Efforts on benefit fraud at risk, says watchdog

Efforts to cut Britain's annual £2bn benefit fraud bill are being jeopardised by falling numbers of investigations con-ducted by the Government and local councils, the spending watchdog will warn today.

The National Audit Office said that the Department of Work and Pensions' "good progress" in cutting some fraud was in danger unless urgent action was taken to spread best practice around the country.

In its report, the NAO praised the department for reducing fraud and error in income support and jobseeker's allowance by 24 per cent since 1997, more than double its target of a 10 per cent cut. But it noted that there was also a 12 per cent reduction in the number of cases of suspected fraud accepted for investigation between 2001 and 2002 and a bigger drop in the number of referrals.

The NAO said that in 2001 and 2002, 1.1million higher-risk income support and jobseeker's allowance claims were subject to additional checks, 20 per cent down on the previous year. The fall was partly the result of a desire by regional offices to target efforts, investigating only cases based on better quality intelligence. But performance varies significantly between regions and bringing them all up to the highest returns would cut wrongly paid benefit by a further 22 per cent.

The NAO said: "The reduction in checks and investigations may jeopardise further progress towards the department's target to reduce losses from fraud and error."

The annual benefit fraud bill – equivalent to £80 for each household in Britain – includes up to £50m lost to criminals using fake identities. The main losses overall occurred in income support, jobseeker's allowance and housing benefit.

The report found at one point that 5.4 per cent of those claiming income support – 204,000 people – and 8.6 per cent of those claiming jobseeker's allowance – 86,000 people – did so fraudulently.

Edward Leigh, a Tory MP who chairs the Commons Public Accounts Committee, said: "While the levels of loss in income support and jobseeker's allowance have gone down, what causes me concern is that in some respects the department may be losing ground."