How much does housing benefit abuse cost UK taxpayers?
An article in the Mail this morning reported the likely eviction of the Rostant family from their Central London home. The family were purported to be receiving £2,000 a week in housing benefit.
The paper also went on to claim:
"But the money [being paid out] is to be stopped as the result of the Government's crackdown, which began this week, on the long-running scandal of housing benefit abuse (which costs the working public a staggering £20billion a year)."
But does housing benefit abuse really cost the public so much money?
The figure of £20 billion has been used by the Mail with regard to housing benefits before, however this was in reference to the total cost of such payments.
Examining the latest data from the Department for Work and Pensions (DWP), the total number of housing benefit claimants in the UK currently stands at 4,934,110, the majority of which are from the social rented sector.
Given that the current average payment per week is £87.01, this puts the total housing benefit payments across all claimants at approximately £22 billion per year. This is backed up by DWP figures provided in fraud and error preliminary estimate statistics.
Given that housing benefits cost just over £20 billion anyway, the claim that the abuse of such costs the same amount seems implausible. The Mail's wording is, however, ambiguous - given that they could have been referring to the overall cost anyway. As it stands, we can't determine this either way.
Ambiguity aside, the best available measure for abuse is provided by the DWP's research on the costs of fraud and error in housing benefits payments. 'Abuse' could, of course, refer to factors other than fraud, but none are readily available in DWP or Treasury statistics.
The latest Housing Benefit Recovery and Fraud Statistics show that the total value lost to overpayments in housing benefit totalled £968 million between the last quarter of 2009/10 and that of 2010/11 - far from the £20 billion figure suggested by the Mail.
Housing benefits are overpaid for three reasons: 'Official Error', 'Customer Error' and 'Fraud'. The former involves miscalculation on the part of the DWP, HMRC or a Local Authroity. Customer Error refers to accidental miscalculation by claimants themselves, while Fraud refers to the deliberate appropriation of undeserved benefits by claimants.
According to National Audit Office estimates, Official Error cost the DWP £100 million in 2010/11 in overpaid housing-related benefits (and hence also includes council tax - the figures for housing benefits alone will be lower). Customer Error moreover cost £700 million in overpayments. Fraud costs were estimated at £300 million.
The distinction is relevant because, when referring to 'abuse', only fraud on this measure seems an appropriate cost to consider. On these terms, the amount of housing benefits lost to fraud is approximately £300 million.
Again, given the vagueness of the term 'abuse', we cannot assume all the Mail could have been referring to was the cost to the DWP of housing benefit fraud. There remains, however, a huge gap between the cost of fraud and the £20 billion figure implied by the Mail.
Given that the housing benefit bill, at £22 billion, is only marginally above the level of 'abuse' that Mail seems to suggest, it seems likely the confusion has been caused by imprecise phrasing in the article. Full Fact has seen no evidence that abuse of housing benefits totals anything near £20 billion, and the suggestion otherwise, accidental or not, needs to be clarified by the paper.