Officials fear organised crime as well as individuals have scammed as much as £1.5 billion from Universal Credit as the pandemic played havoc with people’s finances.
The lockdown has created a huge demand for benefits by people in genuine financial distress.
Claims rose to record levels with more than 1.5 million people asking for help in the four weeks up to April 9th.
Because of the huge demand some of the Department Of Works & Pensions (DWP) processes were relaxed so money could get to claimants as quickly as possible.
Applications were running at six times the normal level and a decision was made that identity checks could be processed online rather than face to face and some information – like the cost of rent and whether someone had been self-employed – were taken on trust.
Now the department’s fraud team believe that organised crime and an unknown number of individuals exploited the highly pressured situation and made bogus claims.
Investigations are continuing, but the initial assessment is that fraudsters could have got away with £1.5 billion – ironic as one of the initial aims of Universal Credit was to save £1 billion a year by reducing the amount of fraud in the benefits system.
Work is now under way to claw back as much of the scammed cash as possible, but a large proportion of it was issued in the for of emergency advance payments and the recipients can’t be traced.
Overall fraud in the system has been calculated by investigators as 1.4% overall, but on Universal Credit it was 7.6%.
Record number of claims
As the pandemic struck, the DWP was hit by an avalanche of 1.5 million new claims in the first four weeks of lockdown – six times more than the same period in 2019.
Latest figures show there are currently 4.2 million claimants – a rise of 1.2 million in a single month.
A spokesman for the DWP said: “Thanks to the extraordinary efforts of staff, since mid-March we’ve managed to process more than two million new claims for Universal Credit and pay 970,000 advances, getting hundreds of millions of pounds into the accounts of those in urgent need within days.
“We continue to monitor benefit fraud very closely and will relentlessly pursue the minority attempting to abuse the system using the full range of available powers, including prosecution through the courts.
“Our detection systems make use of increasingly sophisticated techniques to identify discrepancies and thwart those seeking to rip-off taxpayers.”