single rental agency here who’d even agree to rent to someone on benefits, or private landlord who’d accept housing benefit as payment.

Why refusing to rent to people on benefits for disability doesn’t count as discrimination against the disabled is beyond me, but that’s the situation we find ourselves in. Meanwhile, the number of empty houses in the UK could house the homeless population, but no one seems to be willing to do anything about it.