Benefit cheats and corporate fraudsters

By Symon Hill

February 11, 2010

Government ministers seem to be rather confused about their attitude to fraud.

This week, minister Ed Miliband said that he was considering including in Labour’s manifesto a policy of paying rewards to people who inform on “benefit cheats”. This is the government’s latest attempt to appear tough on benefit fraud.

Last week, however, the government seemed to be much more lenient towards fraud. Ministers welcomed the Serious Fraud Office’s decision to abandon all corruption investigations into the arms company BAE Systems in return for a payment of £30 million and an admission of “accounting irregularities”.

Given the size of BAE’s profits, this is roughly the equivalent of requiring a benefit cheat to pay back a tenner and admit to filling in a form incorrectly. Ministers are not promising to pay rewards to arms company employees who report on their bosses’ corruption.

Of course, the government’s attitude to fraud has not changed between one week and the next – it’s all about who is accused of the fraud. Corporate fraud is treated more lightly than benefit fraud because it is committed by wealthy individuals and companies, who walk in the corridors of power and who are able to point to major economic consequences that they say would result if they were prosecuted. In contrast, most people accused of benefit fraud are claiming slightly more than is technically allowed in a system that constantly appears to be stacked against them.

As both the Trades Union Congress and Church Action on Poverty have pointed out, tax avoidance by corporations and wealthy individuals costs the revenue 25 times as much as benefit fraud. But a crackdown on tax avoidance and corporate fraud would not result in the favourable Daily Mail headlines that ministers are seeking.

Conservatives and commentators sometimes accuse this government of waging “class war”. This is bizarre. While Brown and Blair have effectively tackled discrimination in some areas, they have presided over an increase in the gap between the rich and the rest.

As the contrast between attitudes to fraud shows, when it comes to a choice between attacking powerful people or attacking vulnerable people, many politicians will sadly fall back on the easy option.

Perhaps certain ministers are waging a class war – but they seem to be on the side of the rich.