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Government and Credit Reference Agency work together to stop £800m benefit fraud and error

News Release issued by the COI News Distribution Service on 05 December 2011

Benefit cheats are being warned that Government will work with a credit reference agency (CRA) to track down fraudsters across the country.

HMRC and DWP are delivering on the Prime Minister’s commitment to draw on the expertise of credit reference agencies (CRAs) to tackle fraud and error. The Departments have signed a twelve month contract with Experian to help drive down unacceptably high levels of tax credit and benefit fraud and error.

HMRC and DWP will work with Experian to identify undisclosed partners and income – all of which affect how much money claimants are entitled to receive.

A recent pilot of this work has already protected more than £16m of anticipated losses in tax credits.

The first cases identified by Experian as part of this work are already with fraud investigators. Using the Experian data, the departments expect to save around £800m over life of the contract.

Exchequer Secretary to the Treasury, David Gauke, said:

“I’m delighted that following a very successful pilot we are able to take forward a partnership which will work in the interests of all honest taxpayers and benefit recipients.

“The Government will not tolerate people who dishonestly divert money away from those who are genuinely entitled to it.

“Working with Experian will allow HMRC to escalate the fight against tax credit fraudsters, helping to ensure that they are caught and punished.”

Minister for Welfare Reform, Lord Freud, said:

“Benefit fraud is a crime and we are committed to stamping it out.”

“We will catch and punish those who abuse the system and prevent fraud from entering in the first place.

”Alongside this work at the frontline, we are bringing in the Universal Credit which will simplify and automate the benefits system. This will make it much easier to catch people who make false claims."

Notes for editors
1. Case studies of tax credits claimants caught by the CRA pilot are attached to this release here: http://nds.coi.gov.uk/Content/Detail.aspx?ReleaseID=422347&NewsAreaID=2&ClientID=257
2. By working with Experian, HMRC expects to save £700 million over the life of the contract, DWP expects to save £100 million over the same period.
3. Experian is a global information services company, and the largest credit reference agency in the UK. The contract was signed on 2 December.
4. In October 2010 HMRC and DWP launched their joint strategy to tackle fraud and error across the benefit and tax credits regimes. The joint strategy is based upon five key components that together address the causes of fraud and error.
5. All DWP means tested benefits fall under the scope of this work - Jobseekers Allowance, Employment and Support Allowance, Income Support, Pension Credit and Housing Benefit (except for Standard Working age claimants which is covered by a separate contract also with Experian and now in its second year). The CRA data matching work will target £770m worth of overpayments lost to undeclared partners and/or income.
6. In May 2011, the Chancellor announced that more than £1 billion of fraudulent and incorrect tax credit payments were stopped by HMRC in 2010/11. More information here: http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=419423&SubjectId=36
7. In October 2010 the Cabinet Office established the Counter Fraud Taskforce, which is chaired by Francis Maude, Minister for the Cabinet Office. It is made up of senior officials from government and private sector with expertise in tackling fraud, error and debt. Officials from the National Fraud Authority (an Executive Agency of the Home Office) provide the secretariat to the taskforce.
8. This Taskforce has overseen eight pilots in different Government departments using the latest technology to tackle fraud in the public sector:
o HMRC: £256 million over 4 years by using data analytical techniques to screen tax credit applications before payments are made
o HMRC: £700 million using credit reference agency, and existing HMRC and DWP data, to detect undisclosed partners
o DWP: £490 million over 4 years using credit reference agency data to detect undisclosed partners and undeclared income.
9. Follow HMRC on Twitter @HMRCgovuk

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