Benefit scroungers and tax dodgers – why aren’t the Tories looking at both?

By Jamie Ellison

David Cameron is in the news today talking of the need to curb benefit fraud in the UK:

“We need to do more to stop fraud. £1.5bn of hard-earned taxpayers’ money is being stolen from the taxpayer. This is simply not acceptable.”

“It’s quite wrong that there are people in our society who will behave like this. But we will not shrug our shoulders and let them get away with it any longer.”

“We will take the necessary action to stop fraud happening in the first place, root out and take tough action against those found committing fraud and make sure the stolen money is paid back.”

“I have asked Iain Duncan Smith to draw up an uncompromising strategy for tackling fraud and error which we will publish in the autumn.”

Fair play, Dave. Root those evil benefit scroungers out.

But how about taking a look at the fraud that actually affects the UK economy in a way that is statistically relevant? Tax fraud costs the UK economy £15.2bn a year of which benefit fraud accounts for only £1.5bn. In fact the most recent figure from Tax Research puts the figure lost from tax evasion and avoidance at a staggering £95bn. Why not invest some serious time and resource into how we can claw this back, because so far I’ve heard nothing from this government (or, to be fair, the last government or current opposition) on how we can do this.

I also can’t be the only person concerned over the hardline language used by Cameron in this quote. What will this “uncompromising strategy” entail? What will the “tough action” be?

The Tories talk of being progressive, and whilst attempting to stop benefit fraud isn’t a regressive policy it is a policy that will, by it’s very nature, hit the poorest in society harder than those better off. Presumably “taking the necessary action to stop fraud happening in the first place” will make it harder to claim benefits? Will the focus on welfare fraud from the very top of government widen the divisions between rich and poor? The language used by Cameron also attacks the very small minority claiming benefits (less than 1% of benefit claims are fraudulant) as though they are the norm.

The TUC believe that Cameron is using fraud as an excuse to reduce benefits for those truly in need.

A TUC spokesman said:

“All fraud is wrong and should be tackled, but benefit fraud accounts for less than 1 per cent of benefit spending and is dwarfed by the amount lost to tax evasion.”

“If the government is serious about raising revenue it should put more resources into tackling tax evasion rather than using benefit fraud as a cover for swingeing cuts to genuine claimants.”

But the underlying issue here is that there is a much larger pot of money that can be aimed for. With a deficit of around £159bn were we able to claw back the £15bn lost due to tax evasion we could reduce the deficit by around 9%. If the £95bn figure is true, then the deficit could be reduced by just under 60%. Surely the Tories have a perfect opportunity here to look at both welfare fraud and tax evasion, and to be (as they continually claim) truly progressive in their approach? Yet it appears to be nowhere on their radar.

Labour should also begin to talk about this. Of course it’s important to appeal to the middle class voters that helped win us three elections – but could we not do this by pointing out that whilst they pay 40% some of the richer in society pay basic rate tax whilst exploiting loopholes and living in a black economy? Would this not sicken those living within the law and honestly paying their tax?