Universal credit system could be ‘open to fraud’

A report by the communities and local government committee has highlighted “worrying” concerns about universal credit, a new all-inclusive payout to replace a string of benefits such as housing benefit and child tax credits.

The committee said it was “concerned” that the IT system to process the new benefits allocation will have trouble detecting between genuine and fraudulent claims.

One council told the inquiry that its understanding was that the system would not work from local authority property databases so it would not be able to automatically detect, as local systems do 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 is understood to 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 pointed to the transition period as the scheme gets under way fearing an exodus of experienced local authority housing department staff, who will quit due to uncertainty over their future prospects.

This, they said, could “leave the system more open to fraud”.

The committee said the government must make sure that local authorities have the admin funding they need to manage the transition to universal credit and stop staff leaving prematurely.

‘Extreme concerns’

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.”

A spokesman for the Department of Work and Pensions said it was “confident” IT systems would 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.”

The government wants to simplify the existing benefits system, so that it is easier for claimants to manage their own finances and make the transition 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.