Debate contribution: Welfare System: Tackling Fraud and Error

Debate contribution by Mr Gordon Lyons on 11 February 2025.

MLA

Mr Gordon Lyons

Party at the time

Democratic Unionist Party

Date

11 February 2025

Type

Debate contribution (made as a minister)

Business

Ministerial Statement

Heading

Welfare System: Tackling Fraud and Error

Assembly identifier

Official Report component 4793790

Read the official Assembly record

Text

Thank you very much, Mr Deputy Speaker. Today, I will address a matter of critical importance: the integrity of our welfare system. That is crucial not only for those who are recipients of the support that it provides or those who one day may depend on it but for those who contribute to it through their taxes and, in doing so, ensure that those supports are available when needed. At its core, our welfare system is a lifeline, a safety net designed to support those in our community who need it most. Whether it is helping someone through unemployment, supporting families on low incomes or providing for those unable to work due to disability or ill health, the system is a cornerstone of the fair and compassionate society that we strive to build. To that end, I recognise the excellent work that my staff across benefit delivery and benefit security have done over many years and continue to do to protect the integrity of the benefit system while responding to the needs of claimants and to ensure that millions of pounds in support reach those who are entitled to it every year. Their work changes lives, offering hope and stability to those facing hardship. Let us be clear: the system is funded by the hard-earned taxes of working people across Northern Ireland. They rightly expect us to safeguard it and ensure that every penny goes only to those who are genuinely eligible. They trust us to uphold the principle of fairness. We must honour that trust. That is why welfare fraud is not just a financial issue but a moral one. When individuals cheat the system, they are not stealing from a faceless entity; they are taking from their neighbours, friends and fellow citizens. They are undermining the very safety net that so many rely on.

Therefore, let me be unequivocal: I am taking a zero tolerance approach. I am personally committed to rooting out fraud and ensuring that those who exploit the system face the consequences.

Of course, this is not an issue that is unique to Northern Ireland. All jurisdictions are grappling with the same issues and concerns, but that does not mean that we are complacent or that we do not take action. To be clear, there is a substantial body of work under way in my Department to ensure that the right money goes to the right people at the right time. I have a team of trained and accredited fraud investigators whose role is to take referrals from front-line benefit delivery staff and the public, and to follow those allegations through to their natural conclusion. That can be painstaking and time-consuming, which can be frustrating for those who make referrals and want to see instant results. My Department receives approximately 10,000 fraud allegations per year and utilises around 25,000 high-risk scans, which help us point our resources to the emerging risks. All allegations are triaged before being routed to the appropriate team for investigation. That is an indication of how seriously we take this issue. My officials work closely with their counterparts in the Department for Work and Pensions on fraud, including on the early detection of fraud and the lessons that we can learn from it. Indeed, DWP has adopted some of our initiatives, which shows that we can be a leader on the issue. Whilst my officials are working hard to detect and reduce the levels of fraud in the benefits system, there is more that I want to do. I have repeatedly bid for additional resources to support greater investment in benefit security activities. I will continue to make the case to Executive colleagues for that funding, but, in its absence, my officials have not been sitting on their hands. My Department's benefit security division works hand in glove with universal credit operations to secure insights and drive real-time learning on suspected fraud, and to target resources towards that. They utilise high-risk scans and the latest fraud detection techniques, which allow them to continuously improve how they target their efforts. They contact claimants directly to ensure that the evidence to support claims is still relevant and valid. My Department made 20,000 of those contacts last year and aims to undertake around 30,000 in the incoming financial year. However, that is not enough. I want to shift the balance from downstream detection to upstream prevention. Therefore, I announce today that I am establishing a task and finish group within my Department to look critically at every intervention that we take and drill down on the high-risk areas. It is about working smarter to tackle this issue, including how we utilise the ongoing digital developments that are constantly evolving and maturing, and will, undoubtedly, support us in this work. I am determined to use every tool to tackle this issue. Therefore I am also announcing a change in how we report fraud. My Department will reintroduce the practice of naming those who have been convicted of benefit fraud. Fraud is a crime, and those who commit it must be held accountable. We will ensure that our processes continue to be as effective as possible in delivering that accountability, including in the recovery of money from those who claim it under false pretences. My Department's debt management team already actively pursues repayment in those cases and will continue to focus resources on that important task. There are some in society who will go to great lengths to avoid their obligations or to claim that to which they are not entitled. That should not be tolerated, and I will always be on the side of those who play by the rules. People work hard and pay taxes to ensure that the welfare safety net exists, and support should only go to those who are eligible and need it. Let me be crystal clear: I am on the same page as those hard-working taxpayers. This issue matters deeply to the people of Northern Ireland. For too long, there has been a sense that the system is not working for hard-working families and people who do the right thing, and that it is too easy for some to exploit while others who genuinely need help are left struggling. That erodes trust and undermines confidence, and it is not good enough. We must rebuild that trust. We must restore confidence in a welfare system that is fair, transparent and focused on those who need it most. That is the change that I am determined to deliver, and we should not rest until we get it right. I commend the statement to the House

First, it is not my role to tackle tax evasion. That does not come under the auspices of the Department for Communities or even the Northern Ireland Executive. I make no apology, however, for wanting to make sure that we have a welfare system that is fit for purpose and that only those who are entitled to help get it. I hope that everybody in the House can unite behind that. I disagree with the Member about naming people. I believe that, when someone has done something wrong and there is evidence of their deliberately trying to misrepresent their circumstances in order to get additional resource or funding, it is everybody's business. We should use every tool that we have to deal with that. If naming people makes a difference, it is right that we do it. I do not have figures on the difference between cases of fraud and error, but we are aware that significant sums are involved. The total estimated level of customer fraud in 2023 was 2% of the total expenditure.

We should use every tool that is in our box to make sure that we make such fraud as difficult as possible for people in the first place and that we identify those who are guilty and pursue them. If there is a conviction, it is only right that it is highlighted. We do that across other Departments. If someone is disqualified from being a company director because of activities that they are involved in, the Department for the Economy puts that information on its website. It was the same in the past for those who have been convicted for other things. For example, it happens when DAERA challenges those who have been found guilty of pollution offences. Why should there not be a consistent approach? I think that it is fair and straightforward, because we should take a zero tolerance approach to those who misrepresent their financial situation in order to get money that they are not entitled to.

I am grateful to the Member for her support for the steps that I am taking. It is difficult for us to get an exact comparison, because prosecutions that are initiated in one year may not follow through until later on. There are figures on successful benefit fraud prosecutions over the past number of years. In 2020-21, we had 75 prosecutions; in 2021-22, we had 98; in 2022-23, we had 51; and in 2023-24, we had 40. I certainly believe that there is more work to do. I want the task and finish group to look at making sure that those who are found to have deliberately misrepresented their situation are prosecuted. Ultimately, hard-working taxpayers are paying for it. I think that most people will want to see us take a very robust approach, including prosecutions.

In 2024-25, I bid for £20 million, of which £17·3 million was for current fraud and error activities and an additional £2·7 million was for an increased intervention, which included more staff. I bid for £20 million, but, unfortunately, I received only £16·5 million.

No, I do not believe that there will be any impact on GDPR, because this is something that already takes place in other areas and has been done before. I have not sought advice on the issue directly. It is a decision that I have taken, and officials are now making sure that it will be put in place. Ultimately, it is for Ministers to decide on these issues.

Yes, absolutely, I agree, for the fundamental reason that this is not simply public money. It is money that is put into the public purse by taxpayers, which means that there is a responsibility on us to make sure that we spend it appropriately. All actions should be taken to make sure that we recover the money from those who have cheated the system. Unfortunately, those sums have not been as high as I would like them to be. In the last full financial year that we have the records for, which was 2023-24, we recovered just over £1 million. In that year, we had a loss of £163 million to fraud. That is simply not good enough. I want the task and finish working group to look at that issue to make sure that we are recovering more and to take away any incentive that people think that there might be for engaging in that type of behaviour.

I am grateful to the Member for her question. Staffing costs on fraud compliance and intervention activities, with a small level of general expenditure, building costs and IT and training, was approximately £0·5 million. That is out of the total of £15·8 million that we currently spend each year on fraud and error, so there is much more work to be done.

First, I welcome the Member to the House. I am not sure whether that was her first question, but I am very glad that she has taken an interest in these matters. I am bidding for additional resource to ensure that we do everything that we can to tackle fraud and error. It is not about making it more difficult for all those who apply but about dealing with those who have been found to be in breach and having the resource to investigate when something does not add up. I do not want to make it any harder for those who are entitled to benefits to be able to get them.

There will be the opportunity for us to recover some of the funding through our investigations, but, ultimately, additional savings that are made after that will belong to the Treasury. However, whether that money goes back to London or we are able to keep it here, ultimately, it is taxpayers' money and we need to ensure that it is spent in the best way possible. I want to continue to press on the issue to ensure that we tackle it because we must not let it continue at its current level.

We can compare ourselves with other jurisdictions and the rest of the UK. As I said in my statement, the issue affects all jurisdictions. However, regardless of the different levels that there may be, ours is too high. A level of 2%, which equates to £163·2 million, requires us to take action. I do not think that any of us should be happy with where that figure is right now. I can tell you this: I have many more uses for that money, which I would like to bid for from the UK Government. Ultimately, the money that was lost last year — £163 million — came from hard-working taxpayers who are already taxed to death right now. We need to do everything that we can to press down on that. I will say this: even if we were the best in the whole of the United Kingdom at 2%, I would still want us to do far more.

Yes, I can give the Member the figures again. Last year, it was £163·2 million; in 2022, £119 million; in 2021, £138 million; in 2020, £99·5 million; and in 2019, £65 million. In 2019, the level of fraud was estimated at 1%. That is now up to 2%, obviously with an increased benefit spend as well. That is why it is so much more. That is why we need to take action. I know, because I get requests from Members right across the Chamber, that there are many different areas where we would like that money to be spent, be it in our benefits system or outside it, so why should we not take every action possible to ensure that we tackle fraud?

Absolutely. We need to tackle fraud and error. If there are issues in the Department that need to be looked at, I want to see that happen. That can be part of the task and finish group's work. We have identified issues before, such as with carers' overpayments, and there are processes in place now to make sure that people are alerted to that. It is in everybody's interests to make sure that we deal with all areas of fraud and error. Our shared determination and goal should be that those who need support get it and that those who are not eligible do not get it. The figures are stark and show that we need to take action.

As I said in answer to a previous question, this is not about making it more difficult for people who are applying in good faith for benefits, nor is it about asking for more onerous information. It is about when there has been a detection of error or fraud, and we are putting the resources in there to properly investigate it and taking that through to its natural conclusion. That is where the investigation will take place as well. What I also want to see is a very strong and robust system that sends a strong and robust message that this is not something that we are prepared to tolerate. If you are found to be in breach, we will be coming after you to make sure that we get that money back, because you are not entitled to it. I think that most people in Northern Ireland will welcome that approach. Let me be very clear, lest anybody misrepresents what I am saying today. This is not about making it more difficult for those who are legitimate claimants, nor is it an attack on those who are in receipt of benefits. It is about making sure that the money and the resource goes to those who actually need it.

Yes. All departmental staff get the appropriate training and are responsible for creating and maintaining the records in accordance with management best practice. The Department manages the retention and secure disposal of information in line with business requirement and legal obligations and ensures that personal data is not retained for longer than is necessary. We have a retention and disposal schedule in place that sets out the retention periods for all data, and that is regularly reviewed. Information must be kept for the length of time that is defined in the schedule, unless there is a legal requirement to destroy it sooner. However, I know that that issue has been raised and that comparisons have been made with data retention in the rest of the United Kingdom. Again, that is something that the task and finish group can look at in order to make sure that we are keeping appropriate records, which can be helpful in tackling this issue as well as in monitoring how we are doing as a Department.

That is certainly the case at the moment. Perhaps one of the reasons why the levels of payback of that money are not as high as we would like is because it is done over a long period in amounts that are manageable for the claimant. Certainly, we need to make sure that we are recovering that money, but we also need to make sure that it is done in a sustainable way so that we can get back the resource that should not have been taken.

My understanding is that the reference has not been removed. In fact, the use of information from the Companies House website is only one tool that is available to staff to verify a claimant's employment status. A more reliable source of information is the benefits system interface with HMRC. To be clear, staff are not prevented from accessing information on the Companies House website. Rather, they are encouraged to use the most efficient route for obtaining the relevant information, and my understanding is that that is the benefits system interface with HMRC.

3,073 words. Text as published by the Northern Ireland Assembly.

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