By Daniel Hunter

Benefit fraud fell last year — but more action is needed to stop the £1.2bn cost to the taxpayer each year, Minister for Welfare Reform Lord Freud said.

The Department for Work and Pensions (DWP) figures show total overpayments due to fraud and error stood at 2.1% of all benefit expenditure or £3.4bn over the last year.

"We are fighting the battle against fraud and making advances, but fraud in the benefits system remains a huge problem," Lord Freud said.

"We have given our teams more resources and more powers so investigators are now actively tracking fraudsters, using a mixture of the latest technology and old-fashioned detective work.

"From next year, Universal Credit will also make fraud much harder to commit and easier to trace quickly."

With the introduction of Universal Credit in 2013, the benefits system will be made simpler and the opportunities for fraud and error will be greatly reduced.

Universal Credit will also substantially reduce overpayments due to claimant error — which rose to a record high of £1.4bn in the last year.

Lord Freud added:

"Clearly something is dramatically wrong with the current system when more money is lost because of mistakes by claimants than because of fraud.

"With Universal Credit bringing together six benefits into one, the system will be much easier for individuals to understand, and less vulnerable to human error."

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