asked Her Majesty's Government:

What is their response to the recent National Audit Office report on the benefit system which estimated that £2.6 billion is lost through fraud and errors.

My Lords, the Government welcome the National Audit Office report. We are making progress in the fight against benefit fraud, but we are not complacent. There is more to be done to continue to drive fraud and error out of the system.

My Lords, I thank the Minister for that reply, but is it not a fact, as this report makes clear, that the gradual introduction of new benefits and the constant flow of changes have created a tangle of fiendish complexity? When will the Chancellor learn that benefits should be easy to understand, apply for and administer so that this scandalous amount of money lost through fraud and error can be properly allocated to those who are in genuine need?

My Lords, the aim should always be to reduce complexity, and that is the Government's aim, but there is always a balance between responding to the needs of individual clients and customers and administrative simplicity. Of course we are committed to reducing complexity. We have reduced the number of forms, and we are reducing the number of information leaflets for our customers. The introduction of contact centres means that many clients can actually process forms over the phone, helped by members of staff from my department. Progress is being made, but there is still some way to go.

My Lords, does my noble friend agree that this report is in some senses disappointing? It points out that complexity can indeed ensure and facilitate serious fraud, but on the other hand it says that simplicity may not be possible or desirable. As far as I can see—and perhaps he can reassure us—the only recommendation is that complexity on a regular basis should be studied. I assume the department is doing that.

My Lords, we always keep these matters under review, and will continue to do so. To be fair, although it is not for me to defend the National Audit Office, it seems to me that it has come to a pretty reasonable view. As I have already stated: yes, we want to reduce complexity, but doing so means you then have hard and fast rules that many clients will consider to be unfair. Over the years the rules are changed to make them more sensitive. As you do that, however, they become more complex, and there are then issues for staff in administering those schemes. This matter will continue to be addressed. We will do what we can to reduce complexity, but we also have to ensure that the benefit rules are fair as well.

My Lords, can I ask the Minister—

My Lords, it is the turn of the Liberal Democrats.

My Lords, is the Minister aware that £220 million was lost last year through errors in the complex pension credit alone? I hope that he is, since the figure comes from a report published by his own department last Thursday. Hopelessly complicated credit like that is not reaching 1.7 million people and it is wide open to errors. How much longer will the Government continue to treat pensioners as second-class citizens by making them claim what should be theirs by right?

My Lords, we must not anticipate the conclusions of the Government's consideration of the Turner commission report on pensions. It is all very well to have a go at pension credit, but it has enabled thousands of older people to get out of poverty. I continually come across older people who benefit enormously. As for error, we are of course committed to doing everything that we can to reduce it. There are programmes for staff training and for targeting those offices where the figures are disappointing. But in taking forward the debate on the pension commission report, we must not underestimate the good that pension credit has achieved.

My Lords, how much of the problem is due to a complete mess-up in the systems employed by the Department for Work and Pensions—much like the systems employed throughout government? When will there be joined-up government in looking at IT systems overall?

My Lords, there are mechanisms in place which enable people responsible for developing IT systems to compare and draw on good practice. The Government's gateway review ensures that departments who progress these schemes are subject to rigorous scrutiny. While problems are inevitable when introducing new systems, the fact is that my department's performance is improving enormously. The result is that through the use of contact centres, customers are able to get through to a service that can be delivered over the phone rather than having to come into Jobcentre Plus offices.

My Lords, does my noble friend appreciate that for many of us the change of attitude, particularly within the DWP, has meant that it is far easier for many people to obtain benefits than ever before—or, certainly, before 1997? Moreover, instead of crocodile tears about fraud and incompetence, should we not worry about the larger problem of those who are deterred from claiming? It is not all down to complexity; old-fashioned social attitudes are denying these people their entitlement to the decent benefits which the Government are now providing.

My Lords, my noble friend puts it well; I find it difficult to disagree. Surely, the question is one of rights and responsibilities. We must ensure that customers who are entitled to benefits get them in as straightforward a way as possible. Much of my department's work is designed to communicate that, and the work we have put into reducing the complexity of application forms also derives from that. My noble friend is also right that this Government have done much more than the previous one to deal with fraud and error.

My Lords, for many years the Comptroller and Auditor-General has qualified his opinion of the DWP's accounts because of unacceptable levels of fraud and error. Is it not therefore surprising that the latest PSA targets for the department have nothing whatever about tackling fraud and error?

My Lords, PSA targets have been set for the department to reduce fraud and error. I am sorry to say that the noble Baroness is quite wrong. In terms of the department's record, I can inform your Lordships that in the spending review of 2004, the PSA 10 targets relate to reductions in fraud and error concerning income support and jobseeker's allowance.

I regret that the accounts have been qualified. However, I would point out that they have been qualified for 15 years, going back into the Conservative government's performance.

My Lords, what proportion of these frauds and errors relate to those benefits that require NHS letters of recommendation? I should have thought that the system in place would have reduced such error and fraud.

My Lords, it is difficult for me to answer that. Letters from doctors are required for many benefits. I am sure that the noble Lord is referring particularly to incapacity benefit, which is an issue. He will know that we will shortly be bringing forward a Green Paper on welfare reform, part of which will encompass the relationship with GPs and the health service because, clearly, they have an important role to play.