STAFF fraud is taking its toll on small businesses in the North-west, it is claimed.

Research from Eagle Star Small Business Direct -- part of its Safer Office Campaign -- found that one in 20 small firms across the country admitted to experiencing problems with employee fraud and dishonesty.

Staff pilfering accounted for 46 per cent of the fraud cases in the UK and in nearly one in ten incidents devious employees had set up false accounts in order to siphon funds.

Mr Steve Wilson, Managing Director of Eagle Star Small Business Direct, said: "The bottom line is that businesses need to establish a positive working environment that gives their staff responsibility and trust, while also ensuring that there are adequate procedures to prevent them from stealing."

Eagle Star offers an optional fidelity cover which insures office-based businesses against employee fraud or dishonesty.