Labour promises war on benefit fraudsters

Labour will this week steal another traditional Conservative policy with a promise of a "crackdown" on benefit fraud and waste that is likely to draw on tough tactics pioneered in the US.

The move, which City consultants have told Labour could help save between pounds 3bn and pounds 5bn a year on the social security budget, will be followed by a visit to the US in August.

Chris Smith, shadow Secretary of State for Social Security, will launch his campaign tomorrow with a promise to tackle housing benefit fraud, which is estimated to cost the Government as much as pounds 2bn a year.

Mr Smith will promise that Labour will be tougher than the Tories in the battle against fraud.

Yesterday he said: "This is not something that is the preserve of the left or the right in politics. It is simple commonsense to make sure that social security money is spent efficiently."

His housing benefit initiative will include more personal visits by the authorities to verify that claims are genuine, a greater requirement on claimants to appear in person, and more cross-checking of payments to landlords.

Labour will ensure that landlords who make large housing benefit claims declare this income for tax purposes by informing the Inland Revenue.

Mr Smith argues that, for all their rhetoric, the Tories have been ineffective, particularly in taking on corrupt landlords.

In August he will visit the US, where the authorities can take away driving licences, benefit payments or the right to work in certain professions (such as medicine and law) from those who fail to pay maintenance or are suspected of fraud. Mr Smith, who was yesterday cautious about the more hard-line US policies, is particularly interested in "data-matching", where the different arms of government cross-check information on claimants.

Mr Smith, who said no decision had been taken on whether to pick up on US tactics, has held meetings with management consultants including Deloitte & Touche Consulting Group, who have worked with the authorities in the US. A spokesman for the company, which also advises the Government, said: "We believe savings in a variety of areas such as eradication of fraud, increased accuracy of payments and efficiency could total pounds 3bn- pounds 5bn."

Mr Smith's war on fraud provides a possible mechanism for freeing himself from the spending constraints of Gordon Brown, the shadow Chancellor. If he can promise large savings it will ease pressure from Mr Brown in other areas.