In the United States, under a law passed by president Abraham Lincoln, it is possible – although unusual – for any person to take another to court for welfare fraud and keep up to 30 per cent of the money recovered.
The DUP is on the cusp of giving Stormont a comparable ability. Gordon Lyons, the party’s Minister for Communities, is in discussions with the UK treasury to keep half the savings from tackling benefit fraud and error. All savings are currently retained by London. Lyons says this can deliver an initial £25 million (€28 million) a year for the Northern Ireland Executive, with more coming in as his department employs additional inspectors and introduces new processes and technology.
That would add 0.2 per cent to Stormont’s block grant, not an insignificant sum. But Lyons is interested in more than money – he wants a broader debate on the politics and ethics of the benefits system. Last year, he resumed publicising the names of people convicted of benefit fraud. This had been stopped in 2020 by his Sinn Féin predecessor, who called the practice “unnecessary”.
Explaining his decision, Lyons told the Assembly benefit fraud is “not just a financial issue” but also a “moral one”. “When individuals cheat the system, they are not stealing from a faceless entity,” he said.
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“They are taking from their neighbours, their friends, and their fellow citizens. They are undermining the very safety net that so many rely on.”
That would sound like a statement of the obvious in most places and to most people but it is unusually debatable in Northern Ireland, even as a technical observation.
Although welfare is devolved and Stormont administers claims, Westminster pays the bill directly as long as Stormont runs a carbon copy of the system in Britain. That is also why London keeps any savings.
A perverse feature of this unique arrangement is that Stormont has no financial incentive to keep the bill down. On the contrary, Executive parties – including the DUP – generally take the view that more UK money flowing into Northern Ireland is always good, however bad a deal it is for UK taxpayers overall. The Renewable Heat Incentive was the most notorious example. While no minister has ever said this of benefit fraud, they have always encouraged the maximum possible benefit uptake. Lyons is the first to pursue a serious crackdown on fraudulent claims. Doing so before he has secured a savings deal with London shows his moral conviction is genuine.
Tackling fraud tends to be popular with voters. Anonymous tip-offs have risen by a half since Lyons launched his “zero tolerance” campaign and there has been no sign of any public backlash.
That makes other parties reluctant to criticise the Minister, even when they are uncomfortable with the tone of his message.
Nor is the crackdown’s aim entirely punitive. A condition of the treasury deal is that any savings have to be reinvested into programmes to help people into work, in particular those with disabilities and health conditions. This is a priority in the Executive’s programme for government, as Lyons has noted.
So Sinn Féin has focused on questioning if the numbers add up – the same approach it took in 2017 when Leo Varadkar promised a welfare fraud crackdown as minister for social protection.
John O’Dowd, Stormont’s Sinn Féin Minister for Finance, has refused to fund the upfront costs of a tougher inspection regime. His scepticism is warranted. More inspections will be expensive, little money is recovered in most cases and the treasury intends to drive a hard bargain on proof of savings.
A deal of the type Lyons is seeking has been on offer from London since the 2015 Fresh Start Agreement. Sinn Féin and DUP ministers have previously considered it not worth the bother.
Lyons could easily be criticised for underselling potential savings. Fraud was officially estimated last year at £233 million or 2.5 per cent of the benefits bill, with error another 1.2 per cent. These figures are clearly conservative – they include near-zero estimates for disability benefits, for example.
A crackdown could aim to secure savings for Stormont in the order of £100 million. Even at that it is small change beside the financial debate all Executive parties are avoiding. Stormont could take proper control of large parts of the benefits system, as Scotland did a decade ago, by striking a deal with the treasury to take over those parts of the budget. The sums this could make available for Stormont to spend as it sees fit would be vast – total benefits spending is £9 billion a year, on top of the £18 billion block grant. The greatest favour Lyons could do for Northern Ireland would be forcing this question. If Stormont can tackle fraud to get people into work, why can it not take on further basic responsibilities?
