The Department of Work and Pensions has re-issued a warning to billpayers over a recent increase in benefit fraud. As pressure mounts from the cost of living crisis, the government has found an increase in scammers attempting to exploit the Universal Credit system.
A growing amount of fraudsters are trying to use a loophole in the Universal Credit system whereby they can gain advance payments of up to £1,500. The DWP first encountered this scam during the Coronavirus pandemic and since then benefit fraud has risen by £2.8billion.
The department has announced a new £613m initiative to combat fraud, Birmingham Live reports. Originally starting in 2020 these scams involved a glitch in the application process for Universal Credit. The issue allowed several people to get three advanced loans of £500 even though they were not entitled to the money.
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A DWP spokesperson said: "The vast majority of claims to Universal Credit are legitimate and fraud and error in the benefits system remains very low, with 96.5 per cent of benefits paid correctly. We continue to monitor and investigate emerging fraud threats and pursue those seeking to rip off the taxpayer using the full range of our powers, including prosecuting and tough financial penalties."
The scam involved true claimants, who were usually looking for extra cash, being approached by fraudsters posing as jobcentre staff or personal loan advisors. Then, in return for helping them put in false information, the scammers took a cut of £500 a time from the advance payments of £1,500. The loophole led to a flurry of phoney claims for advance payments and was widely shared on social media.
In response, the DWP has launched a new 'Fighting Fraud in the Welfare System' initiative. With an additional £613million the department has added 1,400 more staff to its counter-fraud teams and a new 2,000 person team dedicated to reviewing existing Universal Credit claims. It also has new legal powers dedicated to investigating and punishing fraud.
The DWP said: "Welfare transactions last year totalled £258.2 billion – 22.5 per cent of all UK government spending. This makes the welfare system a target for deliberate fraud by both organised crime groups and opportunistic individuals. With the complexity of the operations we run, we also recognise that both claimants and DWP staff can also make mistakes that can lead to payments being made in error.
"Last year, there was an estimated £6.3 billion of welfare fraud, up from £2.8 billion from the year before. Together with £2.1 billion of error, the combined loss as a result of fraud and error was £8.4 billion or 3.9 per cent of benefit expenditure."
In May 2020, the DWP identified an attack against Universal Credit which involved hijacked identities. It suspended 152,000 fraudulent claims and prevented £1.9 billion in benefits from being paid to scammers. The DWP also says it disrupted or corrected over 298,000 false benefit claims during 2020/21, which stopped almost £3billion from getting into criminal hands.
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