How prison inmates were paid £17m in benefits by mistake

In a decade, £5 billion has been lost through fraud and error. Prisoners, students and those with jobs and money in the bank have all enjoyed payouts to which they were not entitled.

Since 1997, more than £17 million has been wrongly paid to prisoners, who are not eligible for many benefits during their incarceration.

Students have received £33 million while those who are in hospital for the long term - and are not entitled to Jobseeker's Allowance or Income Support - were handed £10 million.

More than £1 billion has gone in benefits to those who have jobs and are not entitled.

Prisoners are not entitled to Jobseeker's Allowance - worth up to £57.45 a week - as they are not available for work.

Nor are they eligible for income support, worth the same amount, or pension credit.

Help with housing costs is payable only to those on remand, awaiting trial or sentencing.

Inmates are not usually eligible for incapacity and disability benefits, the state pension, carer's allowance, industrial injuries benefit or maternity allowance.

The sums involved suggest that thousands of prisoners continue to receive handouts through fraud or error after they have been jailed.

Most full-time students are not entitled to claim social security benefits.

Tory work and pensions spokesman Chris Grayling said: 'I never cease to be amazed by how incompetent this Government can be.

'They are paying out vast amounts of taxpayers' money to the wrong people. It beggars belief that they would actually be paying out benefits wrongly to people in prison.'

The number of prosecutions and convictions have fallen every year for five years.

Prosecutions dropped from 11,584 in 2000-2001 to just 8,670 in 2004-2005. There were 11,403 convictions in 2000-2001, but only 8,573 in 2004-2005, a fall of about 25 per cent in each case.

Fraud and error in the benefits system costs each taxpayer about £100 a year, senior MPs say.

In a recent report, the Commons Public Accounts Committee said the total bill for 2004 was £3 billion. Half the money was lost because of mistakes by officials.

MPs concluded that the Government had little idea of how much was owed by claimants who had been overpaid.

Benefits Minister James Plaskitt said yesterday: 'Fraud and error was left untackled before 1997 because it wasn't even regularly measured.

Since then we have slashed in half losses to fraud and error in Income Support and Jobseeker's Allowance, saving taxpayers around £3 billion.

'A continuing, hard-hitting benefit fraud campaign is running alongside a new strategy aimed at taking out a further £1 billion of error.'