Housing benefit fraud investigators have estimated that they will lose up to pounds 200ma year because of a little-known circular issued by the Department of Social Security.
Town halls are reporting a 60 per cent drop in the level of fraud detection as a result of the new DSS rules that tightened the rules of evidence. Until last year, a "balance of probabilities" system operated and investigators could suspend benefit on suspicion of illegality and provide concrete proof later.
The DSS circular informed councils that they would no longer be compensated for money lost to fraudsters unless they provided surveillance and other evidence to prove that the fraud was deliberate.
Councils claim that the Government has "changed the goalposts" in a bid to save itself millions of pounds while claiming that fraud was dropping. Anti-fraud units across the UK claim the new system penalises them and could result in job losses or rises in council tax.
Senior Tories are set to raise the issue in the Commons today, when they will claim the circular proves that ministerial rhetoric on tackling fraud is not matched by reality. Iain Duncan Smith, the Conservative social security spokesman, said that the DSS change was an "outrageous" example of the Government watering down the campaign against fraud.
"We always worried that Labour was soft on benefit crime and this proves it. This circular is a politically motivated sleight of hand to save the department millions," he said.
Mr Duncan Smith claimedthat the Social Security minister Angela Eagle had misled the House of Commons on Monday when she denied that anti-fraud strategies had been watered down.
Alistair Darling, the Secretary of State for Social Security, denied the Tory charges last night. "Since I arrived at the DSS, I have ended the `money for nothing' culture. The new system of housing benefit fraud targets produces real fraud savings not fictional ones. In the next few weeks I shall be making a major announcement on my anti-fraud strategy."
A spokeswoman for the DSS said that the changes had been introduced after claims that some councils had been over-claiming the level of fraud in their area. pounds 100m was being directed into improving fraud prevention for local authorities. The total amount of money saved by local authority fraud investigation units in 1997-98 was pounds 342m, with the majority of town halls saving nearly pounds 2m each on average.
The National Audit Office reported this week that there was "no evidence of any improvement" in stemming the losses from benefit fraud suffered by councils.Reuse content