Lilley launches attack on pounds 1.4bn benefit fraud

NICHOLAS TIMMINS

Public Policy Editor

A fresh attack on social security fraud was announced yesterday by Peter Lilley, Secretary of State for Social Security, as he published new evidence suggesting that one in ten claims for income support is fraudulent.

While "the vast majority" of people claiming were honest and entitled to their benefit, fraud in income support and unemployment benefit alone was costing the taxpayer pounds 1.4bn a year, Mr Lilley said.

People working while claiming benefit were the biggest single illegality, costing pounds 560m a year, while people claiming they were single while living as couples accounted for another pounds 450m, the study found.

Most fraud was committed by people pretending to be lone parents - 18 per cent of lone parent claims were fraudulent - or pretending to be unemployed. Eleven per cent of claims by the unemployed proved fraudulent. Just 4 per cent of claims by pensioners were false.

The figures are extrapolated from cross-checks and interviews on 6,000 cases that were conducted without warning by benefit staff. The study threw up under-payments of pounds 123m by the Benefits Agency, as well as fraud and over-payment.

The study was published as Mr Lilley announced a five-year strategy aimed at lopping almost pounds 1bn a year from the pounds 90bn social security budget by deterring rather than detecting fraud. Savings over the first three years should total pounds 2bn, he said.

The measures include computerised benefit payment cards; bar codes to detect stolen order books; a computer database linking all 20,000 post offices aimed at eliminating a pounds 150m loss through stolen order books and Giros; stronger identity checks; a million extra checks including 300,000 more home visits to new and repeat claimants - a system the Government axed in a civil service economy drive during the 1980s.

A programme to remove 10 million "live", but unused, national insurance numbers which social security staff can themselves use for fraud is also to be launched, and social security and housing benefit computers are to undergo a pounds 50m improvement scheme.

The new strategy was "a quantum leap from detection to preventing and deterring fraud", Mr Lilley claimed. "My aspiration is to wipe out fraud altogether." Until publication of yesterday's figures, "our efforts have been hampered by ignorance of how much fraud there is and what kinds", Mr Lilley said. At an estimated pounds 1.4bn, fraud was costing more than grants and loans to all students in England. The money saved could be used to cut taxes or help those in need.

Donald Dewar, Labour's social security spokesman, was careful not to attack the initiative, arguing instead that it was "remarkable" that it had taken the Tories 16 years to launch a systematic study of fraud. He said Mr Lilley "should blush as he now describes home visits - which his government has cut year by year - as the front-line weapon against fraud".

Sally Witcher, director of the Child Poverty Action Group, said: "We don't condone fraud, but we are concerned that the clampdown will be very intrusive. This will hit many people who are not getting the benefit to which they are entitled." Before using the savings for tax cuts, the Government should make benefits adequate, she said.

News Analysis, page 13