The Government’s controversial welfare reforms will leave the benefits system more vulnerable to fraud, according to a group of MPs.
The Government decision to press on with welfare reforms means that Universal credit is set to be implemented nationally from October 2013 and replaces a string of existing benefits such as local housing allowance (LHA), housing benefit (HB) and child tax credits.
Changes to IT system for universal credit could make it harder to distinguish fraudulent claims from those that are genuine, and there are calls for the government to give swift assurance that the introduction of Universal Credit will not cause a rise in benefit fraud,
MPs issued the warning after a report by the Communities and Local Government (CLG) Committee into the extent of the welfare reforms highlighted several concerns about the new Universal Credit scheme.
The first trial of the new system begins on 29 April 2013 in Ashton-Under-Lyne, Greater Manchester.
The committee highlighted concerns raised during an inquiry into the changes because the IT system under Universal Credit will have trouble distinguishing between genuine and fraudulent claims.
One council told the committee its understanding was that the system would not work from local authority property databases so it would not be able to detect automatically, as local systems did now, when several people made a housing benefit claim for the same property.
A new fraud detection service, called Iris, is being built into Universal Credit which the committee was told does have a similar database to that used by local authorities for detecting housing benefit fraud.
But the committee’s report said it is “worrying that the system still seems to be at the development stage”.
The committee also raised concerns that during the transition period as the scheme gets under way, there could be an exodus of experienced local authority housing department staff, who will quit due to uncertainty over their future prospects, which “will leave the system even more open to fraud”.
The committee said the Government must make sure that local authorities have the administrative funding they need to manage the transition to Universal Credit and stop staff leaving prematurely.
Universal Credit is being introduced in gradual stages over several years, with the national rollout following several “pathfinder” pilot projects taking place from this month.
Clive Betts, chair of the Communities and Local Government Committee, said evidence heard by the committee that systems for fraud detection were still in their early stages was “extremely concerning given the advanced state of implementation”.
He said: “The Government must act to provide assurance that the benefit system will not be left vulnerable to fraud either during or after the transition. And it must do so urgently.”
The committee said the landmark changes mark the “most significant reforms to the welfare system for 60 years”.
The Government want the welfare reforms to simplify the existing benefits system, so that it is easier for claimants to manage their own finances and make the transition back into work.
Under Universal Credit, a single unified benefit payment will take in income-based jobseeker’s allowance, income-related employment and support allowance, income support, child tax credits, working tax credits and housing benefit.
But the committee also highlighted concerns that the new Universal Credit scheme could result in increased rent arrears as housing support will be paid directly to tenants instead of landlords.
It urged the Government to give a clear definition of the circumstances under which a tenant would be considered “vulnerable”, and would therefore have their rent paid directly to the landlord.
The committee also said that the Government should be doing more to raise awareness about the changes that the welfare reforms will bring and should be advising all claimants to contact their local authority to find out more through advertising.
A Department for Work and Pensions (DWP) spokesman said: “Universal Credit will cut benefit fraud by £200 Million (GBP) a year and we are confident that our IT systems will be strong enough to protect us from the threat of fraud. We have been running pilot projects with local authorities to ensure that those people who can’t manage with monthly or direct payments get the support they need.”
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