Benefit fraud that we all have to pay for

01 January 2000
Benefit fraud that we all have to pay for

Most of us think we pay too much in taxes. I don't. I like to think my money is being spent by the Government to help the less well-off. But I do object when the Government turns a blind eye to wholesale benefits fraud.

Equally pernicious and costly is the way the benefits system is designed to encourage people to stay out of work.

Last November, when I opened my Indian restaurant, Café Spice, my eyes widened as I discovered how such practices are costing us billions.

When interviewing people for various positions at Café Spice, I unearthed a fraud that is being perpetrated in a high number of Indian/Bangladeshi restaurants around the UK.

Cash payments

Time and again we heard the same story as we interviewed staff. They all wanted to know how much money they would get "in hand". In other words, they insisted on being paid cash, because that was how their previous employers had paid them.

Almost without exception, they shamelessly refused employment unless a maximum of £110 was put through the books (the rest paid in cash), so that they could continue to claim benefits.

This demand was so common that the only conclusion to be drawn is that this fraud is widespread.

Restaurateurs in this sector who want to stay legal and compete for the best must, as a consequence, pay enormous and almost uneconomic gross rates of pay to staff.

Then I chanced across a benefits system that encourages people to stay unemployed.

I sought to employ an ex-Smollensky manager at Café Spice. He is a family man, with a mortgage and large debts.

He seemed to be sorely in need of money, work and some self respect - or so I thought.

Wanting to help

I wasn't certain that he was right for Café Spice, but I wanted to help him. Because of my uncertainty, I offered him a two-month contract as a duty manager at £18,000pa, renewable if things worked out. I thought he would jump at the chance. But he didn't. And here's why.

He received £105 net Income Support from the Department of Social Security (DSS), equivalent to about £6,500pa gross. The DSS also paid his mortgage interest of about £600 per month. He claimed that if he took my temporary job, he could soon find himself in worse circumstances than if he stayed out of work.

By taking my job, his income support would cease immediately and so too would the mortgage interest payments. If after two months I decided not to renew his contract, he would have to wait a full four months before his DSS support would be reinstated.

He simply could not take the risk of making his family worse off if things didn't work out. In short, he was snookered. And so too are we tax payers under this absurd system that pays people to stay at home without self-respect and purpose.

Beating the problem

I then came up with a way round his problem. Why not work for me for nothing for two months in return for a promissory note which he could claim from me at some indeterminate point in the future - say, after he got more permanent employment?

This may not have been legal, but before I could check it out he said my idea wouldn't work.

He was prohibited from accepting unpaid work because, having been unemployed for more than a year, the system obliged him to attend utterly useless and irrelevant training courses at short notice. If he failed to attend, he would lose benefits.

It appears that the social security benefits system is geared to allow people to keep their heads just above water, but prevents them from reaching for a life-line should one appear. Crazy or what?

Government ministers, please do something about this situation - and quickly. Those of us who like paying tax to help society don't like to see our money being squandered in this manner.

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