A government dossier has uncovered that two Department for Work and Pensions (DWP) benefits—Housing Benefit and Disability Living Allowance (DLA)—have been exploited by terrorists, hostile foreign agents, and organized criminal gangs. The report reveals that over £28 billion of taxpayers’ money, including various grants and Covid loans, ended up in the hands of adversaries such as Russia and Islamic State between 2015 and 2021.
Commissioned and produced by the Cabinet Office, the report was suppressed during the previous Conservative government but highlights a critical national security issue. Experts warn this misuse is part of a broader pattern of economic warfare, with hostile actors exploiting the UK’s financial systems to undermine its economic strength.
Rebecca Harding from the Centre for Economic Security emphasized that economic security has become a frontline in modern conflict. “We have been naive in assuming that all actors share the same values,” she said. “Foreign adversaries project economic power in ways that directly weaken ours.”
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The dossier also draws attention to criminal gangs, including those involved in human trafficking, who fraudulently claim Housing Benefit and Disability Living Allowance. Tom Keatinge of the Royal United Services Institute (RUSI) called for stronger government involvement in combating financial fraud tied to national security threats, describing the current separation of government and industry efforts as outdated.
Professor Nicholas Ryder, an expert in terrorism financing at Cardiff University and former adviser to the Home Affairs Select Committee, described the findings as “staggering.” He criticized successive governments for failing to recognize the clear connection between fraud and terrorist financing. “This is a direct threat to national security that has been consistently overlooked at a policy level,” he said.
In response, a Cabinet Office spokesperson stated: “This Government is taking unprecedented action to tackle public sector fraud. We have saved over £7.5 billion of taxpayer money in the past year through enhanced fraud prevention and recovery efforts. By leveraging better data and increasing specialist investigators, we are identifying and stopping fraud faster than ever.”