Benefit cheats set to face up to 10 years in jail in crackdown

Keir Starmer QC warned it was time for a “tough stance” against the perpetrators of benefit and tax credit fraud as he set out new guidelines for the Crown Prosecution Service (CPS).

The Director of Public Prosecutions said the £1.9bn annual cost of the crime to the taxpayer should be at the “forefront of lawyers’ minds” when considering whether a prosecution was in the public interest.

Suspects can now be charged under the Fraud Act, which carries a maximum sentence of 10 years in prison, the CPS said. In the past, benefit cheats have often been pursued under specific social security legislation which carries a maximum term of seven years.

A financial threshold which prevented benefit fraud cases of less than £20,000 from being sent to crown court will also be abolished, the CPS said.

“It is a myth that ‘getting one over on the system’ is a victimless crime: the truth is we all pay the price,” Mr Starmer said. “It is vital that we take a tough stance on this type of fraud and I am determined to see a clampdown on those who flout the system.”

Under the new guidelines, prosecutors in England and Wales will be told to seek tough penalties in cases with aggravating features such as multiple offences, abuse of position or substantial loss to public funds. Professionally planned frauds, the use of a false or stolen identity and cases involving attempts to dispose of the evidence will also be targeted.

Benefit fraud of less than £20,000 was previously automatically allocated to magistrates courts, which can hand out maximum sentences of only 12 months.

The financial threshold will now be abolished, bringing the prosecution of benefit fraud in line with the prosecution of other fraud cases, the CPS said.

The move follows the merger of the prosecutions division of the Department for Work and Pensions (DWP) with the CPS in April 2012, and the transfer of staff to the CPS Welfare, Rural and Health Division.

Mr Starmer added: “The guidance for prosecutors is clear that if the evidence demonstrates an element of dishonesty, rather than just knowledge of a fraud, the appropriate charges should be used.

“This will ensure that following conviction, all options are on the table for magistrates and judges including custodial sentences. Indeed, prosecutors are also instructed not to shy away from using a range a legislation that carries higher sentences where it is merited.”

He added: “The cost to the nation incurred by benefit fraud should be at the forefront of lawyers’ minds when considering whether a prosecution is in the public interest. The loss of £1.9bn of public money has a significant impact on communities up and down the country.

“Where frauds have been professionally planned, carried out over a long period of time and include attempts to conceal or destroy evidence, then we will make this plain when advising the courts on sentencing.”

Last year, the CPS saw more than 8,600 prosecutions in benefit and tax credit cases, along with 4,000 in the first five months of this year, Mr Starmer said. The current conviction rate is 89.7 per cent, he added.

Prime Minster David Cameron “warmly welcomes” the move, Downing Street said. “Benefit fraud is very serious. It’s wrong and that’s why the Prime Minister warmly welcomes this announcement,” his official spokesman said.

The UK is losing around £85.3bn to fraud every year, according to a survey from an accountancy and business advisory firm.

The Financial Cost of Fraud Report 2013 from BDO LLP, which is based on 15 years of data, finds the global cost of fraud for the period between 1997 and 2007 was 4.57 per cent of gross domestic product (GDP), a broad way of measuring the total economy.

However, taking account of data from the five years since the start of the recession in 2008, this figure has risen dramatically by almost 20 per cent to 5.47 per cent – an implied total loss to fraud of £85.3bn a year in the UK or £2.91 trillion worldwide.