Apr 05, 2013 (11:04 AM EDT)
British Worry Of Fraud With New Social Security System

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New York's 32-Story Data 'Fortress'
New York's 32-Story Data 'Fortress'
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This week has seen a range of controversial changes to U.K. benefits, including a cut to 1% on the rate some welfare payments rise and what seems to be emerging as an unpopular "bedroom tax" on public housing users.

Still on the horizon is yet another big change to the British welfare system: Universal Credit, an IT-driven system that rolls multiple payments into one single offering and which is set for its first field trial later this month in Manchester and full rollout in October. The system’s had plenty of criticism before its launch, centered on the claim that its innate complexity makes delivery in two years impossible.

Now, another note of caution has been sounded, this time by a group of British lawmakers, who have raised concerns that the system risks raising, not cutting, the chance of fraudulent claims.

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The Communities and Local Government Committee, a cross-party group of members of Parliament focused on local government issues, this week issued a report that says Universal Credit’s computer-based fraud detection systems are too rudimentary.

The report says it is "extremely concerning" that these core systems were "still at an early stage" and that the government must as a result "provide swift assurance" that the shift to the new system "will not leave the benefit system vulnerable to fraud."

"We heard evidence that ICT [information and communications technology] systems for fraud detection within Universal Credit were still at an early stage in their development," Labor Opposition member Clive Betts said. With implementation of the new program already in progress, the government has to reassure the public that fraud detection won't fall through the cracks, "and it must do so urgently," he said.

The part of British central government responsible for implementing the new system, the Department for Work and Pensions, says such fears are unfounded. In fact, far from raising the risk of more fraud, a spokesperson for the department told the BBC that Universal Credit will cut fraud by £200 million ($306 million) a year. Official British state figures put the annual loss of public money due to fraud or waste as high as £21 billion ($32 billion).

But at least some parts of the U.K. hi-tech community agree there is a basis for Parliament's warning. "MPs are absolutely right to warn that the Universal Credit system presents a serious fraud risk," said Ross Parsell, director of cybersecurity at the U.K. arm of French IT firm Thales. "A question mark still remains over whether the government will be able to verify, manage and protect the identity of claimants. We are yet to have a government system that pays money to the public: if a high percentage of transactions are fraudulent, the government could come under severe pressure," he warned.

Parsell said that, for example, with 1.56 million people claiming Jobseeker’s Allowance, one of the benefits to be replaced by Universal Credit, just that element of welfare presents a potential £4.56 billion ($6.94 billion) fraud risk over the course of a year.

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