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29 Jan 2015

Plans to double benefit fraud administrative penalty

Plans to more than double the maximum administrative penalty that can be offered as an alternative to prosecution for benefit fraud are to be considered by Parliament today.

The changes, if approved by MPs, will mean penalties of up to £5,000 can be issued. This will be in addition to recovery of any money falsely claimed, plus a 4 week loss of benefits. The maximum administrative penalty currently stands at £2,000.

Those suspected of the most serious offences will continue to face prosecution but ministers want the option of a much larger administrative penalty to give enforcement agencies greater flexibility in the way they tackle benefit fraud.

Work and Pensions Minister, Mark Harper, said:
The amount of money lost to benefit fraud stands at some £1.2 billion – cash which otherwise could be spent on supporting those in genuine need, improving public services or reducing people’s taxes. There are still too many people who continue to ignore the warnings and steal from the benefits system. They deserve to pay a heavy price for doing so and that is why we are taking action. I hope this new measure attracts widespread support in the Commons.
The proposed new arrangements will see administrative penalties set at 50% of the benefit an individual has been overpaid, up to the new maximum figure. Therefore, this change will affect cases where a sum of more than £4,000 has been overpaid.

Penalties will only be levied in cases where there would be sufficient evidence to pursue a prosecution for benefit fraud – not in cases of genuine mistakes or error.

DWP’s existing debt recovery processes will continue, meaning penalties and overpayments can be recovered from benefits, deducted from earnings or reclaimed through other means.

Going to court brings unwelcome publicity and a criminal record. But at the lower end, these administrative penalties are more serious than the sentences the courts hand out - assuming, of course, that the money is collected, which (let us say) doesn't always happen.

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