The government has little real idea about how much fraud there is in parts of the benefits system, according to an influential committee of MPs.

The Commons public accounts committee says the problem makes it impossible to gauge how well government is meeting its targets on cutting benefits fraud.

Benefits estimates

Social security budget: �100bn Fraud losses: �2bn Mistakes losses: �1bn

Estimates suggest that about �2bn of �100bn social security budge is being lost in fraud every year, with another �1bn paid out by mistake.

The MPs say ministers are making headway on cutting fraud on jobseekers allowance and income support but not enough is known about other benefits.

IT worries

Work is being done to produce better estimates of the amount of housing benefit being wrongly paid out and the MPs say such efforts need to be extended.

Even by 2006, fraud will top �700m for income support and jobseekers' allowance alone, the MPs warn.

Taxpayers' hard-earned cash continues to seep into the pockets of fraudsters at an astonishing rate

Edward Leigh Public accounts committee

The committee says there also needs to be more investment in computer systems aimed at reducing mistakes and identifying fraudsters.

It is disappointing that the Department for Work and Pensions' (DWP) IT networks will be made significantly better until 2006, complains the MPs' report.

Assessing progress

"The scale of the department's legacy systems and track record of IT failure, and the recent deferment of the new IT system for the Child Support Agency, do not augur well," says the report.

A Department for Work and Pensions spokesman denied they were complacent about fraud.

He said recent official national statistics showed they had reduced fraud and error in the two key benefits by 24%, saving �240 million.

He added: " We..realise there will be fluctuations on the way to achieving our targets to cut the amount of money lost each year to fraud and error - taxpayer's money which could be better spent on hospitals and schools.

"We are working hard to prevent fraud and error before it happens and detect it when it does and to change public attitudes by showing fraud is not a victimless crime.

"And we are taking a tougher line with fraudsters - and employers who collude with them - aided by new powers we have recently adopted."

Edward Leigh, who chairs the committee which produced the report, wants more reassurance that taxpayers' money is being properly spent.

The Conservative MP said: "For some benefits, such as child benefit and disability living allowance, the DWP has little real idea of how much fraud and error takes place.

"Until this changes, it will be impossible to tell whether they are making across-the-board progress in this vital area.

"Meanwhile taxpayers' hard-earned cash continues to seep out of the system and into the pockets of fraudsters at an astonishing rate."