Belfast Telegraph

Staggering £800,000 weekly bill for benefit fraud in Northern Ireland

By Rebecca Black

The cost of fraud in Northern Ireland's benefits system has reached its highest level for more than a decade, a damning report reveals today.

Taxpayers shelled out £45m in the last year to cover payments drawn illegally - around £800,000 every week.

The bill for fraudulent claims has climbed to an 11-year high, auditors said.

An investigation found "significant levels of estimated fraud and error" in housing benefit claims.

The shocking details are revealed in a report by the Northern Ireland Audit Office.

It reports on the results of financial audit work undertaken on the 2015-16 accounts of Government departments and other public sector bodies.

One of its most shocking findings concerns Northern Ireland's ballooning benefits bill.

The total expenditure on benefits in the 12 months to April was £5.8bn - a staggering £15.8m a day.

That is up £100m from £5.7bn in the previous financial year.

On all benefits, except the State Pension, the former Department for Social Development estimated overpayments due to fraud and error of £75.3m.

This has fallen from last year - mainly due to less money being lost through official error.

However, the amount lost through fraud has spiralled, Auditor General Kieran Donnelly warns.

His report states: "From an overall departmental point of view, the estimated levels of overpayments and underpayments due to fraud and error were 1.7% this year compared to 2% in 2014-15.

"Customer error and underpayments due to official error have fallen significantly.

"But the estimated levels of customer fraud in the benefit payments made by the Social Security Agency, Northern Ireland Housing Executive (NIHE) and Land and Property Services (LPS) increased to £45.1m and is now at its highest level since 2004-05."

The NIHE was a particular concern, with "significant levels of estimated fraud and error in housing benefit expenditure" reported.

Robin Swann, who chairs Stormont's Public Accounts Committee, said worries over the extent of benefit fraud have been raised in a series of Audit Office reports.

"The auditor has been consistently concerned with benefits," he said.

"We are in the middle of a whole reform of the benefits system at the minute, so it is how that actually works out to countering fraud. On benefit fraud the numbers are actually down on previous years, but the level of customer fraud has increased.

"The committee will get a briefing on this report at our first meeting back in January."

The report says: "Despite the initiatives used by SSA (Social Security Agency) to counteract fraud and error, the level of overpayments remained at 1% of total benefit expenditure, the same as in 2014 against a rise in annual benefit expenditure of 2.1%.

"SSA continues to face a significant challenge to administer a complex benefits system to a high degree of accuracy in a cost effective way

"The level of estimated fraud and error remains significant - out of total benefit expenditure (other than State Pension) of £3bn, estimated over and under payments total £60.2m."

In terms of LPS, the report found total housing benefit expenditure administered by it in 2014/15 was £42.3m.

"Within this, the levels of fraud and error estimated by DSD's Standards Assurance Unit amounts to £8.6m in 2014/15," Mr Donnelly's report says.

"I also reported on the level of outstanding ratepayer debt at year end, and the amount written off in year. The ratepayer debt outstanding at March 31 2015 was £156.4m, compared to £162.1m at March 31 2014. The amount written off in 2014-15 was £25.3m compared to £31.6m in 2013-14."

The Department for Communities said it was committed to tackling fraud and error and would highlight its success during 2015 in reducing both loss and underpayments, due to benefit fraud and error, from the levels reported in 2014.

"Nonetheless, the department recognises fully that any level of loss, while at 1.4% of benefit expenditure, still represents a significant loss of public funds," it said.

"The department is determined to ensure the focus and investment in driving high levels of accuracy and low levels of fraud continues and the integrity of the benefit system, designed to help those in need, is protected."

The Audit Office report also finds:

  •  £11.9m was spent in 2015-16 on the non-domestic Renewable Heat Incentive scheme without the necessary approvals. The renewable energy subsidy scheme has previously been described as "potentially the biggest scandal since devolution began".
  • Northern Ireland's legal aid bill was under-stated by between £9m and £33m.
  • Phase 2 of the Londonderry to Coleraine rail line, originally estimated to cost £20m, is due to be completed this month at a cost of £46.4m, more than twice the value of the original estimate and nearly a year later than planned.
  • The former Department of Agriculture lost £17.4m of EU funding through not properly administering the European Agricultural Funds.

However, the report praised the retention of students at higher education institutions in Northern Ireland in 2013-14, when we had the joint highest average student retention rates in the UK.

Couple who pocketed £30,000 avoid prison

In May Dunmurry couple Michael (56) and Brenda Rennick (52)  were handed suspended sentences for benefit fraud.

Belfast Crown Court heard that during the time they made false declarations to the Social Security Agency, Michael Rennick was registered as company secretary at Lagmore Securities Limited, and Brenda Rennick was the company director of BR Pets Limited, trading as Mick’s Pet Food. Michael Rennick pleaded guilty to one charge of failing to declare a change in circumstances that would affect his Income Support between 2007 and 2008. He also admitted two counts of making a false declaration with a view to obtaining Income Support in 2008 and in 2010.

Brenda Rennick admitted one count of failing to notify a change of circumstances that would affect her Carer’s Allowance between 2007 and 2008. Crown prosecutor Gareth Purvis said Michael Rennick’s offending amounted to a total of £20,474.35 in Income Support, while his wife was paid £9,837 in Carer’s Allowance. He got a 12-month sentence, and his wife got a nine-month sentence. Both terms were suspended for two years.

Cheating accountant’s ‘phantom flats’ scam  

In June accountant James Joseph Heaney, from Spruce Meadows in Londonderry, was sentenced to 200 hours of community service after he admitted fraudulently claiming and receiving almost £10,000 in housing benefits for nine flats which did not exist.

A prosecution barrister said Heaney’s offending was discovered by accident after police called at the Northern Ireland Housing Executive offices at Richmond Chambers in Derry to investigate a totally unrelated matter.

Heaney filled in housing benefit forms in other people’s names for nine flats at Dacre Terrace, and the benefits were paid into his personal account. The prosecutor said the Dacre Terrace property, which is owned by another man, had no residential accommodation.

When Heaney was interviewed by police about his offending he tried to blame other people — including the innocent owner of a house at De Burgh Terrace.

The prosecution said the PPS considered taking a case against the people named on Heaney’s application forms, but there was insufficient evidence to do so.

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