The Public Accounts Committee says that social security fraud costing the taxpayer up to 4 billion pounds a year is unacceptably high. This is equivalent to 2 p on Income Tax. The Committee believes that simplifying the system and the introduction of technology are the two key measures that should reduce the amount of fraud.A major area of fraud is Housing Benefit where responsibility is divided between the Benefits Agency and local authorities. Legislation is due to be introduced to provide a series of rewards and punishments for local authorities. There will be changes to introduce financial rewards for authorities who successfully prosecute fraudsters and those which institute new measures to stop fraud occurring in the first place.Each local authority will be set an individual target for the amount of fraud detected. The scheme is designed to impose financial rewards or penalties on performance against these targets. Authorities can earn additional subsidy by exceeding their target. If they fail to meet at least 75% of their target a financial penalty is imposed. The new framework will be in place from April 2001.
The powers of Benefits Agency officers have been recently strengthened and in Glasgow, officers are being trained as undercover investigators to catch out those engaged in benefit fraud all over the UK. Data matching and surveillance of suspected fraudsters is already successfully combating fraud. In May 2000 the Audit Commission revealed a powerful new technique for cross-checking data. It has used the technique to uncover 41 million pounds worth of fraud in local authorities and other public bodies