Last year, one of our employees was in a bit of a pickle.
She worked (impeccably) for us for the princely monthly part-time gross wage of around £500 per month (approx £6 per hour). As such, she qualified for housing benefit.
Now, not wishing to be condemnatory, she wasn't the most financially astute person in the country, but as genuine goes, there really couldn't be an equal. For two months she did a bit of overtime at our request, for which she was paid £148 and £112 respectively. Neither month brought her into even paying basic rate tax.
She didn't notify the benefits office. Foolish some might say, but then she's no accountant and it wasn't a huge sum. There is no way this person could possibly have been attempting to defraud the taxpayer (you'll have to take my character reference for that), she just didn't think about it.
Six months later, she received a letter stating that she was to present herself for an interview under caution for benefit fraud.
Scared witless, she spoke to me and I agreed to be her representative at the hearing. I read the documents she was sent and they were truly scary, as they are deliberately worded to be. Being a gobby shite who has defeated bigger fish than a council (actually, I've beaten my local council twice too, but that's beside the point), I wouldn't personally feel so much dread. She, however, was almost suicidal.
Having agreed to the gig, I read up on the process. I couldn't understand why it couldn't be resolved with a phone call from the council and a readjustment of her benefit payments. There is no way anyone could believe that such a small sum could be deemed intentional fraud, surely?
It didn't take long to find out why the council moved swiftly onto the 'interview under caution', without even a cursory attempt to solve the problem with less fuss, but more of that later.
In the days leading up to the hearing, I tried my hardest to stop her from worrying, but it didn't do a lot of good. She didn't sleep for nearly a week, was constantly crying, and really didn't help my business as her work suffered noticeably.
The day arrived and I drove her there. I wasn't allowed to actually speak unless the two council officers were contravening procedure (and I was gagging for them to do so), so I was forced to watch as they first read the girl her rights. Then they ceremonially unwrapped the interview tapes (two of them), before double-grilling her as if she had just mugged an old lady.
They were well-spoken and confident having conducted many of these interviews. My charge was shaking, tearful, and continually trying to emphasize that she was sorry and that she had made a mistake.
The continually proffered answer was that:
"Making a mistake is not a defence. If you are deemed to be guilty of benefit fraud, you may be prosecuted"
At the end of the hearing, my employee was left with three possibilities. That the transgression would be dismissed, that she would receive a formal caution, or that they would move to prosecute and land her with a criminal record.
It didn't help her mood much.
I tried to tell her, on the drive back, that they wouldn't enforce the court option as it was a trifling amount. Understandably, after such an ordeal, she wasn't as confident as I was. I did tell her, though, that she would receive a formal caution.
The reason I knew this was that, as mentioned previously, I had been reading up and, under the Anti-Fraud Incentive Scheme, brought in by those nice working class supporting Labour types in 2002, the council would be paid £1,000 for doling one out.

And that is what happened, after she had been subjected to an agonising two week wait. A formal caution was issued and her benefits were adjusted to pay back the ridiculously small amount that was overpaid.
She doesn't work for us anymore. Within a month of this, she quit and has probably gone back to staying at home, looking after her kid, and taking what the government gives without the possibility of being dubbed a potential criminal.
We lost a damn good worker, and the country pays more. Great.
So, onto Jacqui Smith. Here is what a local authority 'formal caution' is supposed to discourage.

My employee said sorry over and over again for the benefit difference of earning £260. She received a formal caution and was made to pay the paltry sum back.
Jacqui Smith deliberately steals £117,000 from taxpayers, says sorry, and gets to keep it without any recourse to criminal action - not even a formal caution.
Because some are just ... err ... more equal.