Crack unit to target benefit fraud gangsters

COLIN BROWN

Chief Political Correspondent

An anti-fraud unit to spearhead a massive crackdown on organised fraud in welfare benefits will be called for by a Commons cross-party select committee following alarming evidence that the criminals are costing the taxpayer billions of pounds in illegal payments.

The Commons Select Committee on Social Security will warn that the anti- fraud officers may need Special Air Service-style training to defeat organised criminals, who are ready to kill to avoid detection. One officer was murdered last year when he detected a simple MoT tests fraud, which was believed to be the tip of the iceberg of organised crime.

Organised criminals are defrauding the Government of the equivalent of a 2p on the standard rate of income tax - about pounds 3bn a year from the pounds 92.5bn social security budget, according to Frank Field, Labour chairman of the select committee.

The committee will recommend that the agency should take over fraud from the Department of Social Security and have the power to co-ordinate anti- fraud action across all the main Whitehall departments.

Steps should include new checks on the use of national insurance numbers, including annual reports to millions of members of the public to show what claims are being made on their numbers. This follows evidence of widespread fraud, including one case in which a man who registered to become self-employed found his national insurance number was being used by a criminal in prison.

The committee will highlight housing benefit to landlords and tenants as one of the biggest sources of fraud needing special action. The full extent of such misuse is not known, but the committee was given evidence that landlords are drawing pounds 1m a year in housing benefit on behalf of their tenants.

"I think there should be SAS-type officers who will be trained and paid properly because they are increasingly going to suffer injury and possible death from these gangs who have had it too easy," Mr Field told the Independent.

There is evidence that the landlords engaged in housing benefit fraud are also involved in MoT test swindles. "It is a major business in which we are only seeing the tip of the iceberg," Mr Field added.

Housing benefit fraud is relatively easy to carry out: landlords file claims for fictitious tenants using false national insurance numbers; they may also involve tenants, moving them to flats in different local authorities to avoid inquiries.

Expenditure on housing benefit has soared from pounds 1.6bn in 1980-81 to pounds 12.2bn in 1994-5. It is paid to more than 3 million claimants, of whom 1.6 million were private tenants;1.8 million also received income support.

Mr Lilley, Secretary of State for Social Security, last week announced a crackdown on benefit fraud by targeting areas, but his critics believe this will result in highly publicised checks on individuals, such as some mini-cab drivers, but will leave untouched the "godfathers" of organised crime in benefit fraud.