The National Audit Office (NAO) has found the Department for Work and Pension (DWP) spent £154m in 2006-07 to identify an estimated £106m of fraudulent claims after examining six of the most important counter-fraud activities for their cost effectiveness.

NAO found the department had cut estimated benefit fraud from £2bn to £800m a year since 2000, but said DWP ‘could do more’ to be cost-effective.

By comparing known costs and benefits, NAO found cases of suspected fraud identified through the department’s data matching service were more cost effective than those generated by the hotline, identifying on average £24 per £1 spent compared with £16 fraudulent claims identified per £1 spent on the hotline.

‘Although some of the department's initiatives lead to earlier interception of overpayments and may deter potential fraudsters, I believe the department could do more to determine whether its activities are cost effective,’ Sir John Bourn, head of the NAO, said.

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