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Mr. Darling: I have never claimed that there is £7 billion of fraud in the system. Interestingly, when the

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right hon. Member for Hitchin and Harpenden (Mr. Lilley), who is here tonight, was Secretary of State for Social Security, it was suggested to him that there was £7 billion of benefit fraud, and he rightly rubbished the suggestion--as I do, because there is not.

The hon. Member for Havant (Mr. Willetts) appears to be arguing that because there is fraud in the system, he would be able to save £1 billion just by setting up an organised benefits squad. He is flying by the seat of his pants. Given that the Tories did not manage to cut any fraud during their time in office, how can he say that he knows that he would save £1 billion, especially bearing in mind the fact that the money has already been spent? All he has is an IOU. What evidence does he have that suggests that he could possibly save £1 billion?

Mr. Willetts: I remind the Secretary of State of what I said a few moments ago, when I quoted from the Government report, "Beating Fraud is Everyone's Business", which contains an estimate of social security fraud. It says that

"a conservative estimate of fraud is £2 billion a year; but the figure could be much higher, around £7 billion, if all suspicions of fraud were well founded."

It is no good the right hon. Gentleman now saying that he does not recognise or use that figure. He cannot deny that his Department's main document on social security fraud, published in July 1998, since he came into office, contains the figure.

Mr. Butterfill: It is perhaps worth quoting the Minister of State, who said in a written answer:

"Previous estimates have shown that £2 billion a year has definitely been lost through fraud. A further £3 billion may have been lost in cases where fraud is strongly suspected and a further £2 billion where there is some suspicion of fraud."--[Official Report, 20 December 1999; Vol. 341, c. 323W.]

That seems to add up to £7 billion, so perhaps that is where the Government got the figure from.

Mr. Willetts: My hon. Friend is correct. It is no good the Secretary of State now trying to escape from figures, which the Government have happily endorsed in the past, that add up to £7 billion.

In tackling £7 billion of welfare fraud, we would not rely entirely on Scampion's proposals, but tackling organised benefit fraud would make an important contribution to our £1 billion of savings. Local authorities are another area in which much more could be done, and are another example of the Secretary of State talking tough but failing to deliver.

For my sins, I receive a regular supply of the Secretary of State's press releases. One, dated 6 March 2000 says, "Darling Gets Tough with Councils failing to tackle Housing Benefit Fraud." In it, the right hon. Gentleman says:

"I want to make it abundantly clear that where investigations by the Benefit Fraud Inspectorate reveal weakness I will expect authorities to act immediately to remedy them".

He continues:

"Where the BFI identify persistent service failings by councils I will use my powers to direct standards and timescales for improved performance."

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What has the right hon. Gentleman done in the year since that announcement, in which he talked so tough?

The Secretary of State has received many reports from the benefit fraud inspectorate. Since January 2000, he has had seven reports that were favourable to councils, but he has had 40 critical reports, saying that councils are not effectively tackling welfare fraud. I have them here because we follow these matters carefully. On only one occasion--I think wretched Northampton was the victim--has he done as he threatened and used his powers to direct standards and impose time scales for improved performance. After all that huffing and puffing and 40 critical reports, only one case has led to a ministerial direction.

That is one reason why the figures for housing benefit and council tax benefit fraud are so bad. In the last year for which we have reliable figures, there were 160,000 cases of established fraud, 1,900 cases referred for prosecution and 800 successful prosecutions. That is a strike rate of 0.5 per cent., which is simply not good enough when we are trying to tackle fraud in local authorities. That is why we have said that when local authorities are clearly not up to the administration of housing benefit, that responsibility should go to the Benefits Agency. [Interruption.] The Under-Secretary asks how we would decide which local authorities were not up to the job. I am pleased she asks, because I would like to ask Ministers a question in return. They clearly do not trust some local authorities with the powers to secure private financial information of the sort for which they are providing in the Bill.

Proposed new section 110AA(5) allows the Government to determine that only some local authorities are able to exercise the powers. The Secretary of State decides whether a local authority can exercise the powers. The Under-Secretary has a view about the local authorities that she would trust with them. That is based, presumably, on information that she has about which local authorities are effectively and competently pursuing fraud and which she does not trust to use such information competently or to keep it confidential. We would act on similar information to decide which local authorities are capable of properly administering housing benefit. We would also take into account information from reports by the Audit Commission and the National Audit Office.

The clear implication buried in the Bill is that Ministers do not trust some local authorities to use the powers to tackle fraud. I suspect that they are right. The Government should use their powers in that way. We pursue that policy to its logical conclusion. If Ministers cannot trust a local authority with information that will be secured to tackle fraud, why are they sitting there and allowing that authority to administer housing benefit when the level of fraud is so high? On a selective basis and in those circumstances, we believe that the Benefits Agency should administer housing benefit.

The Government can do something about national insurance numbers, to which the Secretary of State briefly referred. Since they took office, more than 4 million national insurance numbers have been added to the Department of Social Security register and only 300,000 have been removed. Britain now has 81 million national insurance numbers for 60 million people. At first we were told that that was because of people who are entitled to contributory benefits from a deceased spouse. That might

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explain a few million extra numbers, but it does not explain why there are 25 million more numbers than there are people in the United Kingdom.

The Secretary of State struck a different note today. He no longer complacently defended the 81 million national insurance numbers. Instead, he claimed that the Government would tackle the fraudulent national insurance numbers.

Mr. Darling: The hon. Gentleman raises an important issue. There are two reasons why national insurance numbers rose dramatically in the past 10 years. First, in 1990-91, the Conservative Government understandably decided that married women who did not have national insurance numbers should get them, so they issued 3 million. Secondly, in 1992-93, they issued 13 million numbers for children. The hon. Gentleman should remember those policies because I think he was a Minister at the time. The fact that we have a much larger number of national insurance numbers than people of working age is substantially because 10 years ago the Tory Government issued an awful lot of them.

There are 47 million national insurance numbers for UK residents over the age of 16. That is, I think, an Office for National Statistics figure. About 12.5 million national insurance numbers are for children who are coming into the system. They are called child reference numbers. Each year, 700,000 national insurance numbers are added because a number is issued every time a child is born.

As the hon. Gentleman rightly recognises, some national insurance numbers have to be kept in existence. There are two reasons for that. First, the spouse of someone who dies might have rights that accrue from that person's contributions, so the number has to be retained. Secondly, people who come to this country to work get a national insurance number and might then leave or, in the case of expatriates, return. That is why there is an excess. I accept that we need regularly to cleanse the numbers, we are doing that. The figures show that we have removed rather more numbers than the Tories ever did.

Mr. Willetts: That was a lengthy intervention to tell us what we already know. We recognise that the previous Government correctly decided to make child benefit numbers proto-NI numbers. Indeed, every member of the population should have a child benefit number as a step towards receiving a national insurance number. As the Secretary of State is in intervening mood, does he think that all the 81 million national insurance numbers are valid, or have some people falsely obtained them?

Mr. Darling: I said that we are introducing tighter checks on the granting of national insurance numbers. When we tried out the new procedures in south London, there were 361 arrests and a number of deportations. Some 4,600 applications were refused which would otherwise have been accepted. Many measures are at the disposal of the Government to tackle fraud and system errors. The difference between this Government and the Government of whom the hon. Gentleman was a member is that we are implementing them and beginning to turn the corner in our fight against rising fraud and system

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error. National insurance numbers are no exception. The reason for my long intervention is that the hon. Gentleman was talking nonsense--

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