Fraud and error 'cost DWP £2.5bn'

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The NAO, in its report on the DWP accounts for 2006/07, said an estimated £690 million was lost to fraud, £1.01 billion to customer error and £850 million to official error.

Sir John Bourn, head of the NAO, said he had "qualified" the department's accounts - for the 18th successive year.

Sir John said: "Once again I have had to qualify my opinion on the Department for Work and Pensions accounts because of the significant sums lost to fraud and error: £2.5 billion or 2.1% in the last year."

But he added the department was working hard to improve the way it tackled fraud.

Commons Public Accounts Committee chairman Sir Edward Leigh said: "For the last 18 years, the story has been the same: the Department for Work and Pensions loses enormous sums of money to fraud and error and as a result has its accounts qualified.

"This year alone £2.5 billion have been lost. This might be a relatively small proportion of the total benefit bill but we must never become blase and accepting about the wastage of billions of pounds.

"Each year a grievous amount of money which could be put to so much better use is being lost to fraud and official error.

"The DWP is trying hard to stem the flood of money going down the drain and has made a little progress.

"But it remains of huge concern to our Committee that year after year billions of pounds are going into the pockets of people who are not entitled to them."