Page last updated at 02:17 GMT, Tuesday, 20 May 2008 03:17 UK

Record level of benefits 'stolen'

Theft from the public purse ranges from parking spaces to benefits cash

Record levels of benefits and other public money are being "stolen" or overpaid, but authorities are not doing enough about it, says a report.

Some 140m of fraud or overpayments have been detected in England by a biennial Audit Commission study.

The figure - including 24m in housing benefit overpayment and fraud - had risen 26% since its 2004/05 findings.

It said some cases had been "blatant and shocking", but councils insist they are cracking down on illegality.

The Audit Commission has carried out the National Fraud Initiative (NFI) study every two years since 1996, and similar exercises are done in Scotland, Wales and Northern Ireland.

One case in this report revealed a Lincolnshire man was receiving council tax benefit, income support, incapacity benefit and disability living allowance, while running a market stall and sitting on savings of more than 100,000.

Some of the fraud is blatant and shocking - people are stealing homes, pensions, student loans, parking places and benefits, seemingly confident that no one is tracking them
Michael O'Higgins, Audit Commission chairman

He also ran other businesses from home, drove a Mercedes and took luxury holidays, said the report. Meanwhile his wife was claiming carer's allowance to "look after him".

While the report criticises some public bodies for not following up on the information it provides, in this case the council has begun proceedings to prosecute the man.

The NFI computer system searches for "anomalies" in records provided by public bodies, then passes on the information to those organisations so they can take action.

It matches information provided by councils, the NHS, police and probation authorities and fire services, from records such as housing benefit claims, payroll and pensions, disabled parking permits and social housing applications.

In some cases it uncovers fraud from within their own ranks, such as the 2,162 local government employees found to have been overpaid housing benefit in 2006/07.

Businessman's luxury life on benefits
'Homeless' woman sub-letting council houses
Widow claiming dead husband's parking pass

Anomalies found via the NFI could turn out to be deliberate fraud or mistakes that need to be corrected. In 24m worth of housing benefit overpayment found, 31% was classified as fraud, 62% claimant error and 7% local authority error.

The NFI is only one way of discovering fraud and mistakes - the total amount of housing benefit fraud was estimated at 760m for 2005/06.

The Audit Commission said its latest figures did not necessarily mean more fraud was taking place, but that more was being uncovered.

Commission chairman Michael O'Higgins said where there was fraud the crimes were by no means "victimless".

"Some of the fraud found is both blatant and shocking.

"People are stealing homes, pensions, student loans, parking places and benefits, seemingly confident that no one is tracking them. They are wrong.

"We urge all public bodies to put in place the necessary trained staff to work with us and follow up any matches. It makes both moral and financial sense to detect fraud and over-payment."

'Sophisticated methods'

The study focused on a range of services and also found:

  • More than 16,000 blue badge parking permits for disabled people were being fraudulently claimed in the names of dead people.

  • Nearly 160 public sector staff were working without a valid visa to work in the UK, and were dismissed or resigned. They were working in London councils, the NHS, probation boards and police authorities.
  • In 2,819 cases occupational pensions were being paid after the death of the pensioner, with overpayments exceeding 6m.
  • Payments from local authorities to private care homes for residents who had died were detected in 300 cases.
  • Councils form the biggest group of organisations providing information for the NFI, which will be extended to cover central government and private sector employees from October, although submitting information will be voluntary.

    Chairman of the Local Government Association Sir Simon Milton, said all councils had dedicated fraud teams, many of which had recouped "significant amounts of revenue and resources".

    "This report demonstrates that councils are working hard to crack down on illegal claims for benefits, council tax discounts, compensation and disabled parking badges."

    He said councils and the Audit Commission had increasingly sophisticated methods of detecting fraud, but also still relied on "law-abiding people to be their eyes and ears".

    Once council singled out for praise was Southwark, in London, which has so far recovered 30 properties after using NFI information about tenancy fraud.

    Crackdown on public sector scams
    15 May 08 |  Scotland
    Lost benefits millions criticised
    23 Jan 08 |  Northern Ireland

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