It's only a laptop. Nobody will notice. Until a colleague drops you in it ...

Alan Davis has a highly responsible job in the City but was suspended last year for taking a laptop computer from his office. "We had all been given new laptops and the old one's had been lying around for weeks so I just took one. I didn't really think about it, I thought it might come in handy but I didn't want it desperately."

Unfortunately for Davis, a colleague reported him to his superiors and he was suspended from his job. "It was excruciatingly embarrassing because all my colleagues knew. I was off work for a week and then after a thorough dressing down they told me to come back to work and no more was said about it," he says.

Davis readily acknowledges that he was extremely lucky. "I kept my job only because I am very valuable to the company."

The City is generally associated with sophisticated fraud rather than petty pilfering, but general theft is still a big problem. "Staff will take anything that moves. Mobile phones, pictures, big expensive pot plants, even chairs and filing cabinets. We've even had someone take components out of the computer on his desk so that he could upgrade his computer at home. It is amazing what they will walk off with," says one security chief for a major City firm.

Theft by employees is estimated to cost British industry one billion pounds a year and the Association of British Insurers says that its members receive claims totalling pounds 200m a year for computer equipment alone.

Ian Johnson, group managing director of independent security and crime risk management consultants Ian Johnson Associates, says: "Theft in the work place is an ongoing problem. It's not just fraud but pilfering of one kind or another. The problem is that high-value items such as laptop computers are highly portable so the opportunity to take them has increased."

Staff don't just steal moveable items they also use office phones for their personal use. One City firm found that a temporary secretary had run up a phone bill of pounds 1,500 on foreign calls in the space of three weeks. Other staff spend hours on the Internet not just avoiding the work that they should be doing, but running up large phone bills.

But staff don't just steal items for their own use or abuse the phone system. A security expert says, "Some employees have been known to work with outsiders to help them steal computer equipment to order. They give details to professional criminals on where the equipment is and are then paid for their help."

But if theft is a problem in the City, it's even worse in the retail sector. The British Retail Consortium (BRC) says that between 1995 and 1996 customers stole stock to the value of pounds 653m while staff stole pounds 386m worth of goods.

Mike Shuck, assistant director of retail crime and security at the BRC, says: "The average basket of goods a customer takes is worth pounds 42 but for staff it's pounds 1,200. It's staggering and that is the stuff that we know about."

He says that staff have every opportunity to steal because they know how the security system operates and understand stock and cash procedure.

But now employers are fighting back. A growing number have taken basic precautions, such as preventing office staff from making overseas calls, or are running software programmes that can track which internet sites staff are visiting and tot up how many hours have been wasted on "Cyberskiving".

Others are taking a more sophisticated approach and are installing closed- circuit television (CCTV) and miniature spy cameras to keep an eye on staff. Police officers, postal workers and hospital staff are among those that have been caught stealing from their employers.

Ian Johnson says, "More and more companies that we work with are installing covert cameras because they suspect that items or information is going missing."

The BRC's Mr Shuck says, "Covert cameras are often installed when a company suspects a particular employee of wrong doing and needs some concrete evidence.

But cameras in the work place are a highly sensitive issue. They not only record employee theft but also misdemeanours of an altogether different kind, as Steven Powell, a City worker, says, "I can understand why we have security cameras all over the place but unfortunately I was filmed having drunken sex with a colleague in the company car park. Everybody thought it was very funny but she hasn't spoken to me since."

Peter Lilley of security consultants Carratu International says that while covert surveillance can be very effective, "using cameras is a very emotional and sensitive issue".

Cary Cooper, professor of organisational psychology at the University of Manchester's Institute of Science & Technology agrees, "Cameras at work create an atmosphere of mistrust and employees feel that there is no trust or support and it heightens their feeling of job insecurity."

And Dr Jane Sturges, research fellow in organisational psychology at Birkbeck College, University of London, says that rather than install security cameras, companies should examine why employees steal in the first place.

"Employees may expect certain things from employers but they may feel insecure or feel that they are not valued or remunerated and stealing is a way of retaliating. They may feel that there has been a breach in the psychological contract with the employer and so are tempted to take things," she says.

James Reed, chief executive of Reed Personnel Services, says that one of the reasons that staff steal is because it is increasingly easy to do so. "In many companies employees have more opportunity than ever to commit crime due to the increase in responsibility given to them by modern organisations," he says.

In the US, where crime in the work place is rife, companies are beginning to assess the honesty of employees before they are even offered a job. As well as thoroughly checking their references, potential employees are asked a series of questions designed to test their attitudes and behaviour. These include "Does everyone steal a little?" to "How many people cheat on their income tax returns?". The test also includes a scale to measure the extent to which an applicant may be presenting an artificially positive picture.

However, organisational psychologists say that the honesty tests prove nothing and that their use in the UK is likely to be limited.

Mr Reed says that rather than using honesty tests companies are attempting to deter theft by making an example of those who are caught. "They are likely to be extremely hard on current employees who break the rules, whether fiddling expenses or committing serious fraud. With this in mind, anyone who has a record of dishonesty can expect to find increasing difficulties when looking for work."

A fact which is not lost on Alan Davis who says, "Since I was caught I don't even make personal phone calls from the office and rarely claim expenses I've got to be whiter than white."

The names in this article have been changed