§ Mr. FieldTo ask the Secretary of State for Social Security if he will estimate the total amount of money lost through fraud to his Department's budget for 1997–98, indicating that amount as a percentage of the budget for that year; and if he will break down these figures by individual benefits. [73969]
§ Mr. TimmsThe Green Paper "Beating Fraud is Everyone's Business; securing the future" set out the difficulties of measuring a covert activity such as fraud. Previous work reviewing individuals' claims shows that at least £2 billion per year is lost through fraud. This figure is based on a sample of cases where we have obtained firm evidence or an admission of fraud. There are strong indications that a further £3 billion is lost. This figure is based on a sample of cases where there is strong suspicion, but it cannot actually be shown that the claimant was guilty of fraud.
In other cases still, claim reviews have raised suspicions that there could be fraud, but the evidence is weak—for example, where people have been observed to be living above their means. Cases of this kind account for a further £2 billion per year in benefit claims. In addition, customer and staff errors lead to about £750 million being overpaid each year and £600 million being underpaid.
£ billion Amount Confirmed fraud 2 Strong suspicion of fraud 3 Low suspicion of fraud 2 The annexe to the Green Paper showed the estimates of the levels of fraud available at the time. Since the Green Paper, we have published further estimates for Housing Benefit and Jobseeker's Allowance (Contributory). These estimated levels of fraud and strong suspicion of fraud at £610 million for Housing Benefit and £47 million for Jobseeker's Allowance (Contributory).
We indicated in the Green Paper that we intended to overhaul how fraud was calculated. Working with the National Audit Office, we have developed and refined our methodology. We now have a continuous monthly programme of reviews using random samples of Income Support and Jobseeker's Allowance (Income Based) cases in each area of the Benefits Agency. The results from the first six months were published in November and showed 595W around £640 million and £281 million fraud and error in Income Support and Jobseeker's Allowance (Income Based) respectively. We have further investigated those cases where there was strong suspicion that the benefit was wrong to see whether the payment was in fact wrong. The results of this investigation will give a more complete picture of fraud and error in these benefits.
We shall extend this new methodology to other benefits to provide a complete picture.