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Mr. Frank Field (Birkenhead) rose--
Mr. Smith: I give way to my hon. Friend the Member for Birkenhead.
Mr. Field: Are not the Tories today in danger of doing two things? First, they are in danger of appearing to the public as defending landlords who are ripping off taxpayers. Secondly, in disagreeing with us in our wish to control fraud so that we shall have a larger budget
available to those who are in genuine need, they appear to be obstructing the wish of the House that money should be spent as taxpayers require, on genuine claimants, not on those who are committed to criminal fraud.
Mr. Smith: My hon. Friend is right. The Department of Social Security budget is £90 billion this year. I want to ensure that every pound of that is wisely and properly spent and goes into the pockets of those who need and deserve it, and are legitimately entitled to it. I want none of that money to go into fraudsters' pockets. I fear, however, that the Government are being complacent.
Mr. Jenkin: Will the hon. Gentleman give way?
Mr. Smith: I will not give way to the hon. Gentleman at the moment because I want to make progress.
In their response to the Select Committee's report, the Government adopted an attitude that seemed to say, "Aren't we doing well as a Government? We have done all these things; we have taken all these steps; we are fighting fraud; we are talking about fraud. Nothing else needs to be done." That is the overwhelming thrust of the Government's response to the Select Committee, even though the Select Committee said, "This problem is urgent. Serious issues are involved. We have evidence that there is massive organised fraud from some"--I emphasise some--"landlords in the private sector." Yet the Government say, "Everything that we are doing is perfectly all right and we have everything under control."
Two passages in the Government's response might repay closer scrutiny. First, the Select Committee had suggested that any landlord receiving direct payments of housing benefit from the local authority should be required to list the other properties for which payments were being made, either in the same borough or in a different one. That is a simple enough procedure; it would enable cross-checks to be made automatically between different properties. What did the Government say to that?
Secondly, the Select Committee suggested that each landlord with more than 20 direct payment claims from a local authority should automatically be investigated as a matter of urgency--again, a sensible suggestion. Such landlords, after all, receive the most money, week after week, in direct payments sometimes amounting to thousands of pounds. The Government replied:
We know how landlord fraud operates. We know that landlords create fictitious tenancies; sometimes there are even fictitious properties. We know that sometimes there is collusion between landlords and their supposed tenants. We know that they spread their fraud across local authority boundaries. We know that they sometimes claim that higher rents are being paid than actually are. There is a host of ways in which fraudulent payments of housing benefit can be obtained.
We have proposed a series of detailed steps that we believe should be taken to help to stamp out landlord fraud. They include giving local authorities the right to obtain proof from landlords and managing agents of their right to control a property for which they are claiming direct payment of housing benefit, with the provision that a local authority could refuse payment if it was not satisfied with the information obtained.
We believe that landlords should be required to list other properties in their control for which direct payments are being received. We believe that local authorities and the Benefits Agency should be allowed lists of all redirected mail for claimants from the Post Office. We believe, too, that landlords of multiple-occupation dwellings should be required to have a licence. A self-financing licensing scheme would both help to deter fraud and do much to improve safety standards and maintenance in such houses. However, when my hon. Friend the Member for Greenwich(Mr. Raynsford) proposed such a scheme during the passage of the Housing Bill, the Government rejected it.
We believe that special teams of investigators should be established across all local authorities, not just in London--which the Government, rather grudgingly, have come to accept, and we welcome their conversion. We believe that at least 10 such teams should be established around the country and that they should deliberately target organised landlord fraud. We believe that all landlords who receive 20 or more direct payments should be investigated as a matter of course.
We believe that the finders keepers rule--which encourages competition rather than co-operation between the Benefits Agency and local authority fraud investigators--should end, so that we do not end up with the same investigators chasing the same fraud, thereby duplicating effort. We believe that there should be an automatic link to the tax system, so that information about all direct housing benefit payments made to landlords will automatically be passed by local authorities to the Inland Revenue. That would be a fairly powerful deterrent to landlords claiming housing benefit, which was not genuinely directed at the needs of a tenant.
Mr. Smith:
Finally, we believe that a proper monitoring system should be in place to ensure that local authorities fulfil their obligations in this respect. I see that the hon. Member for Colchester, North (Mr. Jenkin) has now returned to the Chamber, so I shall give way to him.
Mr. Jenkin:
I assure the hon. Gentleman that I did not leave the Chamber and that I was elsewhere in the Chamber. I am interested in the source of his innovative
Mr. Smith:
I am proud that the Labour party has looked at the Social Security Committee's report, at the evidence that it received and at the sensible recommendations that it made. We want to implement its recommendations. I am surprised that the hon. Gentleman is not leaping to his feet to defend the Select Committee--he is a member--and arguing that the Government ought to be implementing its recommendations, rather than dismissing them as a burden on landlords, or saying that this is a blanket operation that they will not adopt now, or saying that they will set up an inter-departmental ministerial working party to look at fraud. That has been the Government's response to what he and his colleagues have said. Instead of complaining about me picking up the Select Committee's report and running with it, he ought to be complaining loud and clear about the way in which his Government have not done that.
Mr. Smith:
A considerable number of our proposals for cutting down on landlord fraud go further than the Select Committee recommended. If the hon. Gentleman does not know the content of his own Select Committee's report, perhaps he ought to read it.
Mr. Jeff Rooker (Birmingham, Perry Barr):
My hon. Friend referred to monitoring. We have to address the issue of accountability. No single official at local authority level is responsible for the housing benefit budget. For example, in my local authority the official who was responsible for the operation of the system refused to accept responsibility for the housing benefit payments--£300 million--but accepted responsibility only for the administration. When it all went wrong and the official was moved elsewhere, it was as if no one was responsible for that huge sum.
"There is a balance to be struck between imposing undue information burdens on landlords . . . and requiring them to provide information appropriate to the privilege of receiving money direct from public funds. The recommendation would impose an additional burden, whilst being easily evaded by less scrupulous landlords."
So the real reason why the Government refused that recommendation was that it would impose "an additional burden" on landlords.
"The Government is unable to accept that the Committee's blanket approach to larger landlords would be appropriate at this stage".
Yet these "larger landlords" receive the largest amounts and thus constitute the greatest risk to public funds. This is just sensible targeting at the top of the range where fraud can lose the greatest amount to the public purse. Still, the Government dismissed the idea as a "blanket approach" that they were unable to accept. Well, they ought to accept it and in general they ought to accept more of the Select Committee's proposals.
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