Benefits to be held back in fraud blitz

THE GOVERNMENT is to save pounds 1bn by delaying social security payments to new claimants in its latest attempt to root out fraud.

In a strategy document to be published today, ministers will announce that Benefits Agency staff will carry out much more rigorous checks into the background of claimants before allowing them to receive state handouts.

The controversial move could mean lengthy delays in providing help to vulnerable people with genuine claims, welfare rights groups will warn. At present, new claims take about nine days to process, but the period could now be much longer.

Alistair Darling, Secretary of State for Social Security, is appalled that two out of five requests for income support are approved without proof of claimants' entitlement - and in some cases even without their identity being checked.

He believes the current system, under which benefit offices are set targets to process claims quickly, has added to the number of bogus claims.

Mr Darling will insist that genuine claimants have nothing to fear from his tough new regime. By giving the correct payments at the outset, taxpayers will save pounds 1bn during this Parliament, he will predict.

The new rules are part of a drive by Mr Darling to introduce a "change of culture" in the benefits system that puts the emphasis on preventing rather than detecting fraud. "In future, we will get it right and keep it right," a government source said last night.

For example, the Government will scrap the cash incentives given to local authorities to stamp out false claims for housing benefit, after evidence that the system encourages them initially to turn a blind eye to fraud. Instead, councils will be rewarded for preventing bogus claims in the first place.

Mr Darling will also order anti-fraud staff to launch more prosecutions. At present, many small-time fiddlers are let off with a warning, but Mr Darling wants to send a message that "crime does not pay".

In a further move, the Post Office will no longer allow Giro cheques to be sent to "PO Box" addresses or redirected to a different address to that of the claimant. This is aimed at preventing fraudsters making multiple claims.

Mr Darling will argue that Labour inherited "a mess" from the Tories, who allowed millions of inaccurate payments despite their repeated pledges to crack down on fraud. Estimates of false payments range from pounds 4bn to pounds 7bn, and the Secretary of State will set a new target for reducing the loss to the Exchequer. But he will admit that his measures will take some years to deliver.

Other proposals to be announced today include greater use of "data matching" between government departments, so that information held on individuals can be cross-checked. This is bound to raise concerns among civil liberties groups, as it abolishes the rule that information collected by the state for one purpose will not be used for another.

However, Mr Darling is confident of winning support for his new approach. "He does not believe it is right to allow people to rip off the system and the taxpayers," said one insider.