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.

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.

The publication of the figures comes ahead of therelease 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.