Couples who pretend to live apart can gain up to £10,000 a year in benefits, according to a new book published by UK think tank the Institute of Economic Affairs. Written by sociologist and author Patricia Morgan, the book says that the scale of the fraud is the result of a Government policy which discourages couples from marrying or even cohabiting, dealing a “devastating blow” to family life.

The Government paid credits and benefits to 200,000 more lone parents than actually lived in Britain in 2004-5, the book claims. In some cases, couples can be up to £10,000 a year “better off” by lying about the status of their relationship.

The Office for National Statistics says there are 1.9 million lone parents, but the Government is paying out to around 2.1 million. The Department for Work and Pensions said “living together fraud” cost taxpayers £66 million in 2005-2006, equivalent to hiring 2,500 police officers.

However, £66 million only takes account of benefits, such as Income Support, and not tax credits which are administered by HM Customs and Revenue. If they were included, the fraud bill could be as high as £400 million a year, according to the Conservative Party.

Mrs Morgan, a visiting fellow at the School of Humanities at Buckingham University, said: “The temptation to pretend to live alone is enormous considering the sums involved and is particularly acute when the lone parent is on out-of-work benefits or a low wage.” The system, she says, incentivises marital breakdown.

“When a couple splits up and lives apart, or pretends to, the man’s income does not count against the mother’s benefit entitlement,” she said. “If the man is not earning, there is still an incentive to split up, since he can then draw benefits in his own right as a non wage earner, and have his own subsidised housing. Alternatively, if the couple pretends to split up, the man can receive benefit in his own right and live rent-free in the council houses provided for her ‘fatherless’ children while perhaps declaring that he lives with his parents.”

Mrs Morgan said family life had been discouraged over 25 years by both Conservative and Labour governments, while “strategic single parenthood” had been encouraged. Today’s Government was particularly harsh on single-earner couples who have to earn more than £50,000 before they suffer no economic loss from coming clean about their relationship, she said.

“In the Thatcher years, the Conservative government gave lone parents special financial benefits and priority entitlement to council housing. In the Labour years, the state increasingly became the child-care provider.

“The consequences are obvious – couples are strongly encouraged not to commit to each other because, by doing so, they will lose out financially. Both Conservative and Labour governments also removed any offsetting compensation in the tax system that had previously helped two-parent families.”

But penalising two-parent families had a “disastrous economic and social effect”. Couples who say they are “closely involved” are 12 times more likely than married couples to split up in the first three years of a child’s life.