New technology and greater scrutiny to feature in anti-fraud strategy

Key points

• 3 billion lost annually to benefit cheats and administrative errors

• Anti-fraud strategy set to crack down on benefit cheats

• Strategy could involve lie detector tests and tracking of shopping habits

Key quote

"If 2.8 million people are entitled to incapacity benefit at this moment in time but 700,000 were entitled to the equivalent 25 years ago, something very strange has happened to our society." - DAVID BLUNKETT

Story in full BENEFIT cheats will face lie detector tests and have their shopping habits tracked under plans to tackle the massive abuse of a welfare system that David Blunkett last night conceded was "crackers".

The Work and Pensions Secretary will unveil an anti-fraud strategy later this week which will include controversial measures such as cross-checking utility and credit card bills and voice recognition software to detect when callers are lying to government agencies.

But as ministers prepared to tighten up the system, a damning report from a powerful Commons committee exposed how bureaucratic bungling and benefit fraudsters were costing taxpayers close to 3 billion annually.

Although the government's main focus is on tackling cheats, the report highlights how half the wastage is actually down to administrative errors.

The new crackdown on incapacity benefits is being driven by Downing Street and Tony Blair is believed to have ordered ministers to slash benefits by as much as 40 a week, as well as introducing American-style time limits for claims.

However, opposition parties pounced on the announcement, saying it raised questions about what the government had been doing for the past eight years.

Mr Blunkett appeared to acknowledge the scale of the problem of encouraging people off benefits when he described the incapacity benefit system as a "minefield" at a Whitehall briefing yesterday.

The beleaguered Cabinet minister, who has faced renewed questions over his private life this week, also admitted the 13 billion housing benefit bill was a "nightmare".

He criticised the incapacity benefits and disability living allowance for their complexity, saying: "The system is crackers. So, we've got to cut through the whole plethora of complications that not only make it difficult for people to access what they are entitled to, but also open us up to error and substantial fraud.

"We've had sticking plaster on sticking plaster, and the consequence is that it's a minefield."

Many incapacity benefit claimants were being shuffled straight off income support or Jobseekers Allowance, he admitted.

And Mr Blunkett also made clear that GPs' ability to simply sign patients on to incapacity benefit "makes no sense at all" as there was "no proper assessment" of their potential to work.

The aim of getting 80 per cent of working-age people into jobs was "crucial" for the economy, especially in a society with an ageing population, he said. Mr Blunkett added that a strategy would be unveiled later this week to tackle welfare fraud.

With the decline of heavy industry, there should be fewer people today on incapacity benefit than during the last century, he said.

"If 2.8 million people are entitled to incapacity benefit at this moment in time but 700,000 were entitled to the equivalent 25 years ago, something very strange has happened to our society," said Mr Blunkett.

The minister's own father died from injuries sustained after falling into a vat of boiling chemicals.

Modern incapacity problems were more about mental health issues and stress, he said, and people were better off at work than at home. "If you watch daytime television at any length, we would all be in depression," he added.

On Thursday, the Department for Work and Pensions will unveil its anti-fraud strategy, using "21st-century technology" to tackle benefit cheats.

A shake up in the way investigators are organised, by splitting inquiries into criminal cases and compliance cases, is also expected.

The government will start a trial early next year using credit reference agencies to help pinpoint fraudsters.

A spokeswoman for the Department for Work and Pensions revealed this would include reviewing suspects' credit cards and subscription to satellite television.

"If someone is signed up for Sky Sports while claiming to be on the breadline, that will raise alarms," she said.

As government services became increasingly phone-based, technology such as voice recognition systems and lie detectors would be used. Computers would also continuously cross-check information held about claimants across government.

She added that, so far, fraud had been cut by half a billion pounds.

While Mr Blunkett and other ministers have publicly conceded that incapacity benefit numbers must come down, any heavy-handed clampdown will risk triggering a rebellion, particularly with Labour's reduced majority since the last election. Ministers could face a repeat of the damaging rebellions that greeted attempts to crack down on lone parent payments and introduce means testing for incapacity benefits in 1999.

Sir Malcolm Rifkind, the shadow work and pensions secretary, called for more details on the crackdown, saying it was "belated" and describing the minister's principles as "vague and superficial".

"It makes a mockery of a hugely important issue and looks as though Mr Blunkett is more interested in winning headlines than in taking decisive action," he said.

David Laws, the Liberal Democrats' work and pensions spokesman, warned that the Prime Minister's "meddling" with the system could intimidate disabled people, setting back the necessary reform process.

The government's crackdown comes as two separate reports exposed the scale of bureaucratic bungling and fraud: one highlighting the 3 billion lost annually to benefit cheats and administrative errors, with the other looking at the tax credit fiasco. Half of the 3 billion lost in benefits was attributed to staff errors in an investigation by the public accounts committee.

Edward Leigh, its chairman, warned that plans to cut 30,000 staff from the Whitehall department risked damaging morale and undermining attempts to tackle the massive fraud problem.

The amount of cash lost was "astronomical", even in a benefits system which pays out a total of 109 billion each year, Mr Leigh said.

The fraud and errors made in the tax credits system were highlighted in a separate report by the National Audit Office, which warned that the scale of the overpayments fiasco could be worse than the 460 million estimated earlier this year.

The Whitehall spending watchdog warned that the amount of money wasted and mistakes made remained "unacceptably high".

Even more cases of fraud and error are anticipated when the final figures for tax credits are published next year.

'Stressed-out people should get back to work'

PEOPLE who take time out of employment and claim benefits because of stress should get back to work, Mr Blunkett declared yesterday.

According to the latest official statistics, almost 13 million working days are lost because of "stress" every year. Those figures do not record people who have been formally signed off work and claim benefits because of the hard-to-define condition.

Mr Blunkett said he believes that Incapacity Benefit is now effectively being misused when it is given to people with non-physical complaints, since the payment was originally intended for those with bodily ailments that would preclude all forms of work.

"If people will reconnect with life, getting out, that is volunteering, being able to re-associate with the world of work, suddenly they come alive again," said Mr Blunkett, who faces an extremely heavy workload because of his blindness.

"That will overcome depression and stress a lot more than people sitting at home watching daytime television."