Figures on benefit and tax fraud investigators misrepresented

A post on Facebook falsely claims that more resources are devoted to combating benefit fraud than tax fraud.  

The post says: “The estimated cost of benefit fraud is £2.3 billion a year. 1,400 staff already investigate benefit fraud and another 2,000 are being hired. The estimated cost of tax avoidance is between £35 billion - £125 billion a year. Just 961 staff investigate tax fraud.”

The figures for the numbers of staff investigating benefit fraud, which is dealt with by the Department of Work and Pensions (DWP) and tax fraud, which is dealt with by Her Majesty’s Customs and Revenue (HMRC) are all out of date and originate from written parliamentary questions tabled in January 2020 by Scottish National Party politician Chris Stephens.

Some of them are described incorrectly in the Facebook post. Tax avoidance (unlike tax evasion) is not a form of fraud.

Staff numbers

In its 2019/20 annual report, the DWP said its Counter Fraud, Compliance and Debt (CFCD) department employed 8,000 staff. In addition to investigating fraud, these staff also deal with errors, verification checks and compliance, ensuring people are entitled to the benefits they are receiving. 

A DWP policy paper from May 2022 says an additional 1,400 staff are being recruited to work on counter-fraud teams along with a 2,000 strong team exclusively dedicated to reviewing existing Universal Credit claims. These two figures of 1,400 and 2,000 employees may be what the Facebook post refers to. If so, they do not represent the total workforce currently investigating benefit fraud.

The 2020/21 report notes that there was a backlog of up to 750,000 compliance cases as a result of the pandemic  and 972,000 Universal Credit claims that had not been subjected to proper verification checks. The report says that 3,000 additional staff are needed to assist with the backlogs. 

By comparison, the post says “just 961 people investigate tax fraud”. This figure appears in answer to one of the written questions and refers solely to the number of HMRC staff who, at the time, were engaged in “customer compliance activity” within a specialist team focused on high net worth individuals. So that’s not the total number of staff who investigate tax fraud, as suggested by the Facebook post. 

At the time of the parliamentary question, a government minister said there were around 24,500 full-time equivalent staff in HMRC’s Customer Compliance Group. An HMRC spokesperson told Full Fact its Customer Compliance Group currently employs 28,000 people.

Losses

The figures given for the costs of benefit fraud (£2.3 billion) and tax fraud (£35 billion to £125 billion) in the original post are either incorrect or out of date. 

The figure of £2.3 billion for benefit fraud apparently relates to the 2018/19 financial year and has since increased substantially. 

A policy document presented to Parliament by the Secretary of State for Work and Pensions in May 2022 states that there was an estimated £6.3 billion of welfare fraud in 2021, up from £2.8 billion the previous year. This is nearly three times the figure quoted in the Facebook post. A further £2.1 billion was lost through error.

We can’t find the  source of the £125 billion figure at the top of the range given for tax avoidance, but the lower figure of £35 billion could be , the size of the gap between the amount of tax actually collected and the amount theoretically due, according to the most recent government estimates.

If so, only some of this was the result of fraud. The estimated financial loss from tax avoidance (activities within the letter but not spirit of the law) during 2019/20 was put at £1.5 billion. An additional £5.5 billion was thought to have been lost through tax evasion (illegal activities). This amounts to total losses of £7 billion. 

The tax gap is difficult to calculate, and some people dispute HMRC’s estimates. We’ve written more about this here.

Internal policy documents

Concerns that more resources were being devoted to tackling benefit fraudsters over tax fraudsters also emerged after claims last year that 23 times as many people were prosecuted for benefit fraud than tax fraud between 2010 and 2021. 

However, these figures do not tell the whole story. HMRC says that criminal prosecution will only be used in the most serious cases and that civil measures are preferred. By contrast, the DWP will “normally” pursue a criminal investigation in any case where false documents or identities have been used, where there is evidence of premeditation or where the amount is greater than £5,000. 

Full Fact has previously published fact checks covering whether the number of benefit fraud investigators outnumber overall tax inspectors and whether they outnumber those assigned to investigate the tax affairs of the super rich. 

We have also highlighted in the past that it is not possible to make a direct comparison between the work of the DWP and HMRC.