Ben Shenton – JEP – article on “Vulnerability affects people of all backgrounds. Income hardship can affect those not on benefits.”

It would be nice if the word vulnerable was used in the correct context going forward

IT would be useful if all journalists, teachers and care workers read this piece. A few years ago, I was having a video meeting with an “expert” in social care and pointed out to him that beneficiaries of payments/hand-outs such as income support were not financially vulnerable. I thought that this was a universally known fact, but he actually phoned me back a couple of days later to say he had checked my statement – and I was indeed correct.

The whole idea of the benefits system is to remove financial vulnerability from society. This it does and, while it can be tough living off benefits, vulnerability has been removed. Incomes of people on benefits can, in many cases, be much higher than those who do not claim benefits through a lack of eligibility. Add to that the fact that benefits are not taxable, whereas earned income is if you are above the tax threshold, and you can understand how those not on benefits, and their children, can be suffering financial hardship worse than those on benefits.

The benefit system is designed to remove financial vulnerability, and it would be nice if journalists understood this. A single parent with one child can receive £32,057.48 per annum tax free, plus a childcare allowance of £8.04 per hour. The £32,057.48 figure is made up of £6,286.28 adult allowance, £2,457 single-parent supplement (sometimes referred to as the “don’t let dad stay-over incentive”), £5,179.72 first-child payment, and £18,134.48 to rent a two-bedroom flat in the private sector.

The reason in asking teachers to read this piece is because some local schools have called for free school meals only for those on benefits. If implemented, children of hard-working low-income families, perhaps picking up less than those on benefits, will miss out. You do sometimes wonder what children are being taught these days. Benefit income can easily exceed £40,000, tax free in certain circumstances. Are these really the most vulnerable people as the media would like us to believe?

There is no definitive definition of vulnerability, and many people can be vulnerable in different ways, but for convenience I would define vulnerability as follows:

• A person who may need community care services due to disability (mental or other), age or illness.
• An adult who, due to mental or bodily disability, cannot take care of themselves without help from others.
• Anyone who may be unable to protect themselves from abuse, harm or exploitation due to illness, age, mental illness, disability or other types of physical or mental impairment.
• Individuals who, because of their circumstances, are at risk of harm, abuse or exploitation and require protection under the law.

There would be nothing more unfair than a society that penalises those on low incomes who work but do not claim benefits. The idea of just giving additional benefits to those already receiving benefits is flawed in so many ways, yet this appears to be what teachers are teaching our children.

I’ve just returned from Germany where the benefit system enables those who do not wish to work to freeload off those who do. Of course, it does take care of the majority of genuine cases, people in need, but it also promotes a lazy lifestyle option. No wonder Germany and many other over-generous socialist economies are in decline.

Increasingly, I am encountering people who are asset rich but cash poor. The full old-age pension is barely sufficient to cover all bills yet many do not want to leave the family home that took so much blood, sweat and tears to create – and cannot claim support without risking their significant asset. I also meet many wealthy people who are incredibly lonely and vulnerable. I was in church many years ago and the priest asked us to pray for the poor. “Why does the church never ask us to pray for the rich?” I commented to my wife. Maybe as a society the church believes that having money answers all our prayers.

The point of this article is that vulnerability affects people of all backgrounds in all walks of life. Loneliness is not unique to the poor. Income hardship can affect those who work and do not receive benefits as much as those who do. Generally, if you are receiving full benefits, you are NOT financially vulnerable. It would be nice if the word vulnerable was used in the correct context going forward.

The cost of benefit support in Jersey has increased substantially over recent decades as we adopt UK practices, and this final paragraph has the potential to save us all many millions, and make our pension and benefit system more sustainable. Benefit fraud is a crime, and the maximum savings allowable before benefits are affected is £13,706 for a single person, and £22,718 for a couple. Under the proceeds of crime legislation, the banks have a legal obligation to report all crimes or suspicious activity. The payment of benefits by Social Security are made from identifiable bank accounts and persons receiving benefits who hold banking assets in excess of the minimum levels should, by law, be reported.

I am unaware that the JFSC or the banks treat their legal duty to do this with the attention it demands – this is a legal requirement not an option. Furthermore, following publication of this article any attempt to move savings funds should be blocked by the banks until full compliance is proven, otherwise from a money-laundering perspective the banks are negligent.

This may seem heavy handed, but I did not write the laws and it is about time the JFSC and banks took benefit fraud seriously with this simple cross-checking procedure. I do not want to pay for the failure of these bodies to meet their legal obligations. It would not surprise me if some banks actually sell investment products to perpetrators of benefit fraud.

If you are a banker or investment adviser please note – “the maximum savings allowable before benefits are affected is £13,706 for a single person, and £22,718 for a couple.” You have moneylaundering obligations and if you don’t report suspicious transactions you could find yourself in the La Moye Hotel.

• Ben Shenton is a senior investment director. He is a former politician, Senator, who held positions such as minister, chair of Public Accounts Committee, and chair of Scrutiny. He also assists a number local charities on an honorary basis, and can be a bit gobby.

‘‘ There would be nothing more unfair than a society that penalises those on low incomes who work but do not claim benefits

https://edition.pagesuite.com/popovers/dynamic_article_popover.aspx?artguid=34b9374a-2f72-4c0a-a7cc-f71d7ceccc27&appcode=JEEVPO&eguid=0a2af4af-3392-4668-a7f4-5d0f063c0aa4&pnum=24#

Comsure reply

https://www.linkedin.com/feed/update/urn:li:activity:7247243532514537474/?commentUrn=urn%3Ali%3Acomment%3A(activity%3A7247243532514537474%2C7247274109766615042)&dashCommentUrn=urn%3Ali%3Afsd_comment%3A(7247274109766615042%2Curn%3Ali%3Aactivity%3A7247243532514537474)

Hi Ben,

Thank you again for bringing another critical matter to the public consciousness. Regarding benefit fraud being a crime, it is, as you infer in your article, money laundering.

THE BENEFIT FRAUD IS MONEY LAUNDERING

• Money laundering is where 'criminal property' [e.g. money from social security] has been gained from criminal conduct [a predicate crime, e.g. benefit fraud], and the benefit is used and controlled by either the fraudster and or another [a third party includes a family member of the fraudster][also a THIRD PARTY could be a financial services provider that provides products and services]
• The FATF defines THIRD-PARTY ML as the laundering of proceeds by a person not involved in the commission of the predicate offence [benefit fraud]. 

Through COMSURE NEWS, I have been trying to highlight this matter for some years.

• https://www.comsuregroup.com/news/jersey-benefit-fraudsters-are-money-launderers-how-long-before-local-service-providers-are-checked/
• https://www.comsuregroup.com/news/3-396-12405-in-jersey-benefit-fraud-is-it-time-to-look-more-closely-at-money-laundering-risk-in-jersey/

The criminal and regulatory enforcement of Jersey's money laundering rules would suggest nothing to see here, as no one has been punished for facilitating benefit fraud. However, the number of benefit fraudsters caught over the years suggests the local financial industry.

So, as you say, “If you are a banker or investment adviser, please note—“the maximum savings allowable before benefits are affected is £13,706 for a single person and £22,718 for a couple.” You have money laundering obligations, and if you don’t report suspicious transactions, you could find yourself in the La Moye Hotel.

And don’t forget what FATF-Moneyval said about the lack of prosecutions for money laundering in Jersey ….!!!