New DWP evidence on how to tackle benefit fraud

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29 May 2009

DWP evidence explains that people living in poverty commit benefit fraud out of need, not greed

'Factors affecting compliance with rules: Understanding the behaviour and motivations behind customer fraud' (Read full report here)

Findings

• Major source of fraud is undeclared earnings above permitted amount
• Fraud is usually irregular and short term work
• The percentage of cases are a result of customer error, as opposed to fraudulent intent
• Better job opportunities would dissuade people from committing fraud. Levels of wages had an impact on people; they want full time, permanent, legitimate jobs with an acceptable wage.
• IE helped others out, it enabled people to cement or forge social networks
• Some people in deprived areas work informally in response to poverty
• Benefit system is not flexible enough to cope with modern day employment

Motivations

• Rowlingson (1997) found the key motivation were
a) Financial need
b) Inflexibility of the benefits system
c) Low probability of detection
• Financial strain: although the amounts earned by working whilst claiming are small, it makes a crucial difference to the family budget.

Behaviour

• Jobseekers Allowance has the highest level of incidence yet is not seen as the most serious by society as cash in hand work is so entrenched
• Informal work has a positive effect in linking unemployed people back into the culture of work rather than becoming work shy.
• Undeclared work creates a culture of enterprise rather than dependency
• The perception of the system as unfair could lead to people to rationalise cheating

Society’s role

• From a sample of families living below the poverty level in 1992 when unemployment was high, two thirds did undeclared work. Then benefit fraud was possibly more socially acceptable, in the recession benefit fraud may be come more acceptable.
• Individuals committing benefit fraud are influenced by social norms as opposed to personal norms. Social norms are the authorities, but also other claimants and the community

DWP action

• DWP anti fraud advertising: A large proportion of the public believe that many people are falsely claiming benefits as a result. These beliefs could potentially undermine taxpayer support for social security even though the facts tell a different story. Further, the belief that ‘everybody does it’ might encourage fraud.
• The DWP must demystify anti benefit fraud campaigns if they are to gain tax payer’s support for the welfare system
• Anti fraud campaigns are blown out of proportion and this may be counterproductive; encouraging people to justify their actions
• Sanctions: research suggests that the more positive attitudes customers have to DWP staff, the lower will be non compliance.

Policy Recommendations

• It was concluded that ‘the motivations for fraud are complex, and people are diverse in their fraudulent behaviour. This review, therefore, suggests that the improvement in compliance requires an approach that goes beyond the focus on deterrence to one that recognises the multitude of factors that are responsible for this type of behaviour.’
• Benefits
- simplify benefits system
- easing the transition on and off benefits for people in temporary jobs
- Raise awareness of different types of activity that is fraud, not just earnings
• DWP should consider raising the limits on what can be earned without deductions from means-tested benefits

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