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Mr. Deputy Speaker (Mr. Michael Lord): Order. I appreciate that the issue is complicated, but the Secretary of State's interventions are verging on speeches.
Mr. Willetts: The Government are not implementing those measures; they are merely talking about it. That is why there are 45 press releases and a statistically insignificant change in the amount fraud. There is a great deal of talk, but not much action.
Mr. Butterfill: I checked the numbers with the House of Commons Library. There are 82 million national insurance numbers and 48 million people of employable age.
Mr. Willetts: My hon. Friend is correct. It is important that we have effective data cleaning. My right hon. Friend the Member for Hitchin and Harpenden initiated such a project when he was Secretary of State in 1995. It was a good example of how the problem should be tackled.
Let me move on from national insurance numbers--[Interruption.] I warn the Under-Secretary, the hon. Member for City of York (Mr. Bayley), that I will respond to his challenge and talk at even greater length about them. I do not believe that issuing 4,061,512 national insurance numbers between 1997 and 2000 was effective control of the problem. The figure is too large and suggests that the controls are not tight enough.
I am concerned about the effectiveness of the proposals. We must consider whether we can be comfortable that the powers to secure data from private sources will be safe not just from a challenge by the Data Protection Commissioner--I look forward to seeing her letter, which the Secretary of State has generously agreed to provide--but from a challenge under the Human Rights Act 1998. The other place debated that at length, but did not reach a conclusion.
When the assistant commissioner spoke at a conference of the British Bankers Association last week, he outlined the difficulties that the office of the Data Protection Commissioner has with the Bill. There is a widespread anxiety that the powers might not be secure if they are challenged under human rights legislation. It would be a frustrating but all too typical example of the way in which the Government behave if powers that are taken with a flurry to demonstrate their effectiveness in tackling welfare fraud result only in a challenge in the courts and cannot be used as originally intended. [Interruption.] The Secretary of State is offering me the commissioner's letter and I look forward to studying it.
We need an assurance not just that the Data Protection Commissioner is content with the Bill, but that the Secretary of State believes that he can stand by his judgment on the front of the Bill that its provisions are compatible with the European convention on human rights, which is incorporated in UK law. We still need further information on that point.
When the Minister of State replies to the debate, I would like to hear his estimate of the burden on business that will result from the enactment and implementation of the proposed legislation. Very few of those working in
the financial services industry believe Ministers' estimates of the cost of compliance, which range from £2.3 million to £7 million. One bank alone believes that 38 additional staff will be needed to comply with the Bill's provisions. We know from Ministers that they are expecting 900,000 inquiries a year when the Bill is enacted. The idea that those inquiries can be dealt with by private sector banks and financial institutions at a maximum cost of £7 million is one that is difficult to believe. I hope that we shall hear more from the Minister of State about the real burdens on business.I hope also that we shall hear more about the way in which the Department will be organised to discharge the powers that it will have when the Bill is enacted. I do not know whether what the Secretary of State said was new. I suspect it was a new and lower estimate of the number of officials in his Department who in the first instance would have powers as designated officers to pursue information, using the provisions set out in the Bill.
Another concern has focused on the number of people who will be so empowered and how well they will be trained. There is the problem of spoofing. Bogus inquiries will be made to banks by people claiming to be working for the Benefits Agency. The Secretary of State should know about that. We have had a great deal of spoofing by the Government over the past four years. There is a need also to have single and reliable points of contact.
It seems that we are reaching the stage where there will be only 14 area benefit offices, with relatively few staff. They will be expected to discharge their powers under the Bill. We shall listen with great interest to anything that the Minister of State can say about what that means for the organisation of the Benefits Agency.
We will not oppose the Bill on Second Reading. The measure has been heavily revised and improved in another place. It is a modest step in the right direction. We do not believe that it will deliver what the Secretary of State and his ministerial team claim for it. That will require energetic ministerial intervention and organisational change within the Department, and that will have to wait for another Government.
7.12 pm
Mr. Frank Field (Birkenhead): The hon. Member for Havant (Mr. Willetts) began his brief contribution to the debate by commenting that this evening may be the last occasion on which we shall hear my right hon. Friend the Minister of State speak from the Government Front Bench. The hon. Gentleman also began with comments about my right hon. Friend, and I hope to conclude my equally brief contribution with comments about him too.
I hope also that there are those who can make a distinction between this being perhaps the last speech that we shall hear in this place from my right hon. Friend, but not the last speech that he makes in Parliament. [Interruption.] If the hon. Member for Havant and others will contain themselves, I will suggest why Parliament would be strengthened if my right hon. Friend's speech this evening were not his last.
Much has been made about the extent of social security fraud. Most of us will conclude that it is too large and that it may be growing. The Government have introduced the Bill because they wish new powers to be more
effective than those that Governments have had in the past to safeguard taxpayers' money. It is fair game to cite and to criticise the figures in "Beating Fraud is Everyone's Business: Securing the Future", but I must declare an interest. For about three months, I was the Minister responsible for counter-fraud, and during that time the document was produced. Though the figures did not come down from Mount Sinai, they did go through No. 10. If there is a wish to query them, people should know that they have that stamp of approval.In the spirit of give and take, I shall suggest four modest but important ways in which the Bill could be improved. As in the other place, I hope that the Government will be open to suggestions. The first involves working families tax credit. I cannot believe that the Secretary of State, who is as anxious as anyone to bear down on fraud, would willingly exclude WFTC from the Bill.
When we consider the Bill in Committee and on Report and table amendments to include working families tax credit, I hope that my right hon. Friend will invite those of his colleagues who have opposed WFTC being part of the Bill to defend their action, and not leave him to defend an omission that I am sure he was anxious not to agree initially.
There is resistance to serious consideration of possible fraud problems with the WFTC. It was not only when the ministerial team first met after the general election that I suggested that if the WFTC was to be part of our programme, we should undertake a benefit review of family credit. During my 13 or so weeks as a Minister, I asked for that review to take place. I am not surprised that those papers no longer exist. I have no doubt that most of them will disappear down a black hole, as did so many of the papers relating to other activities at that time.
From talking before the general election, let alone since, to counter-fraud officers who deal with the WFTC, it would be necessary to be simple beyond words to believe that there was not a major issue. As the Green Paper stated, when new benefits are being designed, we should try to design out the obvious ways in which fraud is being committed on current benefits. It stood to reason that we should have had a benefit review of the WFTC. We did not, but that is water under the bridge. None of us has the power to shift the bridge further downstream so that the water can pass under it again. However, we can ensure that the WFTC comes within the ambit of the Bill. That is my first suggestion.
My second suggestion is to strengthen the proposed penalties. I hope that we shall move to two strikes and out. That should be our policy, with no qualifications and no changes. However, we should not kid ourselves that that will deal with the more serious crimes against taxpayers in respect of social security fraud.
On reading the Bill, it is interesting to ascertain where the Government think that the main fraud is located. It is in that area that they are proposing penalties. There are the individuals who might suffer the two strokes and out, and employers. I know that my right hon. Friend has spoken to those in the credit industry who are concerned about countering fraud, and about the people who they see practising fraud against them and the taxpayer. They have an image of well-organised firms undertaking such activity, and some of them are prepared to use guns.
The thought that a two strikes and out policy, or an up to £5,000 fine for employers, could deter that group suggests to me that we will welcome an opportunity to consider penalties again and further to strengthen the armoury that taxpayers have to protect their hard-earned income.
That leads me to my third suggestion, which relates to national insurance numbers. There was horror in the Department when, as a Minister, I suggested that we should consider the probity, the record and the background of those who issue national insurance numbers. It said that staff would be up in arms. I have never taken that view; with identity cards, all those who have nothing to hide would have no worries about such changes.
We should encourage the Government now to make a move on looking at people's backgrounds to ensure that staff are who they say are when they apply for jobs, especially those who are in charge of issuing national insurance numbers. If one goes back to the gangs--which, after all, are attacking taxpayers' biggest budget and the image that the credit, banking, finance and insurance industries present about these people--it is inconceivable that those highly organised groups have not placed some of their people on the inside so that they know which of those excess national insurance numbers can be used safely for the creation not just of the odd identity, but mass identities. When we come to consider the Bill in Committee and on Report, I suggest that we strengthen the Government's hand on safeguarding national insurance numbers.
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