Policy document says councils should have credit check powers to fight benefit fraud
Data protection laws would be eased to allow local authorities to carry out credit checks in the effort to drive down housing benefit fraud, under plans outlined in a Labour Party policy document.
The Zero-Based Review on housing benefit says that claimants would face the same checks as people applying for a mortgage or other bank loan. This would be designed to crack down on cheats who are driving up the £24bn annual bill for the benefit.
At present, councils administering the payments do not carry out credit checks to verify claimants are entitled to them, relying instead on self-reporting.
The party would also scrap the government's plan to take housing benefit fraud investigation away from local authorities.
Rachel Reeves, Labour's work and pensions spokeswoman, said delays to Universal Credit, which will eventually swallow up housing benefit, had led ministers to take their eyes off failures in the existing system. She set a target for her party to cut the bill by £1bn over the course of the next parliament - which could include requiring claimants to waive data protection rights.
Powers to be removed
Labour's policy document reads: "The government is set to further reduce the ability of local authorities to tackle fraud by removing their powers and transferring the function to a Single Fraud Investigation Service (SFIS) in Whitehall.
"As the DWP (Department for Work and Pensions) select committee has said, this makes no sense in the context of the hugely delayed roll out of Universal Credit. Labour will therefore enable local authorities to retain their fraud investigation powers at least until Universal Credit is fully rolled out."
The document says credit checks helped HM Revenue & Customs cut error and fraud in disability-related tax credits by 72% between 2008-09 and 2010-11.
It adds: "Labour will therefore carry out a consultation on how to increase the use of data from credit reference agencies, and will investigate how we can better use data from the payments industry, including looking at how information from bank accounts could be used more effectively."
The House of Commons DWP select committee has previously warned that the switch to Universal Credit will lead to the loss of vital fraud-busting technology in town halls.
At present, councils can trap fraudsters by cross-checking their claims against data they hold on them from numerous other council services. But the DWP has yet to demonstrate how it will carry out similar checks when it assumes responsibility for housing benefit.
Picture by Colin, CC-BY-SA-4.0 via Wikimedia Commons