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6.41 pm
Ms Liz Lynne (Rochdale): There is no question but that benefit fraud is a huge problem in Britain today. Only now is the real size and extent of the problem coming to light. I find it incredible that, before last year, the Government had not conducted a survey on the extent of benefit fraud in Britain.
Mr. Heald: Britain was the first country in the world to do it. Was the hon. Lady suggesting it?
Ms Lynne: Yes. All hon. Members have been suggesting that we should find out how much benefit fraud has been going on. The Government have had17 years to carry out such a survey, yet only last year did the Department of Social Security actually decide to do so.
Ms Lynne: The hon. Gentleman said that it was their idea, but the Government he supports have had 17 years to implement it. According to the first major survey by the DSS of income support and unemployment benefit fraud, £1.4 billion a year has been wasted and one in10 claims is fraudulent. When we add the £546 million that is overpaid in income support alone--mainly due to official error--it is clear that there is an enormous waste of taxpayers' money.
This year, there was another Department of Social Security survey, which I welcome. I welcome the fact that, at long last, the Government are doing something about benefit fraud. The survey stated that £1 billion in housing benefit is wasted through benefit fraud--for which the taxpayer is paying--and that one in five housing benefit claims is fraudulent.
The fight has only just started. Most people think that benefit fraud is mainly down to individuals, but a survey in the January edition of Computing magazine estimated that overall benefit fraud was in the region of £5 billion and that organised gangs and terrorist organisations accounted for £1 billion of computerised benefit losses.I do not know how accurate the Computing survey was, but it is certainly interesting to consider that the extent of benefit fraud could be as much as £5 billion. None the less, we have to accept that criminals are not only ripping off the taxpayer, but financing further criminal activity.
Benefit fraud is a huge problem, but what is the way forward? We have to consider several possible solutions and look at the operation of the agencies and local councils. A parliamentary answer stated that theft in the Department of Social Security had quadrupled from the 1993-94 figure of £222,000 to £850,000 in 1995 and that housing benefit fraud was occasionally--although it is not widespread--down to local government employees.
The co-ordinator of the local authority investigation officers group said that 20 per cent. of housing benefit fraud could be internal. I do not know how accurate the surveys are, but we must take them into account. The Minister shakes his head. I should be grateful if he would tell us whether he agrees with the estimate that 20 per cent. of housing benefit fraud is internal.
We have only to look at what happened in Lambeth under the Labour-controlled council. In January, when the council was under no overall control, more than100 council staff were involved in a crackdown and anti-fraud measures were introduced. They faced accusations that they had been making fraudulent claims in housing benefit and income support. The workers were not the only ones involved. On 21 March, there will be a by-election in Lambeth because the deputy leader of the Tory group pleaded guilty to defrauding the council of housing benefit.
Local councils face a difficult problem, because many claimants move between different council areas. There is no way of checking on whether they are already claiming in another council area. Individual councils cannot address that difficulty alone, so I welcomed the announcement the Secretary of State made in January--whatever the figure is, whether it is £10 million or£8 million--that the Government are providing money to help local councils tackle those problems. I hope that they look into other such measures.
Hopefully--I say hopefully as the Secretary of State seemed unsure about when it might happen--a national register of council tax and housing benefit will be set up so that data matching by councils can be undertaken on a national basis. It has my full support, but it must be carefully monitored to ensure that confidential information is protected.
In answer to my recent parliamentary question about how those working in different benefit organisations had improperly used confidential information, I was informed that two employees in the Benefits Agency and one in the Contributions Agency had been dismissed. The figure relating to the Child Support Agency was larger. Since 1993, eight members of staff have been dismissed and10 have faced disciplinary action. Although the number is small, we must assume that the problem is wider--I assume that many fraudsters have not yet come to light. The Government already have generalised matching services for other benefits. It makes sense to extend those safeguards to income support, but mainly to housing benefit--but we must be aware of the pitfalls.
Home visits are another way of overcoming benefit fraud. I welcome the announcement that they are to be increased--they should not have been cut in the first place. They prevented many people from perpetrating benefit fraud. I hope that home visits will not be jeopardised by the staff cuts that the Secretary of State announced recently. I hope that the Minister will be able to give that assurance.
The Secretary of State announced that 1,100 Employment Service investigators are to go to the Benefits Agency. Will that represent an overall increase in fraud officers or a decrease? I am not sure of the number of investigators in the Employment Service and theDSS respectively and would be grateful for clarification.
Staff must be properly checked. Were the 100 or so Lambeth staff checked properly? I doubt it. Checks are particularly important in respect of staff tackling benefit fraud. The Government's response to the Social Security Committee report ruled out tighter training and closer scrutiny of staff dealing with benefit fraud in particular.I hope that the Government will change their mind, and I shall be grateful if the Minister will comment.
In another investigation by the magazine Computing, it claimed to have seen internal DSS documents showing that, in London alone, 120 staff were suspended for giving information to criminals, credit reference agencies, debt recovery groups and others seeking private information.I should like the Minister to confirm or deny the accuracy of that report when he winds up. It is vital that the situation does not worsen. If the DSS and its agencies fail to protect confidential information, and if some of its employees are on the fiddle, benefit fraud will become more difficult to tackle.
Mr. David Faber (Westbury):
I warmly welcome the opportunity to debate benefit fraud again. The debate recognises the extent to which fraud is perpetrated and its draining effect on the social security budget. I warmly congratulate in his absence my right hon. Friend the Secretary of State for Social Security on his excellent speech. He more than anyone has done much over the past two or three years, in his time at the Department of Social Security, to raise the profile of the fight against fraud. Sadly, we heard little that was new from the hon. Member for Islington, South and Finsbury (Mr. Smith).I was particularly disappointed at his reluctance to give way in his speech, after my right hon. Friend entered into the true spirit of social security debates by giving way to the hon. Member for Birkenhead (Mr. Field) on at least four occasions. I was sorry not to have the opportunity to intervene on the hon. Member for Islington, South and Finsbury because he used one quote from the Select Committee's report extremely selectively. I refer to paragraph 6, on means-tested benefits. The hon. Gentleman said that the Committee criticised means testing, but omitted the next sentence:
The hon. Gentleman would have done us all a favour if he had given the full quotation.
The most telling remark was that of the hon. Member for Birkenhead. When the Select Committee heard evidence on 7 February, he said that
Listening to the speech of the hon. Member for Islington, South and Finsbury, I wondered whether he was the colleague who had sidled up to the hon. Member for Birkenhead, to comment that the investigation was yet another shamefully right-wing decision by thehon. Gentleman. I pay tribute to the hon. Member for Birkenhead, as Chairman of the Select Committee. I have been privileged to serve under him since the beginning of this Parliament, and the hon. Gentleman has done more than any other member of the Committee to highlight benefit fraud and drive forward the Committee's investigations. My right hon. Friend the Secretary of State is due to give evidence to the Committee tomorrow. I am not sure whether that means that today's debate was well timed or poorly timed. It might have been better to have waited until hearing what my right hon. Friend has to say tomorrow, but I look forward to hearing his evidence.
I warmly welcome the mechanisms already put in place by my right hon. Friend, to some of which he referred today. On 10 July 1995, my right hon. Friend set out in his paper "The Right Money to the Right People" the extent of benefit fraud as the Department perceived it and his strategy for combating it. My right hon. Friend revealed in that paper, and did so again today, that fraudulent income support and unemployment benefit claims alone were costing a crippling £1.4 billion a year. He revealed that the review's investigators proved or found strong evidence of fraud in one in 10 cases. The largest proportion of income support and unemployment benefit frauds took the form of people claiming while working--a staggering £560 million of the £1.4 billion total. The second largest type of fraud, amounting to£450 million, resulted from people claiming to be single when they were living as a couple.
Those findings combined with others led my right hon. Friend to determine the new priorities for fighting fraud that he announced last July. What has been achieved to date? My right hon. Friend established the fraud strategy group, to co-ordinate anti-fraud work across the Department and its agencies. The Select Committee's fifth report in 1995 welcomed that recognition of the need for closer liaison.It heard evidence from the chief executive of the Contributions Agency that the group was "a genuinely useful forum" in which ideas and information could be exchanged under the chairmanship of a Minister. However, the Committee is also concerned to hear how liaison between agencies works at ground level. Later, I will touch on one or two of the problems that the Committee has identified from subsequent evidence, when further or much closer liaison could have been undertaken between the various agencies.
My right hon. Friend's announcements today go a long way to calming some fears. I particularly welcome the establishment of the benefits fraud investigation service, which will bring together the Employment Service and Benefits Agency in tackling the 30 per cent. of fraud in which an individual claims not to be working when he or she is doing so. My right hon. Friend has also established dedicated fraud teams at local level, about which the Select Committee has taken considerable evidence. I particularly welcome today's announcement that benefits fraud crackdowns will begin by area from April.
Last year's benefit reviews enabled my right hon. Friend to build on the work that had already been undertaken and to institute a new security approach, and we heard a good deal today about that success. I very much hope that such benefit reviews will be a continuing process, enabling the Government to measure the success of their strategy against the initial yardstick. My right hon. Friend's new security strategy has three key elements. Obviously, the first is to make the system secure. I have no doubt that the new plastic benefit card that he announced last year will make a considerable difference, but I echo one thing that the hon. Member for Islington, South and Finsbury (Mr. Smith) said.
We heard today that my right hon. Friend has gone out to the consortiums that will be asked to bid to produce the new benefit card. I hope that, in the wind-up or at some stage, we can hear a little more about the criteria that have been set for the consortiums. We await further details on how the card will work, and assurances and proof that the technology is proven, but surely the most important thing about the card succeeding is that the identifying factor, whether it is a photograph or whatever, is secure. I quote from Mr. Rob Elliot of the London boroughs fraud investigators group, who pointed out to us in evidence:
He went on to say, in response to the Chairman,who asked what we would need if we were in Utopia:
These questions will have to be considered, but it is very important that the identifying mechanism on the card is secure so that the public will have confidence in how it works.
Secondly, new guidance has been issued to staff who are at the sharp end--distributing the benefits--to improve the identity checks that they undertake. Thirdly, the number of checks to ensure that the correct amount of benefit is paid will be increased. Between July last year and the end of this month, an additional 1 million home visits will have been made by DSS officers to check the validity of claimants. It is worth putting on recordthe savings that have been made. Fraud savings for1994-95 were £717.6 million--up from £654 million the previous year and a welcome £64 million ahead of target. There is more to be done, however, as my right hon. Friend and, indeed, hon. Members on both sides of the House, acknowledged today.
The Select Committee is currently considering where the war against fraud could be tightened still further. Although it is currently looking specifically at housing benefit fraud, I shall highlight briefly one or two of the obvious areas of concern, some of which will undoubtedly feature in our report when it is produced.
"The alternative of universal benefits, however, would spread disincentives to seek employment and to save for future self-provision across the whole population, as well as being prohibitively expensive. Furthermore, all benefits are subject to fraud."
"when we announced as a Committee that we were doing an inquiry into benefit fraud, one of my colleagues sidled up and said, 'Typical! Another right-wing strategy from you.' It never struck me that being against fraud was actually a right-wing stance."
"In the case of a photograph, unless all photographs were collated and were able to be compared then I do not think that a photograph is secure . . . Some people might suggest that a fingerprint on an ID card might be a more secure method of doing it."
"I would not be adverse to providing both a fingerprint and a DNA sample."
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