France’s plan to tackle welfare fraud

Three weeks after Gabriel Attal described tax fraud as “a tax on working French people,” the minister delegate for public accounts is now tackling welfare fraud, which he sees as “the means of maintaining control over our social model.” In an interview with daily newspaper Le Parisien published on May 29, Attal unveiled a wide-ranging plan to combat this multi-faceted fraud, including evasion of social security contributions and fraud involving healthcare and social security benefits. “Fighting against welfare fraud means reinforcing trust in the state’s word and power for every French person, and guaranteeing that everyone abides by the same rules,” said Attal, who wants to combine the fight against tax, social security and customs fraud.

Welfare fraud is not controlled by the finance ministry but by various welfare organizations, which makes it difficult to assess the amounts involved. Based on figures from France’s Court of Audit and the High Council for the Financing of Social Protection, Attal estimates the total amount of social security contributions evaded as a result of undeclared work at €8 billion; fraud involving social benefits paid out by the family allowance funds (family allowances, RSA (a minimum income for unemployed and underemployed workers), activity bonus, housing benefit, etc.) at €2.8 billion; fraud involving the pension funds of the general scheme at €200 million; and 3%-7% of certain health insurance expenditure. The Court of Audit estimates that social security fraud alone amounts to between €6 billion and €8 billion annually.

Nevertheless, the amounts recovered remain very low. The finance ministry hopes to double tax reassessments by the end of French President Emmanuel Macron’s second term. “In 2027, we will have twice as many results as in 2022,” said Attal. This applies to evaded social security contributions, with the aim of increasing them to €1.5 billion a year by 2027. In terms of social benefits, the target is set at €3 billion in “harm detected and avoided” and €500 million in healthcare benefits by 2024, that is “double the average for the previous five-year period,” according to the finance ministry.

‘Better cross-referencing of data’

To this end, the number of Social Security staff dedicated to combating fraud will be increased by 1,000 over the next five years. And €1 billion will be invested in information systems “to better cross-reference data,” said Attal. To prevent undeclared work, a reform of the collection of social security contributions from micro-entrepreneurs working for platforms such as Uber or Deliveroo should prevent them from under-declaring their sales. The undeclared amounts equate to €800 million, according to the finance ministry. From 2026 onward, these companies will be required to declare the revenues of the micro-entrepreneurs they employ, to make tax adjustments more reliable.

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