Daily Telegraph - £400m cost of couples who pretend to be lone parents

Monday, 18 December, 2006

COUPLES who pretend they are living apart so that they can claim bigger benefit payments are costing the taxpayer more than pounds 400 million a year.

The full scale of the fraud has been revealed in official figures that the Conservatives said exposed how Gordon Brown's benefit system was encouraging families to lie about their circumstances.

A total of pounds 305 million of tax credits were paid out to people who "claimed they were single despite having a partner'', according to analysis by HM Customs and Revenue.

This makes it the second largest single source of fraud in the tax credit system, accounting for around a quarter of the pounds 1.2 billion of tax credits lost to benefit cheats each year.

A further pounds 106 million of other benefits, including Income Support and Jobseeker's Allowance, was claimed by couples who told the authorities that they were living separately. This brings the total bill for the taxpayer to just over pounds 400 million.

The scale of the problem was revealed by David Ruffley , the shadow welfare reform minister, who said it underlined how couples were penalised under the current benefit system.

John Hutton, the Work and Pensions Secretary, will warn today that people on benefits who refuse to make any effort to find a job - the "Can work, won't work'' generation - should receive "less benefit or no benefit at all''.

He will also say there are lots of vacancies in many areas of high unemployment, yet in many cases only migrants from Poland and other Eastern European countries are prepared to fill them.

Despite the Government's tough message, Mr Ruffley said his figures confirmed suspicions that tens of thousands of couples were pretending they lived separately so they could claim more money from the benefit system.

While the Office for National Statistics estimates that there are 1.9 million lone parents living in the United Kingdom, the Government is currently paying tax credits or other benefits to around 2.1 million single parents.

Mr Ruffley said this suggested that as many as 200,000 people were declaring themselves as lone parents, even though they were actually living with their partner as a couple.

"Gordon Brown said in his 1998 Budget that 'support should be based on family need - not family structure'. That damaging disregard for family structure has led to discrimination against couples that is now at an all-time high,'' said Mr Ruffley.

"The result is that many couples are now being pushed into making fraudulent benefit claims.

"My new figures expose a record level of fraud in a benefits system that is not fit for purpose. For those on low incomes, Brown's dysfunctional benefit system sends couples the clear signal: 'Pretend to live separately and you will receive higher benefits than if you admit you are a couple.'

"The Chancellor is Incapability Brown - incapable of grasping that family structure does matter; incapable of understanding that by discriminating against couples so heavily they can get so desperate that fraud is the result.''

The incentive for couples to claim they are living apart was underlined by recent research by the Institute for Fiscal Studies, the respected independent economic body.

It found that many couples were more than pounds 50 a week worse off if they stay together than if they lived separately.

In his speech today, Mr Hutton will argue that the welfare system must be redesigned to tackle the hard core of jobless who have not been helped by Labour's New Deal programme.

In a move that will enrage many Labour MPs, he will argue that claimants could lose all their benefits. "We cannot reasonably ask hard-working families to pay for the unwillingness of some to engage in the labour market.''