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7.31 pm

Mr. Bernard Jenkin (Colchester, North): It is always a great pleasure to follow the hon. Member for Birkenhead (Mr. Field). I pay tribute to the work that he does on the Select Committee. He leads a very happy band of men and women, and inspires us all with his leadership. Although I have not had the benefit of having served on another Select Committee, I think that his is probably the best on which to serve.

We are, perhaps, blazing quite an innovative trail for a Select Committee, because we are not only scrutinising what the Executive does but playing an active part in the formation of policy--reflecting, perhaps, something of an emerging consensus among intelligent people in this

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place, and leaving aside some of the more tiresome party political prejudices that often do not do hon. Members as much credit as they think.

I welcome the Bill. It is an important contribution to the debate on this subject, and reflects very well on my right hon. Friend the Secretary of State. He has worked hard to change the culture surrounding social security fraud. The data-matching provisions are a sine qua non for proper policing of our benefits system; I hope that data matching will eventually lead to the establishment of a single on-line database for all social security benefits, because so many opportunities for fraud arise from the difficulty of reconciling the different bodies of information that are contained on different computer systems and relate to different benefits.

If only it were possible, with a single record of a national insurance number, to have a complete record of all the funds going in and out under that number, we should be much nearer to avoiding, for example, the absurd situation that allows someone who is contributing to a national insurance fund on his or her own number to find out--perhaps months later--that someone else is claiming on the same number. The inclusion of data-matching provisions will go a long way towards preventing future abuse of that kind; but, until we have a single on-line database making all the information relating to all the benefits and contributions of one individual available on one screen, it is difficult to see how it can be prevented--particularly when it is possible to match data only on the basis of intervals. It was nice to think that that would be done weekly, but I imagine that monthly, quarterly or even six-monthly will sometimes be the norm.

Mr. Stern: My hon. Friend has suggested a complete rounded record of ins and outs, but, in the context of the Bill and the prevention of fraud, what he is looking for--and what we hope to achieve--are data-matching provisions. Does he not fear, however, that the system that he is describing would impinge rather more on individual liberties?

Mr. Jenkin: That may well be a price that we must pay for allowing the state to tax us heavily and provide all these benefits. I shall deal with possible solutions later, but we already allow the state to have this information about us. It seems absurd that we should not allow the various organs of the state to share and develop the information effectively in order to protect taxpayers.

I am afraid that there is no substitute for the principle that those who are doing nothing wrong have nothing to fear. I appreciate that that is not a universal defence for state intrusion, but I think that in this instance it weighs pretty heavily, given that it is taxpayers' funds that are being abused, owing to our failure to use information effectively.

I welcome the inclusion of new offences in the Bill. I hope that the law will be strong enough against the multi-landlord fraud referred to by the hon. Member for Peckham (Ms Harman) and others. I appreciate the difficulties involved in creating new offences, and the difficulty of testing them in the courts to make them effective, and I understand that it is much easier to develop existing offences to ensure that people are caught; but I hope that that provision will be developed.

I also welcome the new powers for local authorities, which will enable them to exchange information and withhold benefit. I re-emphasise the importance of

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allowing those who give out benefits to withhold benefits. I even question whether we should continue to talk about welfare rights, rather than about the taxpayer's right to withhold benefit when there is doubt about whether a payment should be made.

Obviously, one objective of the benefits system must be to ensure that those who deserve help receive it, but too often the burden of proof required for the claiming of a benefit has been much less than the burden of proof needed to withhold it. That is an extraordinary state of affairs, which leads to much frustration when people do provide the authorities with evidence of potential benefit fraud, and then see that neighbours who they strongly believe are defrauding the system continue to benefit from their duplicity. I also welcome the introduction of a fraud inspectorate.

The whole Bill reflects a very positive change in the culture and outlook relating to benefit fraud. It is, I think, for us Conservatives to give at least two cheers for the Opposition parties, which for a long time tended to attack Conservative attempts to deal with benefit fraud, but which have now realised that, in order to sustain the integrity of the benefits system as a whole, it is necessary to restore the feeling among ordinary people--including ordinary taxpayers--that the system is not being taken for a ride. It is a little sad that the Opposition Front-Bench team are now perhaps over-egging the pudding, but if that serves to highlight the problem in the system and to continue to help changing the culture we will live with that.

In the next few years, there will be no substitute for fresh thinking on a complete change in the welfare structure, because fraud is encouraged by that very structure and by the way in which it affects people's work incentives and their outlook as they search for a job and try to climb out of the system. There is no resisting the conclusion that no amount of policing will make this a rational system of distributing help to poorer people.

We need a major change in the state benefit culture--for several reasons, not least cost. The benefit system takes nearly one third of total Government spending--it is not just the biggest programme in central Government, but the biggest programme by miles. My right hon. Friend the Secretary of State for Social Security quoted the cost as £15 per day per working person. When ordinary people are confronted with the scale of the cost in those terms, they are appalled, and it should appal us that the burden and cost of state welfare still do not create the happier and more contented society that we must have expected, or certainly that Beveridge must have expected if he ever thought that this much money would be spent on the welfare state.

If one programme has blown the Government's taxation policy off course, it would be the regular annual increases in the social security burden--the increases are far bigger in this Department than in any other Government Department. It should have dawned on Opposition Front Benchers by now that if, God forbid, they were ever to assume office, they would be confronted with the same problems, and that all their spending promises and tax-cut fiction would be quickly burnt before their eyes as they tried to contain social security costs

That means that we must consider three ways to start bringing down the cost of social security. The first involves savings for retirement. We must improve not

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only the incentives for saving for retirement, but the spread of savings for retirement. They must go beyond just retirement. We should encourage people to save, where they can save, for other eventualities, so that they do not, as a first recourse, fall back on the taxpayer.

Secondly, out of those savings, we should encourage people to take out much more private insurance for disability and for unemployment. Those should not be regarded as avant garde, off-the-wall ideas of some mad think tank. Those are the ways in which other societies are managing their welfare systems.

We should be able to learn from them to reproduce the same benefits, because, until we can encourage and enable people to self-provide such benefits much more for themselves and for their families, we will never be able to deal with the tax and benefits trap that so undermines the labour market's efficiency and ordinary people's ability to provide for themselves and their families in a dignified way, as we would hope.

Finally, we need to change the whole culture of giving out benefit. It should not be a simple financial transaction that absolves the taxpayer and the Government of any further action. In reference to other legislation and measures that the Government have introduced, the workfare experiment is exactly the sort of active help and responsibility that should accompany financial assistance to the least well-off.

It is not good enough for ordinary taxpayers to pay tax, knowing that the Government hand it over to poor people, and to say, "That absolves us of all responsibility of any other help that we might need to give those people." It is incumbent on the system to provide active and intelligent encouragement, so that the receipt of benefit is accompanied by some compulsion on the individuals concerned to show that they are prepared eventually to help themselves.

Mr. Frank Field: It is a matter not just of what is good for taxpayers: it is proper for the people themselves. For example, many of our constituents want to join job clubs immediately to help them get back to work, but the rules prevent them from doing so until they have been unemployed for six months. We know that, with every week that goes by, it becomes more difficult to re-enter the labour market, so it is not a matter of taxpayers ganging up on claimants. This policy is in the best interests of claimants, many of whom want it advanced.


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