A STAGGERING Pounds 5.5billion has been overpaid to benefit claimants over the last five years, a report has revealed.

Those claiming Income Support, Jobseeker's Allowance and Pension Credit were overpaid by nearly Pounds 1billion last year alone thanks to fraud and error.

The overpayments to pensioners, the unemployed and those off work sick come on top of the chaos gripping the tax credits system which overpaid claimants by more than Pounds 2billion last year.

MPs and campaigners said the report by the Department of Work and Pensions based on figures from the Office of National Statistics is new evidence of ministerial incompetence and proof that the Government has still failed to get to grips with problems afflicting the complex system of means-tested state handouts.

The figures are contained in a report published on Thursday at the same time as the DWP which is responsible for the fiasco was busy publicising the new pensions White Paper. Pensioner groups warned that thousands of vulnerable pensioners and other claimants have faced demands to hand back the money upsetting the frail and elderly and pushing families towards the breadline.

The Pounds 1billion a year lost in overpayments would fund 36,000 new nurses, 30,000 new teachers, 26,000 policemen or 156,000 hip replacements. The lost money will cost the average British household Pounds 39.67.

The report reveals that fraud accounts for one third of the Pounds 1billion of overpayments. The rest is due to error.

Mistakes on the part of claimants accounted for Pounds 230million last year, up from Pounds 160million in 2001. Error caused by officials is now running at Pounds 380million a year, up from Pounds 250million in 2001.

Around Pounds 680million of Incapacity Benefit and Jobseeker's Allowance is estimated to have been overpaid, with another Pounds 280million of overpayments in Pension Credit making up a grand total of Pounds 960million.

The publication of the figures comes ahead of the

release next week of data on the performance of the tax credits system.

The National Audit Office has already warned that those figures will show that Pounds 2.2billion was overpaid last year thanks to fraud and government incompetence in Gordon Brown's flagship welfare scheme.

David Ruffley, Tory welfare reform spokesman, who uncovered the report, said: 'These latest figures from National Statistics expose the continuing incompetence of

Department for Work and Pensions Ministers.

'Over the last five years overpayments of Income Support, Jobseeker's Allowance and Pension Credit totalled Pounds 5.5billion due to fraud and error combined.

'Overpayments due to fraud and error have been running at Pounds 1billion a year, every year since 1997.

'Gordon Brown's fiddling with benefits causes confusion to claimants and complexity which fraudsters ruthlessly

exploit. Fraud and error at these levels are unacceptable.

Vulnerable claimants should not have to put up with government incompetence. We need a simpler, fairer benefit system.' The figures show that the Government is failing to meet its targets to reduce fraud and error in Pension Credit. The Government had a target to cut it by 20 per cent by March 2006, but it has only managed a reduction of 7 per cent.

Neil Duncan Jordan, of the National Pensioners Convention, said: 'The Government says it most wants to help the poorest pensioners but they are the people most effected by these problems.' A spokesman for the Department of Work and Pensions said: 'We have no control over the timing of the publication of national statistics. Any suggestion that this Government is complacent about fraud and error is rubbish.

'We are well on target to cut fraud and error in Income support and Jobseeker's Allowance by 50 per cent through a series of measures that resulted in nearly 9,000 successful prosecutions last year.' Comment Page 16