Fraud witch hunt report finds Dutch gov’t was “blind to the people” & failed the public

Government institutions were blind to people and the law, crushing citizens in their fervent hunt for fraudsters. The Cabinet and parliament failed Netherlands residents, implementing organizations like the Tax Authority acted unlawfully, and the judiciary offered no protection, the parliamentary committee of inquiry concluded in its investigation into the government’s fraud policy. The political climate has become so harsh that this derailed fraud witch hunt continued for years largely unnoticed, the committee said.

“In a hardened political and social climate, the three state powers have been blind to people and law, causing lives to be crushed,” the report noted, with reference to the executive, legislature, and judiciary branches of government. “It is painful that the very system of social security and benefits that is intended to support people has destroyed those same people.”

The report depicts a bleak political climate in which almost every agency or organization that has contact with citizens because of benefits and allowances could pile up error after error. Politicians made bad laws and failed to improve them. Implementation organizations like the Tax Authority unjustly accused citizens of fraud for years. The judiciary held on to rules that were too strict for far too long. And citizens had no chance to defend themselves against the injustice done to them.

The committee mentioned the 2005 law for allowances for care, children, and housing - the General Act on Income-Related Schemes (Awir), which covers about 8 million people with monthly allowances - as an example. According to the committee, the government made an “accumulation of wrong choices” in this law, some of which have not been rectified nearly 20 years later.

Due to its massive size, the law does not sufficiently pay attention to protecting citizens. The Tax Authority was put in charge of implementation - an authority used to collecting money, not paying it out, and whose IT system could not handle the benefits system at all. The Tax Authority used advance payments, so citizens had to estimate their own income without knowing exactly what counted under the “income” heading. There was no possibility to deviate from the rules and no clarity on when exactly a citizen would have to repay the allowance.

As a result, people lost their entire allowance for the slightest error, such as a typo when entering a child’s date of birth. “This enabled the all-or-nothing approach which crushed people’s lives,” the committee concluded.

A law like the Awir could cause “a chain reaction of problems for people” due to all kinds of design errors, the committee said. And the people hurt most are the most vulnerable in society - those who need welfare benefits, low-income households, are hit hardest when they have to pay them back.

The committee again pointed out that the Tax Authority’s risk models also singled out single mothers and ethnically diverse parents. “That was no coincidence,” the committee wrote. “It followed from the way in which the risk selection was applied.” The Tax Authority considered these population groups as risks and therefore checked them much more often.

Over the past years, there were multiple indications that the legislation and regulations in this area are inadequate, the committee said. The Council of State, the Association of Duch Municipalities, and the National Ombudsman have all pointed out bottlenecks. But the government “failed to take these problems with the Awir seriously and to fundamentally change the law,” the committee said.

The judiciary also failed, according to the committee. The Council of State, the Netherlands’ highest administrative court, approved the all-or-nothing approach for years despite knowing the “disastrous consequences.” Parliament did no better. “The majority of parliament has failed in its legislative and supervisory task,” the committee said. The Tweede Kamer, the lower house of the Dutch parliament, approved the Cabinet’s “poor laws” and subsequently failed to correct the errors. That makes the Tweede Kamer partly responsible for the victims’ misery.

The committee said it would be “inexcusable” for the government not to learn from this disaster. Many errors are still in the system. “Without the right measures, changes, and safeguards, the next scandal could easily happen again.”

The parliamentary committee of inquiry questioned various politicians and former politicians, civil servants, and directors of implementation organizations in the autumn of 2023. Outgoing Prime Minister Mark Rutte testified twice, once about his role as former State Secretary of Social Affairs and once about his years as Prime Minister.

The interrogations revealed how the government services’ thinking about social security shifted from providing assistance to preventing fraud and abuse. At the same time, due to digitization and cuts to implementation organizations, citizens struggling to complete forms had less access to help. And the stricter fraud legislation resulted in implementation organizations taking tougher action against citizens’ often innocent mistakes.

The parliamentary inquiry is the toughest investigative instrument available to parliament. This one follows an earlier investigation into the benefits scandal, in which the Tax Authority unjustly accused thousands of parents of fraud with the childcare allowance and ordered them to repay the benefits they received. Many were left financially ruined. Hundreds of children were removed from their parental homes as a result. In 2021, the investigators concluded that the government did unprecedented amounts of injustice to these parents, prompting the collapse of the Rutte III Cabinet.