Danes swindle state for 12 billion kr per year

Councils’ efforts to crack down on welfare cheats are only marginally successful, says study

The amount of welfare money paid out each year to Danes who do not actually need it is enough to pay the yearly budget for one quarter of all of DenmarkÂ’s primary schools, or to foot the entire bill for one year of the governmentÂ’s touted economic kickstart.

Each and every year about three percent of the Danish population cheats the social system for between seven and twelve billion kroner in welfare benefits that they are not actually entitled to, according to a new study by KMD Analyse, an IT firm specializing in large public data systems.

KMD found that 3.2 percent of Danes interviewed admitted to collecting welfare benefits they did not actually need. Examples of cheating schemes include accepting cash welfare benefits while neglecting to report oneÂ’s actual (and sufficient) income, or collecting unemployment benefits while not actively looking for a job or having turned down offered jobs.

In 2010, local councils identified and recouped welfare fraud to the tune of 350 million kroner. But KMD estimates that the sum accounts for just four to seven percent of the actual fraud.

One reason councils are not more effective at catching the cheaters is that they rely primarily on anonymous tip-offs from other citizens to identify them. ItÂ’s a terribly inefficient way to identify and catch cheaters, according to KMD. Improved cross-coordination of digital records between different government agencies would reap better results, the analysts said. More council employees to carry out random checks on citizens suspected of cheating the system were also recommended.

KMD also noted that the criteria for allocating benefits ought to be based more on objective benchmarks, and less on subjective evaluations that provide charlatans with opportunities to trick welfare counselors. Finally, KMD recommended that council employees and managers be better informed about the rules for awarding welfare benefits.

Managers from three-quarters of all the Danish councils reported that simpler, more straight-forward rules would help to reduce mistakes and save money.

The vast majority of citizens questioned for KMDÂ’s study supported the idea of greater ongoing collection of digital data on citizensÂ’ incomes and expenditures to determine who actually needs welfare benefits. However, only a third of the respondents approved of physical surveillance of suspected welfare cheaters in and around their homes.

Read KMDÂ’s study here (in Danish).