Privateers are helping defraud the NHS of an estimated £5 billion a year, a former health service official responsible claimed yesterday.

Former NHS Counter-Fraud Services director Jim Gee said the official figures that show £229 million is lost to NHS budgets through false claims were "completely implausible."

The Con-Dem coalition is forcing through massive privatisations and axing £3bn from NHS budgets but doing practically nothing to stop fraud, a Panorama investigation screened last night revealed.

"We need to get on with tackling the problem, minimising its cost, maximising resources available for proper patient care," Mr Gee said.

In a report for the University of Portsmouth and accountancy firm BDO published soon, he found that the biggest areas of fraud were in payroll and procurement budgets.

Although the NHS has a budget of about £100bn, it is having to make significant savings and should prioritise fighting fraud, said Mr Gee.

"I think fraud is one of the last great unreduced healthcare costs. And, to me, putting money into it makes absolute sense," he said.

"It's one of the least painful ways of cutting costs. It makes absolute sense to cut the cost of fraud before you cut the quality or extent of patient services."

A former NHS manager interviewed by the Morning Star said contractors employed by the health service would charge the NHS 10 times the price they would charge other customers.

And enforced tendering meant that simple jobs such as changing a light bulb involved bringing in an electrician to do the job - costing around £80.

Royal College of Nursing general secretary Dr Peter Carter said: "For years the RCN has been warning about the levels of waste in the NHS.

"Tackling this fraud and dealing with its consequences would go a long way towards ensuring that the NHS can make savings without affecting patient care."

The Department of Health claimed it "did not recognise" Mr Gee's figures.