Labour's £186bn benefits madness

And the welfare system has become so bloated and complicated under Labour that it is almost impossible to control, according to a damning report by the Centre for Policy Studies think-tank.

There are now more than 50 benefits and tax credits available for claimants, increasing the risk of fraud and error that costs taxpayers billions of pounds every year.

A host of changes and tinkering under Gordon Brown has continued the “constant churning and revision”, which has created the massively intricate and bureaucratic structure, the report says. Added bureaucracy makes it “next to impossible” to control welfare spending which the Treasury expects to reach the eye-watering £186billion mark this year.

Matthew Elliott, chief executive of the TaxPayers’ Alliance, said: “The welfare state has gone from being a safety net – to stop people falling into poverty – to being a fishing net which entraps people in its complexity.

“Radical simplification would make it fairer for claimants and cheaper for taxpayers because billions less would be wasted on bureaucrats and form-filling. Everybody would be a winner, so it is an urgent and long-overdue reform to the benefits system.”

CPS director Jill Kirby said Labour had failed to “decrease the bills of economic and social failure” as it had promised on gaining office in 1997.

She said: “The Treasury now forecasts total social security payments in 2009-10 to be £186billion, which is a quarter of all spending and more than is received by the Government in income tax and corporation tax combined.

“At a time of economic crisis this is not sustainable. For any reform to be effective, simplification is the essential first step.”

Welfare bills are spiralling in the recession as people lose their jobs and income and are claiming benefits instead.

This year the Department for Work and Pensions’ accounts failed, for the 20th year running, to get a clean bill of health because of the level of benefit fraud and error.

Some £2.7billion of public money was lost last year, of which an estimated £900million was down to fraud and equal amounts to both customer error and mistakes by officials.

The CPS report says the system should be slimmed down and run by a single body with just one form for claimants to fill in. Tax specialist David Martin, who worked on the report, said that since 1997 Labour had introduced eight tax credits and the Employment and Support Allowance to replace Incapacity Benefit.

Labour had also abolished not only Family Credit but several benefits it had itself introduced.

There were now more than 50 benefits, mainly administered by the Department of Work and Pensions, HM Revenue and Customs and local authorities, but other departments were involved. “The different benefits are complicated. They overlap and they confuse,” said Mr Martin.

Different benefits have different thresholds for eligibility, rules, payment periods, forms and decision-making processes, and changes in one can affect others.

A woman with a disabled son must now complete 10 different forms answering more than 1,200 questions to apply for the support due.

A DWP spokesman said it was “making strides in simplifying a complicated system” such as pensioners now being able to claim three benefits with one phone call and no form to fill in.

But he stressed: “It is not possible to have a one-size-fits-all approach when you are trying to support people’s individual needs.”