Serious fraud officer

In the past few weeks there has been a good deal of debate in the press about the government's approach to tackling fraud in the social security system. We have frequently been wrongly criticised for our policy on funding local authority anti-fraud activity, and I would like to take this opportunity to set the record straight.

The opposition claimed in a Housing Today article (Fraud detection system costs millions in bogus claims, 21 January) that the DSS is making fraud detection more difficult. That claim is wrong. The government is continuing its fight against fraud in the benefits system, and we are doing this in partnership with local authorities.

It is because we are determined to tackle fraud, that my department will not pay money out to local authorities where they have little or no evidence of fraud. Local authorities get extra money from central government when they find fraud. The extra funding is based on the level of weekly benefit savings (WBS) detected.

The changes we made from 1 April, 1998 are intended to ensure that fraud investigations are rigorously carried out and that only genuine benefit savings are recorded. The main change we made was to reduce the level of WBS a local authority could score for discovering a claimant was no longer resident at a property. In the past many local authorities have visited a property, found the claimant gone, and then claimed that as fraud and recorded benefits savings.

It was not only my department that was concerned about the level of WBS being claimed. The National Audit Office, the Audit Commission and the Benefit Fraud Inspectorate have all been highly critical of the inflated figures claimed by local authorities in the past. The National Audit Office reported that "results suggest, at best, high levels of error when claiming weekly benefit savings and at worst, sharp practice by local authority staff".

Because of our concerns that local authorities were overestimating WBS, the rules were clarified to make it clear what counted as fraud and what didn't. And revised guidance was prepared in consultation with the local authority associations. Indeed many councillors have urged me to end a system that they admitted was misconceived and open to abuse. Of course some local authorities will complain. But I must ensure that public money is spent properly.

We need to do more to detect fraud. But just as important is preventing fraud in the first place. The old system almost encouraged fraud into the system so that it could then be detected.

We are determined to work with local authorities and provide them with the tools they need to combat fraud and abuse. But we want them to focus on prevention as well as detection.

On 23 December I announced an extra £100m for local authorities to implement tough new verification checks on housing benefit claims. This is a key measure to prevent fraud from entering the system in the first place. It will also promote consistent standards of administration across local authorities. All local authorities will be able to apply for extra funding to implement the new verification framework.

Last week I announced an agreement with the Royal Mail on a new scheme to stop the redirection of benefit cheques. Again this will help to block off a significant avenue of fraud. In future fraudsters who seek to have benefit mail redirected in order to claim at fictitious or multiple addresses will be unsuccessful. The post will be returned to the originating office for investigation. Again local authorities will be invited to make use of this scheme and we will fund it. Benefit Fraud Inspectorate will shortly produce a good practice guide based on their inspections to date. This will be sent to all local authorities.

I recognise the valuable work undertaken by many local authorities to detect benefit fraud. We are developing with local authorities a new approach to supporting investigators including common training standards. We also want effective sanctions in place to deter and penalise fraud. I have offered assistance with prosecutions to 100 local authorities in the form of access to departmental legal services.

These initiatives will help local authorities to get benefit payments right from the start of the claim, keep them right while the claim continues and put right any fraud or error that does occur as soon as it is detected.