Brown's £1.16bn benefits cheats

Ministers have paved the way for what amounts to a charter for shirkers and cheats to exploit the system to the tune of billions of pounds a year by failing to scrutinise claims properly, warn critics.

Government figures reveal benefit fraud costs the taxpayer £1.1billion annually – a six-year high – but the real figure is likely to be much more as thousands of cheats continue to evade detection.

Incapacity Benefit fraud alone has multiplied sevenfold in three years while there have been huge increases in the cost of bogus claims for Housing Benefit, Income Support and Jobseeker’s Allowance.

Government action to stem the haemorrhaging of Incapacity Benefit payments has revealed the true extent of the problem, say analysts.

Initial testing of a new, tougher assessment to be rolled out over the next three years indicates that up to two-thirds of the 2.6 million Incapacity Benefit claimants, who receive a total of £12.5billion a year, would not qualify for handouts or would receive a smaller payment. The bill for Incapacity Benefit fraud may run into several billions, dwarfing the £70million claimed in a Department for Work and Pensions report.

Thirty years ago about 700,000 were paid the benefit if deemed unable to work through ill health or disability. Today recipients outnumber unemployment benefit claimants by more than three-to-one.

Official figures show that while Housing Benefit fraud cost the taxpayer £140million in 2005-6, that shot up to £260million last year, a rise of 85 per cent.

The bill for Income Support fraud rose from £200million to £250million over the same period and the cost of Jobseeker’s Allowance cheats soared by more than 160 per cent from £30million to £80million. The official £1.1billion benefit fraud bill has almost doubled in five years.

Mark Wallace, of the TaxPayers’ Alliance, said: “It is appalling that taxpayers have been paying benefits for so long to so many people who are in fact capable of work. The freeloaders who took advantage, and the politicians who saw this as a convenient way to reduce unemployment figures, should be ashamed of themselves.”

Shadow Work and Pensions Secretary Theresa May said: “Such breath-taking incompetence is unforgivable. At a time when so many people have been forced to rely on the state because of the recession it is simply not fair that others are being allowed to play the system.”

Work and Pensions Secretary Yvette Cooper insisted: “Those who can work need help to get back into jobs as soon as possible.”

A DWP spokesman added: “We have over 3,000 fraud investigators who caught more than 55,000 benefit cheats last year because we are determined to fight fraud in the benefits system.”