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Statute Law Balancing (Limit on Maximum Quantity)

Mr. Anthony Steen accordingly presented a Bill to oblige Ministers of the Crown, when proposing either to implement any proposal under the European Community Treaties for legislation by the Council of Ministers or to introduce any bill or statutory instrument, simultaneously to propose the repeal of at least a similar quantity of existing legislation to that which they propose to implement or to introduce.: And the same was read the First time; and ordered to be read a Second time upon Friday 14 February, and to be printed [Bill 93].

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Orders of the Day

Social Security Administration

(Fraud) Bill

As amended (in the Standing Committee), considered.

New clause 1

Aggravated offence of landlord fraud

'. Where a person is found guilty of an offence or offences under section 111A of the Social Security Administration Act 1992, as inserted by section 13 above, and the offence is or the offences are in respect of--
(a) more than one claimant for benefit, and
(b) benefits paid in respect of persons resident in accommodation owned, managed or controlled by him,
he shall be liable, on conviction on indictment, to imprisonment for a term not exceeding twelve years or to a fine or to both, and in determining the level of any fine imposed, the court shall have regard to the sums dishonestly obtained by him.'.--[Mr. McLeish.]
Brought up, and read the First time.

3.49 pm

Mr. Henry McLeish (Fife, Central): I beg to move, That the clause be read a Second time.

Madam Speaker: With this, it will be convenient to discuss also the following: Government amendments Nos. 5 to 7.

Mr. McLeish: The Bill provides for careful examination of landlords' activities in housing benefit fraud, and new clause 1 would create a new offence of aggravated landlord fraud. We think that such an offence is necessary, because the Government have not yet been sufficiently tough on such fraud. In Committee, we discussed at great length the extent of the problem, and some of the points are worth repeating in the House.

We are currently spending almost £11 billion on housing benefit, a sum which has grown dramatically since 1979. In 1979, we spent £440 million, at 1995-96 prices, whereas, in 1996-97, we spend more than £5.5 billion for private tenants. For local authority tenants, the amount has grown from £1.7 billion, in 1978-79, to £5.2 billion, in 1996-97. We are therefore talking about an enormous amount of public expenditure, and that is the first important context in which we should consider the new clause.

The second context is that the scale of fraud is considerable. There is possibly a consensus that £1 billion of our annual £11 billion expenditure on housing benefit is being defrauded, although some people have suggested that the figure may be much higher. Although there is some controversy surrounding the £2 billion fraud figure that has been suggested and mentioned in some Social Security Select Committee decisions, that may be the upper level of housing benefit fraud.

Nevertheless--no matter whether the figure is £0.5 billion, £1 billion or £2 billion--fraud costs an enormous sum of money, and the House and the Government, of whichever colour, must take it seriously. We have tabled new clause 1 because of the scale of the problem.

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In Committee, the Government were sympathetic to a request for a landlord register, and we agreed that Ministers should go away and formulate a new clause dealing with some of the issues that we raised and then return to the Committee. Consequently, we withdrew our new clause dealing with a landlord register. The Government accepted that suggestion, which represent progress, which we welcome. Now the Government have an opportunity to pass a second test, on the matter of an offence of aggravated landlord fraud.

The Minister said in Committee that the Bill already contained provisions to deal with that offence, but we do not accept that it does. The Bill is clearly focused on landlords and claimants, but far too much emphasis has been placed on claimants and not enough on landlords. Therefore, we want to strengthen the Bill's provisions, particularly those dealing with landlords. We also want to show landlords and the public that we are serious about the annual multi-million-pound fraud. In both the substance and the spirit of legislation, it is important that we send a powerful message to landlords, and especially to those in the private sector, that the House will not tolerate fraud, especially current levels of fraud.

In new clause 1, we suggest that a person involved in aggravated landlord fraud

"shall be liable, on conviction on indictment, to imprisonment for a term not exceeding twelve years or to a fine or to both, and"--

of course--

"in determining the level of any fine imposed, the court shall have regard to the sums dishonestly obtained by him"

or her.

We think that the type of offence that we are considering deserves the punishment we are suggesting, because there are different levels of landlord fraud. One landlord may have a few properties or a few tenants and be defrauding the system, perhaps in collusion with one or more of his tenants. There is then a gradation in criminal activity, however, in which some landlords in our cities are committing organised big-time fraud. We will simply be sending the wrong message if the Bill does not include a specific offence of landlord fraud.

The new clause also deals with multiple fraud. It provides a tough prison term, but defrauding the state is a serious offence. Most of the London local authorities that have been at the sharp end of this serious crime suggested that the Bill needed to be strengthened even more, and we agree. We find it difficult to understand why the Government will not accept the further strengthening that Labour is offering now, just as we did in Committee.

The Government have often talked about being tough on fraud--we support and applaud their attitude--but we have to match the rhetoric and fine words with tough action to show that we not only deplore what is happening but intend to root out the worst excesses of fraud by landlords.

In the past few years, the amount of housing benefit going to the private sector has risen to the point where it will overtake that paid to public sector tenants. Indeed, over the next two years, perhaps another £800 million will be added to the private sector rent allowance housing benefit. That is a staggering sum.

The Government should accept our proposal with good will. We want to toughen the Bill and strengthen the attack on fraudulent landlords. By accepting new clause 1,

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the Government will do just that, and will send a powerful message to landlords who are currently defrauding the housing benefit system.

Mr. Chris Davies (Littleborough and Saddleworth): I warmly welcome the new clause, and urge the Government to accept it. Since 1988, there has been a 350 per cent. increase in the housing benefit paid to the private sector. As the hon. Member for Fife, Central (Mr. McLeish) said, the opportunities for fraud have increased considerably, and it is estimated that between £1 billion and £2 billion is disappearing into the pockets of fraudulent landlords.

Fraudulent landlords are getting rich at the expense of the taxpayer. They are doing so in various ways: some simply continue to claim for a tenant who has moved on, while some create fictitious tenants in order to claim housing benefit. Others who own several properties form a conspiracy, and set out to defraud local authorities by arranging for fictitious tenants--or, indeed, real tenants using fictitious names--to move so rapidly from one of their properties to another that it is impossible for the local authority agents to pursue them effectively.

One problem is that local authorities are so strapped for cash that they may not prosecute even when they know that fraud has taken place. Gathering the evidence required for a successful prosecution puts a strain on their manpower. Too often, when a landlord has been detected committing a fraud, all that happens is that the payment is stopped and the landlord goes unpunished. The penalties introduced in the new clause would concentrate the minds of local authorities and of the landlords who seek to defraud the taxpayer.

The Government claim to be tough on crime, and the new clause simply apes the Government's own sentiments by introducing penalties to curb a problem that we all recognise as one of the utmost seriousness.

The Parliamentary Under-Secretary of State for Social Security (Mr. Oliver Heald): A claimant or a landlord can be guilty of this offence. The new clause deals only with the sentence. How can it be right to lay down a sentence of 12 years for landlords involved in organised fraud and one of seven years for claimants involved in a series of organised attacks on the benefit system? That is nothing but ludicrous.

Mr. Davies: With respect, we are dealing only with one new clause, which is aimed at landlords. Whether the matter should also be addressed in other ways is for the Minister to determine. It is for him to take the opportunity to table amendments at the appropriate time. If the Government wish to be tough on crime, they have an opportunity to demonstrate it.

4 pm

Mr. Frank Field (Birkenhead): I should like to set the new clause in context. It is an extraordinary turn of events for the Minister to find himself in his current position. It must appear to the outside world that he is softer on crime by landlords than on crime by claimants.

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