Leading article: The fraud dividend

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Benefit fraud has become everybody's milch cow. Frank Field, the House of Commons Social Security Committee chairman, believes it is so endemic the social security system could be reconstructed on the savings from a crackdown. Chris Smith, Labour's spokesman, eyes it as a source of extra spending. Peter Lilley has plans for savings of pounds 2.5bn a year.

Yet even MPs on the Commons Social Security Committee admitted at the launch of their report yesterday that their figure of one in five claims being fraudulent producing a pounds 2bn or more loss on housing benefit was at the upper end of the spectrum. But that fraud has been growing is scarcely in doubt. The Government's switch of housing subsidies from bricks and mortar to individuals on housing benefit has more than doubled rents in the growing private sector. Housing benefit is almost unique in that payments can be made direct to landlords for months at a time. The attractions of that to organised crime and dodgy landlords are obvious.

A decade and a half of persistent and high unemployment may well have created a new culture of benefit fraud. The entrepreneurial skills that once would have gone into work in some cases go into making a decent living by ripping off the system.

Fraud must be tackled. Nothing is more likely to undermine support for welfare payments than a widespread sense that taxpayers' money is being systematically stolen. Many of the select committee's recommendations are sensible. But an element of hysteria is creeping into the discussion as one politician after another trumps the latest estimate of how much is being lost. And extremely careful thought needs to be given before government considers loosening the requirements of the Data Protection Act. There are a raft of other measures to tackle fraud - not least the new benefit card, improved data matching and investigation within the existing law, and increased home visits. A police state is no answer to the problems of a welfare state.