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4.46 pm
Mr. Chris Smith (Islington, South and Finsbury): I beg to move, to leave out from House to the end of the Question, and to add instead thereof:
- 'notes that after seventeen years Her Majesty's Government has belatedly begun to realise the extent of benefit fraud; further notes that its massive extension of means-testing in the benefit system, and introduction of increasingly complex procedures for the claiming of benefits, have made the fight against fraud more difficult; believes that Her Majesty's Government's proposed moves towards self-assessment procedure will further hamper both the detection and deterrence of fraud; congratulates the many Labour-controlled local authorities which have had substantial success in tackling housing benefit and council tax benefit fraud; regrets the inadequate support and liaison from government departments in assisting local authorities in this work; and believes that successful action against fraud is worth far more than repeated government rhetoric.'.
The Government have tabled an interesting motion.The most remarkable thing about it is that it started life in a rather more interesting form. The Government's original motion referred to
that is, from detecting and stopping fraud--
It later stated that the House
You will immediately notice two specific changes,Mr. Deputy Speaker.
Mr. Lilley:
The changes to which the hon. Gentleman refers were designed to make way, as I wanted to keep the motion brief, for our challenge to the Labour party to come up with positive proposals. We wait for it to rise to that challenge. I reiterated the target of £1.5 billion in my speech. The hon. Gentleman should therefore see nothing sinister in the brevity of the motion.
Mr. Smith:
I note that the Secretary of State was so desperate to reduce the size of the motion that he deleted "over" from the calculation of savings that he is achieving in the current financial year. He has given us, as set out in the answer in today's Order Paper, a figure of£1.5 billion as a "target". The right hon. Gentleman has used an important word.
The Government are all over the place on their estimated savings from fighting fraud. The Red Book, issued at the same time as the Budget, says that£2.5 billion a year will be saved by 1998-99. The following day, in his uprating statement, the Secretary of State for Social Security spoke about £2.5 billion over three years, so my hon. Friend the Member for Manchester, Withington (Mr. Bradley) immediately tabled a parliamentary question asking what the Government actually meant they would save: was it£2.5 billion spread over three years or £2.5 billion in one year? My hon. Friend still awaits an answer.
Mr. Michael Fabricant (Mid-Staffordshire):
For all those estimates of what might or might not be saved, in all the months that the hon. Gentleman has been a Front-Bench spokesman, and in all the years that his predecessor, now Labour Chief Whip, who is present, and his predecessor, the hon. Member for Oldham, West(Mr. Meacher), were Front-Bench spokesmen, what single constructive point did any of them come up with to counter fraud? Name one.
Mr. Smith:
I must take issue with the hon. Gentleman. The difference between £1.5 billion and £2.5 billion estimated savings from fraud is important. To dismiss the dubiety of the figures, as the hon. Gentleman does, diminishes the issue's seriousness. If he is patient for about a quarter of an hour, he will receive the answer that he is looking for, when I make eight specific proposals that the Government should be implementing, have not implemented and are not making, to assist the fight against fraud.
The other thing that the Government should take into account is how those figures of savings are calculated. Is the 32-week computation they use in calculating them sound? We need more clarity from the Government on what figures they are talking about, and whether£2.5 billion a year by 1998 is the figure to which they are working, so that we can test them against whether they will achieve it.
We know that, over recent years, fraud and error in the system have increased. The Comptroller and Auditor General has told us so. He has qualified his accounts on income support every year since it was introduced, and this year he said that the error level in the income support system was the highest ever. He identified, as the Select Committee on Social Security has in its report, a high and alarming level of fraud.
One of the reasons why fraud and error have increased is because of what the Government have done to the social security system. They have presided over the doubling of means testing. When they took office in 1979, 17 per cent. of benefit expenditure was means-tested; the figure is now 35 per cent. Inevitably, if one increases the amount of means testing in the system, one is bound to increase the scope for fraud. The Select Committee specifically identified that as an issue.
Mr. Lilley:
Would the hon. Gentleman reduce the amount of means testing in the system?
Mr. Smith:
The Secretary of State should consider paragraph 6 of the Select Committee report, which states:
That paragraph was amended and included in the report by the Conservative majority on the Select Committee. The Secretary of State should recognise that that problem is an inevitable consequence of the way in which the system operates.
Mr. Lilley:
Will the hon. Gentleman give way?
Mr. Smith:
I will give way, because it is the Secretary of State.
Mr. Lilley:
Will the hon. Gentleman now answer my question: would the Labour party reduce the level of means testing in the system?
Mr. Smith:
We are preparing a series of proposals to have a serious benefit-to-work strategy in the welfare system. That will make a fundamental difference to the problems that the Government's means-testing approach has brought to the system.
As well as increasing the amount of means testing, the Government have increased the system's complexity. The replacement of supplementary benefit by income support, the introduction of the jobseeker's allowance and of incapacity benefit, and the development of the social fund, the administrative costs of which amount to 61 per cent. of all the money that is allocated to the fund, have increased that complexity.
Ms Eagle:
Has my hon. Friend read the document recently leaked about the running costs review in the Department of Social Security? It considers self-assessment of benefit, having benefit claims decided over the telephone, and the loss of up to 20,000 jobs in the Benefits Agency, but it does not mention fraud. Is he worried that such changes will increase the scope for fraud in the system rather than improve the position?
Mr. Smith:
My hon. Friend is right. The Government are proposing a series of major changes to the Department's administration. We know that the Secretary of State is looking for 25 per cent. cuts in administrative costs over three years. In the wonderful jargon of the age, he calls it a "step improvement", but it threatens the Department's efficiency in the fight against fraud.
Mr. Robert G. Hughes (Harrow, West):
If the hon. Gentleman is so dismissive of what my right hon. Friend the Secretary of State for Social Security suggests, will he confirm that he wrote to the shadow Chief Secretary to the Treasury and said that those savings were feasible, given the scope for efficiency savings?
Mr. Smith:
I did not write to my hon. Friend the shadow Chief Secretary to the Treasury. The hon. Gentleman has misread his central office briefing. In his letter to me, my hon. Friend said:
I say just three things in response to the hon. Gentleman. First, my hon. Friend was reporting internal proposals in the Department of Social Security--he was not making his own proposals. Secondly, if the hon. Gentleman had taken the sensible step of reading the entire letter rather than the particular sentence presented
to him, he would know that my hon. Friend made clear in his letter the dangers and difficulties involved in any such process in such a time scale.
Thirdly, the hon. Gentleman needs to get his English right, because what is feasible is not necessarily desirable. If he reads the "Oxford English Dictionary", he will find that the word "feasible" is defined as "capable of being done"--not as "desirable", "worthy" or "admirable".
Mr. Patrick Nicholls (Teignbridge)
rose--
"benefit savings"--
"likely to amount to over £1 billion in 1995/96".
"endorses its future programme, which, through innovative techniques and additional resources, is expected to achieve£1.5 billion of benefit savings in 1996/97."
"In particular, means tests tend to tax effort, as benefit is withdrawn against rising income, to undermine savings, since accumulated savings disqualify people from benefit, and to penalise honesty."
5 Mar 1996 : Column 174
"savings in running costs of this magnitude are feasible".
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