Hundreds of doctors and health service managers are being questioned in a Fraud Squad investigation of the theft of at least £27m from the NHS.

Hundreds of doctors and health service managers are being questioned in a Fraud Squad investigation of the theft of at least £27m from the NHS.

So massive is the scale of health service fraud that its full extent remains unclear but, with an annual budget of £44bn, the police suspect total losses could be as high as £3.5bn. A recent study of prescription fraud revealed that between 3 per cent and 8 per cent of annual budgets went missing.

The health service is so concerned it is now preparing to train middle managers in crime busting techniques.

"They will be taught investigative interview techniques, surveillance and the law," said Jim Gee, who heads the Government's drive against NHS fraud.

His officers and fraud squad detectives are currently investigating 436 cases of suspected fraud involving 450 people. "The more we look the more we find," he said.

It is thought that GPs and pharmacists account for the bulk of the fraud - often working together to make false claims for drugs or non-existent patients.

Mr Gee, who heads the NHS Directorate of Counter Fraud Services, said that 126 general practitioners, 12 hospital doctors, 10 consultant surgeons, 35 dentists and 23 opticians are under suspicion, along with a number of pharmacists, contractors and patients plus 16 "miscellaneous individuals".

One east London GP was making over £80,000 a year claiming for dozens of non-existent patients whose "addresses" turned out to be houses bulldozed to make way for a motorway flyover.

Last month GP Roland Hankin appeared before Dorset magistrates charged with defrauding the NHS of more than £1m by allegedly issuing fraudulent prescriptions and invoices over an eight-year period. His case was adjourned until 26 September.

In June, GP Ashok Bhagat and chemist Zia ul Haq were jailed for nine months and 21 months respectively for conspiracy to defraud Durham health authority out of thousands of pounds.

One dentist under investigation is suspected of pocketing £2m last year by making false claims recalling patients for treatment.

Dentists are paid £50 each time an NHS patient is recalled. The dentist, who owns a string of practices in the Midlands, is alleged to have submitted claims for multiple recalls, including 96 in one day.

The police struggle to cope with health service fraud which is highly complex and time consuming to investigate. Cases can take three years to come to court only to be thrown out on a technicality.

Every year 530 million prescription forms are used - regarded by some officers as "blank cheques". New easier-to-trace forms with watermarks and serial numbers are now used and in April a "whistleblower's helpline" was launched.

Detective Superintendent James Perry, who leads the Metropolitan Police public sector fraud squad, said closer co-operation with NHS fraud- busters was paying off.

"We had a 68 per cent conviction rate last year and we hope to better that this year," he said.

As of June this year across the NHS in England and Wales 24 cases resulted in convictions and custodial sentences, 36 are awaiting trial, 20 are ongoing civil cases and 50 people have been disciplined or dismissed.

Mr Gee said that the NHS, the largest employer in Europe with its hundreds of hospitals and health authorities, has been seen as a soft touch.

"A small number of people hold the NHS in contempt and think they can milk it to their own ends. They seem to think of it as a victimless crime. That isn't true - it should be used for health care."