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Benefit applicants will be subject to lie detector tests under new plans annouced by Work and Pensions Secretary David Blunkett to crack down on fraud.

The announcement comes as an influential government report reveals that errors and fraud in the benefits system cost the taxpayers £3bn last year.

The anti-fraud strategy, to be unveiled later this week, will see voice recognition software deployed to detect when callers are lying to government agencies.

The use of Voice Stress Analysis, which picks up anxiety in the voice, is in common use in the insurance industry. However, doubts have been cast on its effectiveness. One American expert said that his studies showed "you could have obtained better results by flipping a coin".

Information given to agencies will also be constantly cross-checked by computer, with checks made on utility and credit card bills.

A spokeswoman for the Department for Work and Pensions said this would include reviewing suspects' subscription to satellite television.

"If someone is signed up for Sky Sports while claiming to be on the breadline, that will raise alarms," she said.

A shake up in the way investigators are organised, by splitting inquiries into criminal cases and compliance cases, is also expected.

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