Because more equal societies work better for everyone

Innocent Until Proven Guilty? Not if you're poor...

Thursday, 13 October, 2016

In a bizarre recent story a woman was told by the Government that she was to have her social security withdrawn due to a suspected fraudulent claim. The private company contracted by HMRC to search for fraud in the tax system, Concentrix, had determined that she was not living alone as she had claimed, but was instead cohabiting. Her partner, according to Concentrix, was the 19th century philanthropist Joseph Rowntree, a confusion that had emerged as a result of the woman living in a house provided by the Joseph Rowntree Foundation.

This isn’t the only case where Concentrix has stopped people’s tax credits for bizarre reasons, they’ve also accused people of marrying their sister. However, to just blame Concentrix misses the broader failure. Successive governments have robbed people on low incomes of their privacy, and treated them as guilty until proven innocent

HMRC set the rules that allow Concentrix to stop people’s accounts, and gave them access to people’s private information. The only change from previous regimes is Concentrix seem even more breathtakingly incompetent.

Perhaps this fixation with the private lives of the poor shouldn’t surprise us. People who are supported by social security are mistakenly perceived as dishonest, and seen as likely to be purposefully cheating the system. The public think that £24 out of every £100 spent on welfare is claimed fraudulently when actually it’s closer to 70p. The reality is that benefit fraud is much rarer than people perceive it to be, partly because it’s difficult to actually tell when fraud is occurring.

The undeclared cohabiting that Concentrix is investigating is, according to the government, one of the most common types of benefit fraud. However any close examination of the issue shows that the issue of cohabitation is more complicated than simply people trying to cheat to get more benefits. The rules state that a person receiving benefits or tax credits must declare the income of someone they are married to, in a civil partnership with, or someone with whom they are “living together as a married couple”. The first two types are clear cut, but the third is completely opaque, and only becomes more absurd as you dig into the detail. It includes questions like whether you and the other person eat together, cook together or store food communally. There’s no clear line of when a partner you are in a relationship with becomes “living together as a married couple”. Yet if the government decides that you have shared one too many meals together, then they can stop your benefits, or tax credits.

Tax credits are a vital part of government support for people on low pay. They help reduce in-work poverty and also help support people into work. Along with other out of work benefits they play a key part in reducing income inequality. But the conditions that government attaches to them helps create another type of inequality.

If you’re well off you’d never dream of the government snooping in on your evening meal or asking whether your partner has ever helped out with the cleaning. But people on low incomes aren’t afforded that privacy. They definitely aren’t allowed the kind of privacy that the very wealthiest enjoy by putting their wealth offshore, yet even more unjustly, the richest are protected by a different standard of proof to the poorest. The very richest are protected by something called a double reasonableness test. Those who are accused of abusing the tax system are only punished when no reasonable person could reasonably have thought that what they were doing is OK. Meanwhile, the poorest are assumed guilty and have their support stopped until they can prove otherwise even where the line is blurry at best.

Benefit fraud is estimated to cost the government £1.3bn, whilst the most conservative estimates have tax evasion costing the government £4.4bn and tax avoidance more than £7bn. Yet the HMRC employ about 700 people to chase the richest, whilst the DWP employ 3,765 to chase down the poorest. There is a clear inequality of justice where the poorest cost the government less but are chased harder and are given less of a chance to defend themselves.

It’s positive that HMRC has promised to not renew its contract with Concentrix and that Concentrix are being asked to account for themselves before the Work and Pensions select committee. But we shouldn’t ignore the wider issues of how the government treats low income households by invading their privacy and assuming their guilt.

Tim Stacey, Senior Policy and Research Advisor

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