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House of Commons

Tuesday 19 March 1996

The House met at half-past Two o'clock

PRAYERS

[Madam Speaker in the Chair]

Oral Answers to Questions

SOCIAL SECURITY

Benefit Fraud

1. Dr. Spink: To ask the Secretary of State for Social Security what further action he plans to take to reduce benefit fraud. [19699]

The Secretary of State for Social Security (Mr. Peter Lilley): As I announced to the House on 5 March, I am creating a new benefit fraud investigation service, which will bring together almost 5,000 specialised staff from the Employment Service and the Benefits Agency. I announced yesterday the first three areas to be selected for a programme of local month-long anti-fraud drives.

Dr. Spink: Does my right hon. Friend agree that benefit fraud takes money not only from the Exchequer but from vulnerable people? Will he therefore address the important subject of political benefit fraud, and avoid following the Opposition's policy of thinking the unthinkable and spending the unaffordable, which would perpetrate a massive fraud on the people of this country? Does he think that that is a fair description of the Opposition's social security review?

Mr. Lilley: I entirely agree with my hon. Friend that the Opposition have been trying to perpetrate a fraud on the British people over social security. They have systematically voted against and opposed every social security reform that we have introduced, yet at the same time they try to pretend that they are fiscally responsible.

Mr. Bradley: Clearly, we welcome those belated measures to try to combat fraud--after the Government have been in office for 17 years. At Question Time on 23 January, I asked the Secretary of State exactly what his fraud targets were for each of the next three years. He said that he could not respond immediately from the Dispatch Box, so I wrote to him. He acknowledged my letter on 8 February, but I have had no reply to my question. Will he tell us today exactly what his yearly fraud targets are for each of the next three years?

Mr. Lilley: I am sorry that the hon. Gentleman did not take the reply that I gave him in debate, but I can tell him now that the overall fraud target for 1996-97 is £1.8 billion, and that for 1998-99 it is £2.5 billion. For the current year the target is £1.38 billion.

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Mr. Waterson: Is my right hon. Friend aware that, in my constituency of Eastbourne, since the push on fraudulent claims began, it has been found that fraudulent housing benefit claims are running at more than £1 million a year? Is he aware that my constituents who pay their taxes and do not claim benefits fraudulently are sick and tired of underwriting such activity?

Mr. Lilley: My hon. Friend makes a good point. The people who most support the attack on fraud and abuse are those on modest earnings who honestly pay their way in society without claiming benefits to which they are not entitled, and who greatly resent seeing others who achieve a standard of living not far below their own by abusing the benefit system. I am delighted that, in my hon. Friend's constituency, as elsewhere, we are being successful in cracking down on that abuse.

Income Support Assessments

2. Ms Eagle: To ask the Secretary of State for Social Security what was the error rate for income support assessments in (a) 1988 and (b) 1995. [19700]

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): It was 13.5 per cent. in 1988 and 16.1 per cent. in 1995.

Ms Eagle: Will the Minister confirm that the value of the errors has increased, as they involved 2 per cent. of overall expenditure in 1988, but now involve no less than 5 per cent. of all expenditure on income support? Will he also confirm that, since income support was introduced, the Comptroller and Auditor General has qualified the accounts every year since 1988 because the Department cannot deliver income support properly? How, then, does the Secretary of State justify the recent plans to cut the cost of administering Department of Social Security benefits by 25 per cent.?

Mr. Evans: Income support is a complex and well-targeted benefit, involving repeated change-of-circumstances considerations. Since 1988, the number of claimants, of cases and of changes in circumstances, as well as the total sums involved, have increased substantially. The change programme is designed to be a medium to longer-term remedy. In the shorter term, on most analyses the greater part of the errors appear to arise from income support mortgage interest payments, and the move towards a standard rate introduced last autumn should have a material effect on that aspect. The intention of the change programme is to provide a better service, with modern information technology and an altogether different approach to the organisation.

Mrs. Roe: Will my hon. Friend confirm that the objectives of his change programme include not only improved efficiency, but making fewer errors? Will he also confirm that the changes were opposed by the hon. Member for Islington, South and Finsbury (Mr. Smith) on the ground that they would not work, although he had received a letter from the shadow Chief Secretary describing them as perfectly feasible?

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Mr. Evans: My hon. Friend is certainly right about both points. We are mystified by that contradiction.

Mr. Frank Field: Will the Minister tell the House the date by which he expects income support to get unqualified support from the Comptroller and Auditor General? Surely that is what taxpayers require from the Government.

Mr. Evans: We have introduced measures on a scale previously unknown. I am not in a position to give a date as requested.

Occupational Pensions

3. Mr. William O'Brien: To ask the Secretary of State for Social Security what plans he has to assist people to retain more of their occupational pensions; and if he will make a statement. [19701]

Mr. Roger Evans: By their very nature, income-related benefit schemes normally take account of most forms of income, including that from an occupational pension; hence, it is only right that entitlement to those benefits should reduce as income increases. However, from April 1996, in line with Department of Health changes to the charging rules for people in residential care, people whose care costs continue to be met by income support may have 50 per cent. of their occupational pension disregarded where they remit at least this amount to their spouses who remain in the community.

Mr. O'Brien: Is the Minister aware of the situation in my constituency of retired mineworkers who are entitled to an 80p a week increase in occupational pension? The Department of Social Security claws back 57p of that in housing benefit. A further 15p is taken out of council tax refund. The increase in the cost of fuel oil last year meant a further increase of 10p a week in transport costs. All the occupational pension increase for retired miners is being clawed back by the DSS and the Government's taxation policy. Furthermore, Yorkshire Water has increased water rates by more than twice the rate of inflation, which takes a large slice out of the increase in national pensions. When will the Government do something to allow pensioners to retain something of their occupational pensions?

Mr. Evans: The constituent about whom the hon. Gentleman wrote to me was receiving a retirement pension and a modest occupational pension from the mining industry. He was, however, eligible for housing benefit and council tax benefit. Under the general rules, because those benefits are payable in circumstances other than those relating to income support, above the applicable amount 65 per cent. is taken off, and 15 per cent. is taken off in respect of council tax. If a full disregard for occupational pensions across the income-related benefits were introduced, the cost to the taxpayer in 1996-97 would be more than £2 billion. That is a public expenditure programme that Labour's spokesman had better contemplate with greater caution than the hon. Gentleman does.

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Mr. Dunn: Will my hon. Friend give the House an undertaking that the Government will continue to press for increases in the holding of private pensions? Does he agree that the proposed nationalisation of private pension funds by the Labour party is a nightmare for those who are about to retire and those who are retired?

Mr. Evans: My hon. Friend makes a powerful point. The great success of British pension provision has been UK-funded pension schemes in the private sector by way of occupational pensions, personal pensions and retirement annuity contracts. The total of those funds, in aggregate, is £600 billion. As the funds are properly privately invested, the return on capital in real terms since 1980 has been 10 per cent. per annum. It is a threat to ordinary pensioners in occupational pension schemes if other people such as trade unions, the Government or the state try to interfere with that private enterprise approach.

Mr. Denham: Is not my hon. Friend the Member for Normanton (Mr. O'Brien) right? Is it not true that many of today's pensioners retired believing that their state and occupational pension would keep them out of poverty, but that the Tories have taken their pension away and pushed them into poverty? Does the Minister agree with the Secretary of State for Social Security, who wrote in The Times on Saturday that means testing punishes people who save? Is not that a clear example of the Tories saying one thing and doing another?

Mr. Evans: The hon. Gentleman is wrong on every score--he is not even halfway right, as the Evening Standard reported today. The issue at stake is whether retirement pensions should be uprated in line with prices, which is the undertaking that the Government have fulfilled. Everyone knows that the success of our pensions policy is due to private funds run by private organisations in occupational schemes and the like, which have provided, and continue to provide, a rising standard of living for pensioners. That is why recently retired pensioners enjoy higher occupational pension levels than those who retired a couple of decades ago.


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