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Benefit fraud costs £800m

08/07/2008

The government has been criticised for failing to clamp down firmly enough on benefit cheats.

A Commons public accounts committee (PAC) out today reveals the Department for Work and Pensions (DWP) has made some progress on tackling the ill of benefit fraud, but affirms more must be done.

A total of £800 million benefits expenditure was adjudged to be fraudulent – or 0.6 per cent of all that was spent.

Edward Leigh, PAC chairman, said: "Benefit fraud diverts public funds into the pockets of criminals and, in so doing, reduces our confidence in the benefits system.

"There has been progress: the annual level of such fraud reported by the DWP has fallen from £2 billion in 2001-02 to £800 million in 2006-07.

"But there are important areas where the DWP must improve its performance."

He explained the department needed a firm and coordinated approach where it detects attacks by organized crime.

He added: "It must get a lot better at tracking down and recovering fraud debt. And it should increase the deterrent effect of its investigation work by taking a much higher proportion of cases of potential fraud to court."

In 2006/07 only £22 million of £339 million known fraud debt was recovered, the report found.

Mr Leigh also lambasted the DWP over benefit errors.

"The estimated amount of benefit lost each year to error by customers and officials has nearly doubled over five years to almost £2 billion a year.

"This is not acceptable."

Error rates for Job seekers Allowance was found to be 2.1 per cent of all cash spent.

Responding to the report, James Plaskitt, DWP anti-fraud minister, said: "We have reduced fraud across the benefit system by almost two thirds since 2000/01. Benefit fraud is a crime and we are determined to catch those taking money that does not belong to them.

"In partnership with local authorities we achieved 51,000 prosecutions and sanctions in 2006/07 and, last year, recovered a record £272 million of overpaid benefit."