Its not uncommon: if parents are charged (not even convicted) with fraud, or other criminal offenses, the social services automatically start to become involved - and often will default to "doing something" to "protect" the child from its "criminal parents".

Its a problem of incentives and metrics for the social service caseworkers - if they do not act, and "something happens", they get the book thrown at them.

If they do act, and there was no risk, well it was better to be "safe" than "sorry" right?

Basically there's zero negative outcome for the case worker or social service system when they break up a family or take a child into care.

There are negative outcomes if they fail to do so.

It largely didn't, despite the huge media outcry here that tries to make it seem as if children were taken away because their parents committed fraud. It's simply that there is large covariance between people being poor (and/or having other markers that make them susceptible to being swept up in this sometimes overzealous enforcement of the law) and being unfit parents in other ways (being unable to provide a roof over children's heads, unsafe/violent living conditions etc.) This angle is taboo though to the point where recording data that could show this relationship is forbidden by child protection authorities.

There probably are/were cases where the clawing back of previously paid out benefits pushed parents into territory where the circumstances for having their children taken away could develop. However there is little reason to suspect that out of all those who were involved in this and had their children taken away, had those children taken away because of that involvement - i.e. the '1100' number mentioned above.