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Mr. Heald: The existing data matching measures used by the Department are all covered by the legal regime under the Data Protection Act 1988, and they meet the terms of the European convention on human rights. The external data matching we carry out at present is limited to cases where there is evidence of fraud, and, in those circumstances, it is covered by the appropriate legislation. We are not approving something retrospectively, although the new powers will, of course, take us further in the data matching direction--something that the Select Committee recommended, and with which we agree.
Under the anti-fraud incentive scheme--the tenth measure--local authorities receive significant additional subsidy when they successfully tackle all types of benefit fraud--including fraud by landlords. Moreover, local authorities were awarded a further £6 million this year to finance a variety of anti-fraud projects. It is sometimes said that there is not enough Government money to help with these tasks, but local authorities earned £27.8 million in 1995-96 in additional subsidy for successfully tackling fraud. It is estimated that that figure will be higher this year. When looked at together, the measures produce a substantial package to deal with landlord fraud.
New clause 1 is a new variation on a familiar theme. In Committee, the Opposition sought to introduce an additional offence, which was intended to target
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I am pleased that, in tabling the new clause, the Opposition appear to have accepted my explanation that the offence in clause 13 applies equally to a landlord as to a claimant, and they no longer suggest that there should be a separate offence. I am disappointed that they continue to argue that landlord fraud is somehow inherently more serious than all other types of benefit fraud, including that committed by professional organised criminals.
I fail to see any justification for a maximum penalty of 12 years directed specifically at landlords. Landlord fraud is serious, particularly when it involves abuse of a position of trust, but 12 years is a higher penalty than that for many serious offences against the person, such as indecent assault, cruelty to children, causing death by dangerous driving, or causing death while under the influence of drink or drugs.
As I said in Committee, existing fraud offences for which there is a 10-year maximum sentence may involve multi-million-pound frauds or a particularly vulnerable victim, such as an old lady callously defrauded out of her life savings; yet new clause 1 would make a landlord who committed a serious fraud, but on a smaller scale and without aggravating circumstances, liable to 12 years in prison just because he was a landlord. The Opposition have failed to make a convincing case to show the need for such a severe maximum sentence.
The Court of Appeal has considered the range of sentences which it and the courts feel are appropriate for serious dishonesty in the benefits field, involving large sums of money and an element of breach of trust. Its guideline, which is established as a benchmark, is six years' imprisonment for contested trials in those circumstances. Above that benchmark, the courts have headroom to pass even more serious sentences in more serious cases. However, it is hard to see what a landlord acting as a landlord would have to do to merit a sentence of 12 years, which is double the benchmark.
In summary, landlord fraud is serious. The Bill introduces a range of practical measures that will help local authorities to investigate fraudulent landlords and bring them to justice. Landlords can be prosecuted under a range of tough offences, carrying maximum sentences of up to seven years under social security legislation and up to 10 years under the Theft Act 1968 and common law conspiracy. A separate, even more severe, sentence is just window dressing.
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I shall now briefly explain the Government amendments. Clause 13 creates a new offence of dishonest representation for obtaining benefit. It covers dishonestly making a false representation, and dishonestly producing or furnishing false information, or causing or allowing another person to do so.
Social security frauds can continue for a long, time and involve very many false declarations. In the past, we have relied on specimen charges to reflect that criminality. However, in 1996, in the case of R v. Clark, the Court of Appeal ruled out that approach. The implication for social security fraud is that the court would be able to sentence only on the basis of the specimen offences, each of which relates to only one period of two weeks, instead of being able to take into account the individual's full criminality in relation to benefit fraud. This is totally inappropriate where a fraudster is a landlord or a professional criminal, and hundreds of payments may be involved.
We therefore need an offence--as serious as those under the Theft Act 1968--for those cases in which dishonest obtaining of benefit over a period is a direct consequence of a single false statement or failure to notify changes of circumstances, so that we can avoid having to charge for each girocheque obtained. This is intended to relate the entire dishonest overpayment to the person's initial false statement.
That new offence is intended to be, in effect, what may be regarded as a continuing offence: an offence that covers the continuing period of dishonest behaviour. The inclusion of the offence of dishonest failure to report a change of circumstances is intended to enable the offence to relate to the full overpayment consequences arising from the failure to report, instead of relying on a series of false representations thereafter to the effect that no change had taken place.
Clause 13 also makes it an offence for someone dishonestly to cause or allow another person to fail to notify a change of circumstances which regulations under the Social Security Administration Act 1992 require them to notify.
I hope that I have not trespassed on the House's good will in outlining those details, but it is important to have the reasons for the change clearly stated on the record.
The purpose of amendments Nos. 5 and 6 is to clear up any possible ambiguity in the reference to "him" in this subsection by making it clear that the "him" referred to is, in all cases, the person who is required by regulations to report the change of circumstances.
Clause 14 extends the existing provisions in section 112 of the Act to include the offence of failure, without reasonable excuse, to report a change of circumstances which regulations require to be reported. It will also be an offence for someone knowingly to cause or to allow another person to fail to notify such a change of circumstances.
Amendment No. 7 introduces a further test. The offence of "failing to notify" is being introduced to enforce the existing duty on beneficiaries to disclose a change of circumstances. Much social security fraud arises from omissions rather than acts of commission. That duty is laid on both claimants and, in certain circumstances, third parties.
The provision will catch, where appropriate, automated credit transfer cases where no declarations are made at the point when payments are received and where a landlord
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As I explained to the Committee, it is not the intention that failures to notify caused by a genuine mistake should be treated as cases of fraud and prosecuted. In a case where a person is genuinely unaware of the relevance of a change of circumstances, the intention is that the safeguard of "reasonable excuse" would apply, and that, ultimately, the courts would decide what that constituted. Additionally, the legislation would operate within the framework of the Department's prosecution policy, which is to prosecute only where prosecutions are clearly in the public interest.
We therefore believe that the defence of "reasonable excuse" provides all the safeguards needed, should proceedings be brought. Nevertheless, concerns were expressed in Committee, especially by the hon. Member for Southampton, Itchen (Mr. Denham), about the scope of the offence, particularly where it could be the underlying alleged offence for an offer of an administrative penalty under clause 15.
In practice, we would not expect a prosecution or an administrative penalty offer in a case where the claimant genuinely did not know that a change of circumstances needed to be reported. However, having reflected on the points made in Committee, the Government consider that it would increase confidence in the prosecution and penalty arrangements if the offence were amended to underline the policy intention.
The amendment therefore introduces an additional safeguard by adding to the offence of failing to notify the same test as applies elsewhere in section 112--that the person knows that he is required to notify the change of circumstances. That will ensure that only fraudsters can be offered penalties, and people who have simply made a mistake cannot be brought into the penalty regime. I hope that the amendment will allay the fears that were expressed.
I propose to retain the test of "reasonable excuse", for the reasons that I explained when the matter was discussed in Committee. I want to exclude, for example, someone who had had to go to hospital and had not notified the change, even though he knew that he should have made that notification.
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