Benefit losses are 'astronomical'

Fraud on unemployment benefit has dropped since 1997

Benefits fraud and mistakes are so "astronomical" the figures are rounded up to the nearest half-a-billion pounds, say MPs.

In each of the three years up to 2003/4 £3bn was lost in fraud or error, says a report from the influential Commons public accounts committee.

The MPs say there has been progress in reducing the losses but it wants the system to be simplified.

The Department of Work and Pensions (DWP) says fraud is at its lowest ever.

The report comes after David Blunkett said the array of disability benefits was "crackers" and called the housing benefits system a "nightmare".

'Vivid reminder'

The committee says £2bn was lost in fraud and another £1bn in mistakes by benefits staff and customers in 2003/4.

And more recent estimates suggest the losses are about the same but the department believes fraud and error are now broadly equal.

Overall benefits spending runs at £109bn a year.

The National Audit Office has raised concerns about the DWP's accounts for 15 years running because of the scale of fraud and error.

We are not complacent and will be looking at innovative ways to track down the cheats James Plaskitt Anti-Fraud Minister

But losses from income support and jobseekers' allowance have fallen 38% since 1997/1998.

MPs' committee chairman Edward Leigh said: "The astronomical scale of the amount of benefit money being lost through fraud and error is vividly brought home to taxpayers by the astonishing fact that the figures are rounded to the nearest half-a-billion pounds."

He said there had been progress in cutting losses in the highest risk benefits.

"But fraud and error are unlikely ever to be brought under proper control unless benefits systems for both staff and customers are simplified," said Mr Leigh.

Staff errors are estimated to cost £1.5bn a year.

Morale fears

The MPs are worried that an efficiency drive due to cut 30,000 DWP jobs - a quarter of its workforce - will damage morale, lose skilled staff and make tackling the problem possibly harder.

They say the department was unable to find supporting documents for 106 out of 800 incapacity benefit cases checked by the National Audit Office.

That meant the benefit could not be administered properly.

But a new storage system is due to help the department find files.

Lie detectors?

Anti-Fraud Minister James Plaskitt said: "Fraud is at its lowest level ever thanks to our skilled investigators that use technology and the support of the public.

"But we are not complacent. We have got a new fraud strategy and will be looking at innovative ways to track down the cheats."

The department is looking at using credit reference agencies and "voice recognition" technology systems used by private firms - essentially lie detectors.

On errors, Mr Plaskitt said the benefits system was a massive operation handling 36,000 work focussed interviews every day.

"Estimated error accounts for around 2% of all benefits paid," he said. "This is still too high but we are working hard to drive it down."