‘New blitz on benefit cheats’ trumpets the Daily Express. Here are the basic facts.

‘New blitz on benefit cheats’ trumpets the Daily Express. ‘The Government is joining forces with Crimestoppers to make it easier for people to turn in shameless swindlers. Ministers want the public to call an anonymous phone line to report those they suspect of falsely claiming state hand-outs.’

Now, there has been a National Benefit Fraud Hotline in place since 1996, so it’s not clear what is new about this ‘blitz’ (nor why any British newspaper should think a blitz is a good thing). But in the course of investigating some of the other claims made in this article Full Fact have turned up some truly staggering figures which show that on any reasonable cost/benefit analysis, the fraud hotline should be closed down immediately. Its costs far outweigh the minimal benefits it delivers in terms of detecting social security fraud. But even this waste of taxpayers’ money fades into insignificance when the full implications of these figures are drawn out. They point to a culture of irrational mistrust and grievance regarding benefits which is completely out of control.

Here are the basic facts. 96% of calls to the National Benefit Fraud Hotline are malicious or timewasting. Of 254,000 calls to the hotline in 2009/10, only 3,360 (1.3%) resulted in a claimant being sanctioned for fraud. In a further 8,000 cases (3.1%) error, not fraud, was found.

So what is Dave Cording, deputy chief executive of Crimestoppers, on about when he says.’ Callers who pass on information about benefit fraud are driven by the unfairness they witness of those claiming benefits dishonestly while being healthy and capable of working.’ It is abundantly clear from Full Fact’s figures that callers to the hotline are overwhelmingly not motivated by any ‘unfairness they witness’. At best, they are ill-informed, at worst malicious. So why should taxpayers subsidise this culture of denunciation?

A low estimate of the cost of the hotline in 2009, which doesn’t include the amount DWP pays for the freephone service, was £1.6m. It’s possible that the savings from the tiny number of fraud and error cases identified mean that the service pays for itself financially. However a full cost benefit analysis needs to take account of all costs, financial or otherwise. That includes the costs to claimants of unnecessary investigations prompted by malicious or ill-informed calls to the hotline. 87,000 investigations were undertaken as a result of calls to the hotline in 2009/10. Of these, 87% showed neither fraud nor error. That’s 76,000 innocent claimants a year being hauled over the coals as a result of timewasting calls. If we were to put a reasonable price on this unwarranted pressure on legitimate claimants, it is very unlikely the hotline is paying its way. And that’s before taking into account the anxiety caused to claimants who fear denunciation by spiteful neighbours: anyone who doubts these costs are real should read/watch this.

But it gets worse. The full costs of the hotline also include any socially undesirable behaviour that it prompts and which would not otherwise occur. Because the hotline is anonymous, people are able to make malicious or ill-informed accusations at zero cost to themselves, and this is overwhelmingly what they are doing. No deterrent, no consequences, no responsibility: if you want a case of government enabling people to ‘do the wrong thing’ look no further.

Putting a price on this ‘public bad’ would be challenging, partly because it might just be that some of this subsidised denunciation is in fact substituting for even more undesirable forms of behaviour, such as this : perhaps the hotline is serving a useful function of providing a safety-valve for spite and ignorance*. However it is surely more likely that the availability of the hotline and its aggressive promotion by DWP reinforces the mistrust of claimants which underpins far worse examples of harassment.

And that, of course, is why the government is unlikely to choose the economically rational course of shutting down this less-than-useless scheme. Its purpose is not to detect fraud: like so much headline-grabbing welfare policy, it serves a purely symbolic function. Seconding public mistrust by talking up fraud offers potential short-term political rewards- and failing to adopt such a stance leaves this territory open to rivals. We can therefore expect this and any future government to continue to fund this 'service' despite the evidence that it is doing much more harm than good.

*Which is not to underestimate the real harm that unwarranted investigations can do, as pointed out by David Gillon @WTBDavidG.