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Mr. Heald: Perhaps I can assist my hon. Friend. Clause 3, which deals with authorities administering housing benefit or council tax benefit, enables the Secretary of State or the Northern Ireland Department to pass information to local authorities, which would include the data to which my hon. Friend refers.

Mr. Faber: I thank my hon. Friend. That clarifies the situation, which is not explained in clauses 1 and 2. It is vital that information is passed to local authorities as they may need it most.

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Another of the Select Committee's key recommendations was that local authorities should have access to the DSS central index computer which deals with national insurance numbers. I think that I understood my right hon. Friend as saying that the Government will accept that recommendation. It was accepted in the Government's response to the Committee's report, subject to certain strict criteria. Such criteria must be strict and the system must be policed sensibly and with great care, but local authorities need such information in the fight against fraud.

I welcome the Bill's recognition of the role of local authorities in combating fraud. We have heard much in this and in previous debates about some local authorities' reluctance to pursue fraudsters in the past because of ideological opposition. I think that we have moved from that argument and the Bill presents an opportunity to understand the rewards for local authorities and the penalties for those that do not perform well.

Mr. Bernard Jenkin: Does my hon. Friend agree that, while some local authorities--notably those in the London area--produced strong evidence that they required extra powers and that the local government culture needed to change, the vast majority of local authorities tended to say, "That sort of thing does not happen here"? The Committee and my right hon. Friend the Secretary of State have succeeded in changing the culture so that every local authority is aware of the potential for benefit fraud--however leafy the suburb.

Mr. Faber: I agree with my hon. Friend--and particularly with the relevance of his last comment. In the course of our investigations, it was interesting to learn how many local authorities--sometimes those in our area or in neighbouring areas--did not accept that fraud occurred in their jurisdictions. If nothing else, the Committee's report helps to highlight that fact. I join my hon. Friend in paying tribute to the representatives of the London authorities who appeared before the Committee: they understand the nature of the problem and they have decided to tackle it on a grand scale. I hope that some of their experiences and some of the measures in the Bill will give local authorities throughout the country the chance to pursue that. I hope that the Bill will open up a new area of co-operation between the DSS and local authorities.

As my hon. Friend said, the performance of local authorities is still extremely variable and needs to be improved. Some £1 billion of fraudulent claims--or 25 per cent. of all benefit fraud--is attributable to housing benefit or council tax benefit fraud, and therefore my right hon. Friend's creation of the benefits fraud inspectorate is especially welcome. Its role will be to help and improve the performance of the worst-performing councils and to advise on best practice. It will have a powerful role to play in the fight against fraud. I reiterate that it is vital that the inspectorate is set up in liaison with local authorities and that it is given powers to consider all the bodies involved in the fight against fraud, including the DSS and the various agencies within it, which already have an excellent record of combating fraud.

It is good news for local authorities that the Bill will give them the same powers as the Benefits Agency to enter business premises, including those of landlords, to

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inspect documents. We heard about that during my right hon. Friend's speech. There seems to be an anomaly in clause 10 in that if a private sector landlord works from both business and residential premises, inspectors will not be allowed to enter the residential premises. Many people, in all walks of life, take business home with them. On page 16, the Bill says:

"a private dwelling-house is not liable to inspection under this section unless an inspector has reasonable grounds for believing that a trade or business is being carried on from the dwelling-house and that the trade or business is not also being carried on from premises other than a dwelling-house."

Many hon. Members take work home, and many of us work from home. If inspectors do not have the power to enter residential premises and business premises, fraudsters will simply take the relevant papers home with them and they will be lost. I should be grateful if my right hon. Friend would consider that potential loophole.

The Select Committee also recommends that the base line subsidy figures for local authorities should reflect the authorities' failure in combating fraud. I welcome the proposals in clause 9 to strengthen my right hon. Friend's powers to adjust housing benefit and council tax benefit subsidy. If an authority fails to reach the standards that he has directed them to attain, he may deduct some subsidy. Similarly, he may add to the subsidy of successfully performing authorities. That proposal is at the heart of improving the performance of poor authorities and rewarding good local authorities. I must tell the hon. Member for Peckham that it is a welcome response to one of the Select Committee's recommendations.

Another Select Committee recommendation, on the prosecution of fraudsters, has been included in the Bill. I refer to the proposed legislation covering impersonation and the sanctions and penalties that are available. I welcome the introduction of a new offence of dishonestly reporting or failing to report a change of circumstances, which will trap those who give false information or conceal information to get benefits. Quite rightly, they will be liable to a term in prison of up to seven years. The existing offence of obtaining benefit by false representation will be extended and it will become an offence for somebody to fail to report a change of circumstances, or to get somebody else to do so on their behalf.

Clause 13 provides for payment of a financial penalty, which makes a sensible civil alternative to prosecution. Where such cases are proved, the claimant will pay a penalty, as my right hon. Friend told us, at 30 per cent. of the overpayment.

I warmly welcome the proposals in clauses 18 and 19--again, they were recommended by the Select Committee--relating to the redirection of post. In future, local authorities will be able to ensure that post marked "do not redirect" will not be sent on. Similarly, the Post Office will be required to provide any information as needed relating to the redirection of benefit payment post. That proposal will greatly help the Benefits Agency and local authorities to trace and catch multiple applicants, and should prevent fraudsters from making claims from different addresses and then having the money sent on to them.

Perhaps the Select Committee's main disappointment will be the lack of specific measures in the Bill to combat organised landlord fraud, about which we heard a great

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deal during the debate. However, I acknowledge that plans for the fraud inspectorate are wide reaching and that it can pursue specific proposals to fight landlord fraud in conjunction, I hope, with local authorities. I hope that the inspectorate will have a wide enough brief to take on the issue of landlord fraud.

My right hon. and learned Friend the Chancellor of the Exchequer will present his Budget tomorrow. Whatever is contained in it, there is no doubt that social security fraud has reached a high level of public awareness and understanding, and that applies to hon. Members on both sides of the House. Nothing outrages the honest citizen or taxpayer more than the thought that he or she is being ripped off. We now know that the figures involved are considerable and we have to tackle the problem.

The hon. Member for Peckham was churlish in the extreme in her earlier remarks. The Bill is a natural progression of the Government's battle so far against social security fraud. I welcome the fact that my right hon. Friend has listened to what the Social Security Select Committee had to say, and I warmly support the Bill.

7.15 pm

Mr. Frank Field (Birkenhead): As always in these debates, it is a pleasure to follow the hon. Member for Westbury (Mr. Faber). He was careful in the way in which he examined the Bill and he highlighted the aspects in which the Select Committee may have played some part, which I might have forgotten to do, so I am grateful to him. I shall address other issues.

The difference in the Secretary of State's speech today was noticeable, and it had two parts. He is very much at home with the subject, and in presenting an anti-fraud Bill, which, we are told, has considerable political popularity. I was struck at the somewhat down-key tone in which he presented the Bill. That became even more marked when he presented Labour's proposals. The whole debate changed gear. His tail was up and an interest became apparent that was not there when he was explaining the Bill to the House. I was puzzled by that.

Mr. Bernard Jenkin: The hon. Gentleman has often encouraged local authorities and others and, indeed, the Government, to come forward and celebrate the fact that they are discovering and uncovering fraud. Is it not crucial that we should not be ashamed of the fact that we find that things are not as well run as we had thought, because that shame inhibits the very process that we want these organisations to carry out?

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