I read this article yesterday in the newspaper and post it online as it takes the "spin" off the whole misleading issue of Benefits Cheats being rife.  I liked it because its the best article I have read that explains the facts. If you have people that are mislead by the spin it maybe worthwhile directing them to this article.

Click here for the original online article and to make a/read the comment(s) on it.

By Zoe Williams of guardian.co.uk , 20th October 2010

This talk of 'benefit cheats' is not only stigmatising, it is slanderous, too

The cost of government error dwarfs that of public fraud – surely HMRC's top priority must be to get its sums right

Before we get too animated about the Tory suggestions for dealing with benefit cheats, let's remember that all governments talk like this. George Osborne wants a three-strike rule which will deny benefits to people who have repeatedly been found guilty of fraud.

How this will work is opaque, since you have to assume that these fraudsters, for all their dishonesty, still don't have any money. So they are either to starve, or get food stamps, both of which would represent a radical new direction for welfare policy. But during the election campaign, it was leaked (the technical term is "accidentally on purpose") that Jim Murphy, then Scottish secretary, had suggested to Ed Miliband that people who informed on benefit cheats should get a share of any cash they save the government. In politics, if you have a conversation about benefit fraud and you don't sound like Rush Limbaugh or the Stasi, then you're not doing it right.

The reality of this "cost" never taints the political rhetoric in any way. The figure lost is £5.2bn, but that is fraud and error, which the relevant press officers always pronounce "fraudnerror", as though they were the same thing. The true figure for benefit fraud is £1bn, and £500m for tax credit fraud. About 56,000 people are caught every year perpetrating a fraud, which is about 1.1% of those receiving benefits.

The cost of errors dwarfs that of fraud: in the DWP it's £1.1bn in official error, and £1.1bn in customer error. Within tax credits there's an overall error figure of £1.6bn, over three times the fraud amount. HMRC doesn't specify whose the error is.

The government has suggested a £50 fine for customer errors that could reasonably have been prevented. That is a brilliant idea, but it must be matched, for any semblance of fairness, by compensation from the government when the error is theirs. So far we are only dealing with money lost by the government, not money it saves by underpayments. This is interesting: £1.3bn is saved by the DWP, not because people don't claim what they're entitled to, but because people do claim and the department calculates their entitlement wrongly. If you combined all the official errors by the DWP and HMRC and then undertook to rectify them – well, it would be irresponsible to talk about national bankruptcy, but we'd be kissing goodbye to our empty aircraft carriers, for a start. And that's just relating to benefits – the income tax errors in the government's favour, which predominantly hit the low paid, are even more scandalous.

Anyway, back to these fraudsters, who are the least costly element of a leaky system, but nevertheless transfix the political imagination as though they were masterminds of cunning and audacity, whose long game were to destroy the fabric of society altogether. The department doesn't break the figures down by type of fraud – whether it's mainly undeclared cash-in-hand work, or couples pretending to be single, or criminal gangs stealing identities – but they do give some sense of scale.

The average fraud per prosecution was £11,000, but only one in 10 fraudsters is prosecuted because most misdemeanours are too small to warrant it. There were 360 convictions for frauds of over £50,000 last year, but that is a tiny proportion of the total. To notch up that much, you would have to be doing something quite major, such as cloning an identity for housing benefit or faking a disability over a very long period.

Around 90% of cheats are either given an administrative penalty or a caution – and the average frauds that bring about these sanctions are, respectively, £1,100 and £1,200. So imagine you did two hours a week cash-in-hand work over the 16 hours you're allowed: and over three months, your fraud amounted to £1,000, since you shouldn't have been on jobseeker's allowance at all. That's what politicians should be asking us to envisage when they set upon this bugbear with their big sticks: people on very low incomes earning a very small amount extra and not declaring it. I am amazed that the figure for fraud is so low. When you consider the incompetence of the DWP and HMRC, you would be mad to declare a small cash-in-hand income to them. You'd probably find yourself not just having your benefits withdrawn, but also on an emergency code, erroneously charged tax that it would take you years to recover.

There is a very important failure of governance here: people are being cheated out of benefits by an incompetent system, they are being threatened for their own mistakes and simultaneously screwed by the DWP, and 200 extra employees are being taken on as "anti-fraud" officers when the first priority of government should be that it has enough staff to get its sums right.

But of course this is all common knowledge: nobody in government thinks of benefit fraud as a significant cost. It's just a rhetorical twitch that they have. Osborne demonstrated neatly, yesterday, how the rhetoric works: he placed his welfare aims in the territory of stopping cheats, but the cuts he announced were nothing to do with fraud, they applied to all welfare claimants. This narrative tacitly turns everyone who claims welfare into a fraud. It is socially very divisive, it is stigmatising, it is subtly slanderous and it is immoral.