DWP told to tighten up Universal Credit checks as fraudsters exploit loopholes

The Department for Work and Pensions has been told to tighten up loopholes in Universal Credit that are being exploited by fraudsters. The Public Accounts Committee called for full checks to be reinstated as it raised doubts about whether Universal Credit was any improvement on older 'legacy benefits' in terms of preventing bogus claims.

The committee published a new report on April 26 stating that the proportion of Universal Credit overpaid because of fraud or error was 12.8 per cent (£5.5 billion) in 2022–23, down from 14.7 per cent (£5.9 billion) in 2021–22 but still significantly above pre-pandemic levels. It said: "We questioned whether, given the high levels of fraud and error compared with the past, UC really is less prone to fraud and error compared with the legacy benefit systems.

"Rather than providing assurance about the actions it is taking, the DWP fell back again on its explanation of a societal increase in the propensity to commit fraud, but the PAC is not convinced why this must inevitably lead to growing losses to the taxpayer. The report encourages future Committees to keep a close eye on the issue and to continue to hold the DWP to account for its progress."


Dame Meg Hillier, the Labour chairman of the committee, said full checks on benefit claims must be reintroduced. She said: "Of course they should be bringing them back in but they are taking this rather complacent attitude. There's just been no reason not to. Indeed they had indicated they were temporary and they knew what the risks were."

The new fraud warning comes as five members of a gang that falsely claimed more than £50 million in Universal Credit in the largest benefit fraud in England and Wales have been convicted. Bulgarians Galina Nikolova, 38, Stoyan Stoyanov, 27, Tsvetka Todorova, 52, Gyunesh Ali, 33, and Patritsia Paneva, 26, made thousands of fake claims for benefits using real people or hijacked identities. The crooks used fictitious tenancy agreements, counterfeit payslips and forged letters from landlords, employers, and GPs.

If claims were rejected, the fraudsters would try time and again until they were granted. Investigators even discovered three 'benefit factories' in London, the Crown Prosecution Service said, with 'claim packs' containing false documents.

Sir Iain Duncan Smith, who launched Universal Credit when he was Work and Pensions Secretary, said all loopholes should now be closed urgently. He told the Telegraph: "There is no question that this needs to be tightened up, the Government has to do so because the one thing I learned was that if you leave a gap, fraudsters will get in."

According to the Telegraph, 31 rules used to vet claims have been dropped by the DWP. During the economic shutdown triggered by Covid, the Department 'eased' about 200 different checks so it could speed up the processing of Universal Credit applications and "get money as quickly as possible to those who needed it." Although many of the criteria have been restored, some relaxations are reportedly still in place.

A DWP spokesman said: "We responded quickly and effectively to the challenges posed by the pandemic by introducing easements to ensure people were supported financially. This was the right thing to do. Controls are back in place and our counter-fraud clampdown, together with wider benefit checks and controls, saved at least £18 billion in 2022-23 and saw fraud and error fall by 10pc.

"Our Fraud Plan sets out a long-term strategy to significantly reduce fraud and error – and includes the hiring of nearly 6,000 trained specialists to review millions of Universal Credit claims."

In his speech on welfare reforms, Prime Minister Rishi Sunak said: "We cannot allow fraudsters to exploit the natural compassion and generosity of the British people. We've already cracked down on thousands of people wrongly claiming Universal Credit including those not reporting self-employed earnings or hiding capital. And we’ll save the taxpayer £600 million by legislating to access vital data from third parties like banks.

"Just this month, DWP secured guilty verdicts against a Bulgarian gang caught making around 6,000 fraudulent claims including by hiding behind a corner shop in North London. And we're going further.

"We're using all the developments in modern technology, including Artificial Intelligence to crack down on exploitation in the welfare system that’s taking advantage of the hardworking taxpayers who fund it. We're preparing a new Fraud Bill for the next Parliament which will align DWP with HMRC so we treat benefit fraud like tax fraud with new powers to make seizures and arrests.

"And we’ll also enable penalties to be applied to a wider set of fraudsters through a new civil penalty. Because when people see others in their community gaming the system that their taxes pay it erodes support for the very principle of the welfare state."

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