Good news on Universal and Tax Credits: Minister admits scale of current fraud

Iain Duncan Smith‘s comments on the unknown scale of immigration-linked fraud with regard to tax credits indicates that ministers are at last beginning to get to grips with the issues that have to be addressed in order to ensure that the Universal Credit programme meets its objectives. In one of my blog entries shortly before Christmas I referred to the urgent need to join up activities across departmental borders in order to help make the programme a success. One of my concerns was the lack of operational communications between UKBA (whether front line staff or those in locations like Lunar House) and DWP (whether front-line staff or those in centres like Falkirk who are supposedly the experts in handling  immigrant related issues). In focussing on the issues of liaison with HMRC on PAYE Real Time Information and with Local Government on Tenancy and Housing Benefit fraud I forgot the need to address the tax credits problem.

My attention was drawn to The ONS Paper on Income and Wealth and the figures for tax credits in Table 2 on “Sources of total weekly household income by ettnic group”. This shows that Tax Credits account for 1 – 2% of the income of White, Mixed, Indian or Chinese ethnic origan but 10% of those of Pakistani or Bangladeshi origin. This group also derives a further 13% of household income from other benefits compared to 5% for those of Chinese origin and 4% for those of Indian origin. The Pakistani skills in working the UK tax and benfit system are well-honed. Back in Autumn 1968 I declined a job as a trainee Tax Inspector in Catford, partly because I was told I would spend my days explaining to Pakistanis that they could not claim a tax credit if they had never paid any tax. [The other reason was that the DP Manager  for STC Microwave and Line gave me a 10% pay rise].  

P.S. The ONS table should also help open the eye of those who say that immigrants are either a blessing or a curse. Indian and Chinese households appear to derive a smaller proportion of their income from benefits that any other other group – including the indigenous whites. Indeed the only group to derive a smaller proportion of their earnings from wages and salaries than the indigenous whites are the Pakistanis and Bangladeshis.

Those who come here to acquire skills and work are nearly always a blessing.

Those who come here to live off crime and welfare … 

The issue is how to tell the difference.

The answer is to use cross departmental data matching  – including with Local Government, Law Enforcement and the private sector personal information sources which now cover most of the world (helping the global financial services industries unravel on-line and other fraud).  That requires, however, information analysis skills (not just technology) which have been sorely neglected across Whitehall in recent years. More-over that situation looks set to rapidly deteriorate unless urgent action is taken to sort out the way in which the Civil Service Learning Framework has led to a collapse of departmental staff development and training plans. The benfits can,however, be measured in £billions, perhaps even the £tens of billions needed to help get public spending under control without penalising those who deserve help.