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Mr. Lilley: The hon. Gentleman is absolutely wrong. As I have reported to the House, I have secured increased resources to pursue fraud and those funds are ring-fenced. They will be devoted to tackling fraud and will secure considerable savings for the taxpayer.
The Opposition claims that much extra fraud is being committed by landlords. The Labour party document, "Recovering the missing millions", claims that Labour could achieve £310 million net additional savings from its proposals to crack down on landlord fraud in the housing benefit survey. Yet our survey--confirmed by the very organisation on which many of the misrepresentations are based--suggests that landlord fraud amounts to between £150 million and £200 million. How can Labour possibly save an extra £310 million on top of the savings already made?
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Opposition Members propose unworkable measures to reduce fraud. They say that they will carry out 4 million more visits to claimants and estimate that that would yield savings of more than £544 million. Yet the local authority methods that are cited assume home visits at a rate of 50 a day per visiting officer, which would imply a mere eight minutes between visits from end to end. It is absolutely nonsensical to suggest that officers could carry out serious investigations into fraud with only eight minutes between ringing one doorbell and ringing the next.
Mr. Frank Field:
Will the hon. Gentleman give way on that point?
Mr. Lilley:
I have given way to the hon. Gentleman three or four times already. I would have happily given way had he proposed to answer on behalf of the hon. Member for Fife, Central (Mr. McLeish) in respect of the evidence for the £2 billion figure that we know does not exist.
Mr. Field:
I shall happily answer on that point as well.
Mr. Lilley:
Then I shall give way.
Mr. Field:
It is interesting that, when people appearing before the Committee support a Government hunch or a Government prejudice, they are cited as giving evidence; but when they give us their estimate of fraud, the Government dismiss it. The Government should be more careful about such selectivity.
Mr. Lilley:
I have no vested interest in any particular estimate of housing benefit fraud. The only matter in which I have a vested interest is getting the figure as right as possible. That is why I carried out a scientific study, with the help of 56 local authorities, which investigated a representative sample of many hundreds of claims and produced a specific figure. That method is better than bar room suggestions that the real figure might be double the Government's suggested figure.
The Labour party has also suggested that the mythical extra savings could be used to cover its spending programmes. In last week's rebuttal document, Labour claimed that five measures--jobseekers plus; the jobs, employment and training, or JET scheme; budgeting loans for the low paid; income support disregards for the wives of working men; and a higher disregard in jobseeker's allowance--will be financed from the savings in the benefit bill from combating fraud. Labour will not be able to achieve such savings and the proposed measures are pitiful, ineffective and based on unsubstantiated claims as to the amount. Labour's policies, as it now admits, imply extra spending of £136 million a year. Even The Guardian admitted:
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Ms Harriet Harman (Peckham):
No matter where fraud on the public purse is committed and no matter by whom it is committed, it must be stamped out. Taxpayers are already reeling from 22 Tory tax increases. They are paying more and more of their hard-earned money in Tory taxes, yet millions of precious pounds are being wasted on fraud. The welfare state must, at all times, remain vigilant in the battle against fraud. Fraud not only costs money and wastes resources, but saps public support for the social security system and the welfare state.
The welfare state maintains its popular support because people want to be protected against the risks of unemployment, illness or disability. They value the knowledge that there will be support for them when they need it, but they do not want a welfare state that is exploited by fraudsters and hits their pocket through taxes. Every pound wasted on fraud wastes taxpayers' money, wastes money that could go to those in need, and wastes public support for the welfare state. It is for those three reasons that Labour is committed to cracking down on all fraud, whether by individuals or by organised fraudsters.
Despite the Government's tough talk on fraud, we know that the Tories have failed on fraud. We know that because we can see their record. At this point, I want to say to the Secretary of State that he should be more cautious before belittling the work of the Select Committee on Social Security, because, were it not for its work in listening to the people on the ground who see the mounting fraud, I doubt that the House would be debating this Bill, proposed by this Secretary of State, today. We should have a bit more humility from the right hon. Gentleman.
Mr. Lilley:
Far from belittling the efforts of the Select Committee on Social Security, I bask in its praise, which has been fulsome. According to the Chairman, his original proposals were toned down somewhat because they were over-effusive in praising my efforts. I demand that Opposition Members cease to misrepresent a document that referred to a chance statement by one witness, as if it provided proof that there is £2 billion of housing benefit fraud, whereas the only established and available survey suggests that there is about £1 billion. I do not mind whether there is £1 billion or £2 billion--what I dislike is the suggestion that there is a mysterious £1 billion that can be conjured up, purloined and used to justify £1 billion of extra spending by the Labour party.
Ms Harman:
The Secretary of State says that he pays tribute to the work of the Select Committee on Social Security; it is a pity that he has not adopted its proposals for the full extent of powers that are needed to crack down on fraud. It is all very well to praise the Committee's work; the Bill falls short of the Committee's recommendations for action.
Mr. Bernard Jenkin:
The hon. Lady quoted from the Select Committee report; I am a member of that Select Committee. She read out the passage starting, "It is possible". I was happy to put that £2 billion in to highlight the anxiety of some of our witnesses, but I am convinced that the Government survey data are by far the most accurate record that we can lay our hands on of the true amount of fraud. What does she believe that the fraud figure is?
Ms Harman:
The hon. Gentleman has sought to back off from a statement in a report to which he put his name:
It is my contention that the Government have failed to take action because they are complacent about the undermining of support for the welfare state, they are not vigilant on behalf of the welfare state and they are soft on private landlord cheats. Their dogmatic view that everything in the private sector is good whereas everything in the public sector must be bad means that they have shrunk away from acting against private landlord cheats who rip off the system.
The Social Security Committee estimated that as much as £1 of every £5 spent on housing benefit is wasted on fraud. The Local Authority Investigation Officers Group, to which I pay tribute for its work in drawing attention to the scale of fraud and its proposals for tackling it, told the Select Committee that housing benefit fraud could be even greater.
The Association of London Government estimates that at least £40 million is wasted on housing benefit fraud in London alone, and that much of that fraud is committed by landlords cheating the system, alone or in collusion with tenants.
A case highlighted in evidence to the Select Committee was that of a landlord in London to whom 165 housing benefit claims were paid directly. When the claims were checked, it was discovered that 56 of the claimants did not exist--phantom tenancies. The landlord was ripping off the taxpayer to the tune of no less than £5,000 a week. He was caught, but no doubt many landlords committing similar frauds are as yet undetected. In another case, when the properties of eight managing agents in Greenwich were investigated, 88 of 292 properties were found to be empty.
That is why we need the visiting officers knocking on the door. It does not take long to discover that premises do not exist or are deserted. It is a scandal that landlord cheats have ripped off the taxpayer and that the Government have failed to take action until now, when--after 17 years of Tory government--they are introducing the Bill five months before the general election.
Housing benefit fraud is serious because spending on housing benefit accounts for a large part of the social security budget. Under the Secretary of State for Social
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The Bill seeks to punish those who make false claims on taxpayers' money. We could not agree more; but among the biggest false claims being made today are those of the Conservatives that they are tough on fraud. I shall set out our view of their record, chronologically and based on fact.
In the early 1980s, local authorities took action. They began appointing fraud inspectors to tackle what they believed to be the problem of housing benefit fraud. Did the Government listen to their anxieties or back up their action? No, they did not--and that was the early 1980s. In 1992, the London Boroughs Fraud Investigators Group urged the Government to set up a London-wide body to tackle the serious problem of organised landlord fraud. It asked the Department of Social Security for help. In the report that it sent to the Department as long ago as 1992, it said:
It was not until May 1996, four years and many billions of pounds later, that the Government set up a pilot project. In fact, much of the action that the Tories have taken in the past 17 years has hindered rather than helped the fight against fraud. They cut visits to check on fraud from6.6 million a year under the last Labour Government to only 500,000 a year. They penalised local authorities that took action on fraud. Not only were those local authorities obliged to pay, without subsidy, for fraud investigating officers, but when those officers detected fraud, they were subject to a financial penalty from the DSS. The Tories penalised local authorities that took action on fraud in the public interest until, finally, they were pushed to change the rules in 1993.
The Tories have been complacent about the problem of organised landlord fraud. Not until May 1996, when the Social Security Committee once again brought the problem to their attention, did they prepare the Bill. While fat cat landlords have lined their pockets with taxpayers' hard-earned money, the Secretary of State has stood idly by year after year, until now. That is the background against which the Bill is introduced.
"There is no money left in anti-fraud measures, so Labour will have to stump up some cash here."
By contrast with Labour's repeated and semi-fraudulent proposals, our policies are practical, effective and realistic. Our experience shows that our measures work and the Bill will reinforce our powers to make the battle against fraud more effective. It will boost the efforts of Labour and other local authorities, give us greater scope for data-matching across the range of financial information available to Government and improve the penalties available to penalise those who are identified as defrauding the system. I commend the Bill to the House.6.25 pm
The Government were warned year after year about the increasing scale of the problem, but they failed to take tough action, especially on organised landlord fraud. They failed to do so because--
"It is possible that the true total is £2 billion".
However, bearing in mind the fact that we agree that, over the years, billions of pounds have been wasted through being defrauded from the public purse, perhaps the House should move on to consider the actions that should be taken to solve the problem.
"Organised Housing Benefit fraud is a large, financially significant problem. It is more lucrative than Income Support fraud. Its perpetrators are mostly landlords or managing agents. The DSS does not investigate organised Housing Benefit fraud . . . we have a serious problem that the London Local Authorities need to tackle."
It also proposed--in 1992--
"a specialist team investigating organised Housing Benefit fraud is what is needed."
Did the Government listen or take action? No, they did not.
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