Fraudsters may be operating unhindered because of business indifference and dwindling police resources, warns the Fraud Advisory Panel.

It urged the Government to beef up local anti-fraud teams, which have suffered in recent years from a loss of experienced officers, to combat swindles.

It said there were only 600 police fraud investigators in England and Wales, each of whom could be called away to other duties at any time, compared to 869 in 1995.

The really big cases were dealt with but too many medium-sized frauds, worth up to £1 million each, and thousands of smaller ones were not dealt with.

The panel, an independent watchdog body set up four years ago with the support of the Institute of Chartered Accountants in England and Wales, said small businesses needed to be better informed about cheap and effective fraud prevention and detection techniques.

Forensic accountant Peter Silk, of the South-Eastern Society of Chartered Accountants, which represents the profession in Sussex, said: "Small business owners and managers tend to be more worried about the bank manager, the tax inspector and the auditor than the threat of fraud but they need to be more aware of the risks and how to prevent them."

The panel recently published the first comprehensive checklist of warning signs of fraud in small and medium-sized businesses and plans to do more work in this sector in the coming year.

With the annual cost of fraud thought to be about £14 billion,it said ordinary people needed to know fraud harmed everyone, not just the wealthy.

Mr Silk, who is based in Hastings, said: "Fraud impoverishes those least able to afford it, all too often leading to lay-offs, the loss of pensions and savings and lower pay rises.

"Tax fraud results in extra tax for everyone. Every time someone puts in an inflated insurance claim, premiums rise for the rest of us.

"Every time someone de-frauds a bank with a forged cheque or misuses a credit card, charges rise. Fraud is thought to cost the public 17 times as much as burglaries.

"It is vital businesses consider the risks and take action to tackle them."

Panel chairman George Staple, a former director of the Serious Fraud Office, said:

"Concern must be translated into action and sustained by the right attitudes in the long-term."

Business advisors KPMG said fraud had doubled in value in South-East.

In the first six months of this year, the number of convictions rose from five to 11 and the value of fraud jumped from £76 million to £147.6 million.

Paul Tombleson, director at KPMG Forensic said: "This half- year, our figures have shown a huge rise in the total value of fraud.

"We anticipate this will continue in the coming year or two as cases we expect to emerge from the current tough economic trading conditions come to court."

Nationally, the total value of fraud cases for the six months to June 30 increased by two and a half times to £255 million, compared to £111 million in the previous six months.

The value of fraud cases for the first six months of this year is already greater than the total (£224 million) for the whole of last year.

There was a startling jump in the average value per fraud case, up to £7.3 million compared to £5.8 million at the end of last year and £2.6 million at the end of June last year.

Management and employees were responsible for only 7.5 per cent (£19 million) of the total fraud value, which amounted to ten of the 35 cases during the six-month period.

In half of these ten cases, only one individual was involved. Most frauds (£236 million) were committed by external third parties.

Mr Tombleson said: "This external threat indicates the need for all businesses to make rigorous checks on the parties with which they do business.

"Often truth is hidden behind the fog of betrayal.

"To manage the risks presented by employee fraud, companies should ensure they have an effective fraud risk policy in place, a procedure for employees to blow the whistle and a realistic fraud response plan, all of which should be regularly updated."