Some lessons from benefit fraud cases

It's been estimated that the DWP lost £690m to benefit fraud in the last financial year. That's in addition to frauds on local authorities. Both feature in today's round-up.

A Batchley woman pleaded guilty to offences of dishonestly claiming income support, housing benefit and council tax benefit totalling £11,447.37 between August 2005 and July 2006 by failing to notify the DWP and Redditch Council that she had married.

A couple from County Durham ran a factory from their home, ripping off the music and film industries by illegally duplicating discs. At the same time James Cowan was claiming incapacity benefit and job seekers allowance while Ann Cowan was claiming incapacity benefit.

A Blackburn pensioner obtained an overpayment of £4,479 in council tax benefit by not declaring pensions and savings. How was this discovered? In 2005 a referral from the DWP suggested she might be entitled to an occupational pension and she was called in for an interview, at the end of which she signed a written statement to the effect that neither she or her husband had a private pension.

In March 2007 and further referral was received and inquiries revealed she had been receiving pensions from Lancashire County Council and Canada Life since 1995 and worked for Bullough Contract Services between September 2002 and May 2004.... She also had four accounts with the Britannia Building Society

The system does rely a lot on claimants to tell the truth.

A former Wandsworth prison guard and special constable fraudulently claimed £10,627 in housing and council tax benefit. This was straight fraud. She had said she was receiving either job seekers allowance, income support or pension credit, and that she did not own any property, but it emerged that she owned one house and part-owned the home she shared with her husband. She had also failed to declare details of her bank accounts. Surely property ownership can easily be checked as a matter of routine with the Land Registry database? There can't be very many local people called Shirley Bassey Udo-Affia. Astonishingly the Crown Court judge spared her prison.

All these people should routinely have been put through the Voice Risk Analysis software discussed here last week. And all these fraudsters should have been barred from receiving further welfare payments for varying periods.

If the software were used routinely, and if benefit fraudsters were expelled from the benefits system, the combination of these two measures might lead to a sharp reduction in attempts at benefit fraud.

Then enforcement could focus on cases identified as questionable by the software. Comparison of databases should not be labour intensive, and there's probably scope to make it more routine, throwing up further questionable cases for investigation.

These measures would probably be a lot more cost-effective than a national DNA database or ID cards.

Perhaps there's another lesson. Readers' comments on some of these reports show some people seeing MPs as fiddling the system, and suggesting it's one law for them and another for people lower down the scale. MPs, take note as you continue being judge and jury on yourselves.

After all, Derek Conway stole more than any of these people, but apparently that doesn't disqualify him from being an MP.

Governments aren't nimble

Richard North notes the risibly flat-footed response of EU governments to their own policies on emissions reductions now that they are being helped to start understanding the possible impacts of their ignorant grandstanding.

Rhetoric is one thing but – to no one's surprise – economic reality is another.

Some of the main economic landmarks are changing rapidly and interventionist governments' policies will never be able to keep up with this speed of change.

For instance, the Financial Times reports that

Prices of top-quality wheat jumped 25 per cent to a record high on Monday in their largest one-day increase as Kazakhstan, one of the largest grain exporters, said it would impose export tariffs to curb sales.

The move, which follows similar export restrictions in Russia and Argentina, is likely to put further pressure on already tight global wheat supplies, analysts said.

And of course demand from industrialising countries is still shooting up.

In a leader the FT comments that some factors affecting the price of food are temporary. "But the biggest structural change is biofuels."

Over the next few years, therefore, prices should stabilise as supply increases and stocks are rebuilt. In the meantime, those governments that are subsidising biofuels need to cough up and help fund the World Food Programme. The world has enough food to feed everybody – if there is the will to do so.

There is no chance that an interventionist supranational government seemingly making policy based on bad science with the consent of ignorant heads of government will be able to generate intelligent responses to these changes in anything like a timely fashion.

Another fast moving area is data encryption. Common laptop disk encryption products for Microsoft, Apple Mac and Linux operating systems can be easily overcome. Symantec's chief scientist comments that

The first thing to observe is that encryption technology from ten years can almost now be broken with a Casio watch. It's a war out there and hackers realise, that with enough motivation to break technologies, the gains are worth the effort.

ITPro notes that lost laptops are the most frequent cause of data breaches (36%), the use of paper records causes another 24%, while hackers, malicious insiders and malicious code combined lead to just 12% of such incidents.

Putting data in the hands of third-parties doesn't mean it's any safer, as some 38 per cent of data breaches were seen to be caused by external contractors or partners.

The researchers took the opportunity to renew calls for UK or EU data breach notification, but said it was necessary to create one legislation for companies to follow. Each of the 40 US states with notification laws has different legislation which requires separate filings. A multinational corporation faces even more different rules.

They said, "The worst thing that could happen is very harsh, detailed restrictive legislation. Government don't do a good job of legislating technology... we say use best practices." They also stressed the need for safe harbour clauses.

If you've done best practices and are at zero risk of a breach, you shouldn't be penalized... Don't punish a business which has done the right thing.

This is not EU governments' way. How likely are we to see another set of obsolescent prescriptive measures based on bad science?

Detailed government policymaking just can't keep up, especially as it comes with irrational baggage. In the energy field

Luxembourg, Finland, Austria, Hungary, the Czech Republic and other countries have all written to the EU industry commissioner Günter Verheugen, to ask for "swifter decisions" on how the EU plans will affect big energy consumers.

Expect our legislators to continue to think that they know best even though they can't even submit acceptable expenses claims and they think it's fine that Robber Conway is still an MP.

How we are governed

A choice cut from Dr North in Defence of the Realm. The permanent under secretary of state for the MoD talks to a committee of MPs about the equipment programme.

…our ministers would very much like a programme which is, if anything, more focused on the kinds of equipment requirements that come out of current operations like protected vehicles, helicopters et cetera. It would be extremely surprising if the process we are going through did not lead to a consideration of that.

Yes Minister is alive and well. We know what our ministers "would very much like". It would be extremely surprising if we did not in due course get round to giving this our consideration. That would be after we have gone through a previous process [undefined].

Sir Humphrey would be proud. Give that man a gong, and meanwhile lunch at my club.

They do things differently at the DWP, it seems. Apparently within seconds of his return to the department, James Purnell (you remember him, he it was who mysteriously appeared in a photograph when he hadn't been there, he it was who predicted that 24-hour liquor licensing would lead to a café culture) had appointed David Freud as an adviser, to help implement changes in the welfare state. Given that Mr Freud cheerfully reveals Chancellor Brown's opposition to his proposals, did Prime Minister Brown know this appointment was coming?

And Mr Freud is enthusiastic.

Peter Hain was worried about the Left. Purnell is showing astonishing energy, there is going to be a much more single-minded ferocity.

All this change just because the vain one couldn't fill in a donations return! (Amusingly, The Telegraph actually writes "Peter Hain [the previous work and pensions secretary] ...". Is the vain one so soon forgotten?)

The paper tells us Mr Freud's big idea is that the private sector be put in charge of the long-term unemployed. Companies taking part would receive a "huge fee" for getting somebody to stay in a job for more than three years but nothing if they fail.

The Telegraph sets out a bizarre proposal.

Under his system, the market will decide who should receive benefit and who should go out to work. "The private sector will have to start making assessments about who they can get back into work at what cost.

If somebody is really clinically depressed, for example, [the company] might say, 'I'm not going to get this guy to hold down a job for three years because he's not up to it so I'm not going to expend my efforts on him at the moment'."

This only increases the incentive for the skivers to make themselves look like hard cases. And Mr Freud thinks there are plenty of them. "Fewer than a third of those on incapacity benefit are really too ill to get a job." There is talk of some slicing of benefits for those who won't co-operate, but how meaningful will this turn out to be? And how easy will it prove to be to get dubiously motivated people off benefit and into work against competition from enthusiastic Poles?

To be sure, Mr Freud highlights other measures in a carefully unspecific way. He says

If you want a recipe for getting people on to IB, we've got it: you get more money and you don't get hassled. You can sit there for the rest of your life. And it's ludicrous that the disability tests are done by people's own GPs - they've got a classic conflict of interest and they're frightened of legal action.

So there has to be a big change in the procedures for people entering incapacity benefit, and for their continued entitlement.

As the Financial Times points out, some people make a deliberate choice to live off state welfare payments for the quality of life.

And Mohammed Nawaz Raja, an alleged Islamic terrorist organiser says in the News of the World

"Praise be to Allah I have a car of my own. I have a five bedroom house in High Wycombe. The government is paying me. When I go to Pakistan, my family still gets paid. The system in Britain is that the government pays.

"Take for example a small family with four children, if the husband works he would get £300 to £400 a week. And if he doesn't work the government still pay him around that, so why should he work?

"If he works he gets around £350 a week and if he doesn't he gets £300. For just £50, who would work?"

Reading the account of his activities, it's hard to imagine anyone would ever employ him. Carrots can't work in his case, so a pretty useful stick has to be available. Effective policy has to go beyond the touchy feely.

Never mind. Happily for Mr Raja a solution beckons. Husbands with multiple wives have been given the go-ahead to claim extra welfare benefits following a year-long Government review. If two can live as cheaply as one, what of five?

Mr Freud claims his system can be in place within five years. Hey, hold hard there! Meanwhile, better get working on some pretty serious sticks.

If the officials are prepared to give that consideration in due course.

Robber Conway is still an MP.