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Mr. Andrew Rowe (Faversham and Mid-Kent): My right hon. Friend is making an important point. One of the "frauds" that I often hear about in my surgery occurs when someone carries out a short piece of work that, if declared, would remove him from benefit for six months. That seems to invite the type of fraud that my right hon. Friend has mentioned.

Mr. Lilley: Let me make it absolutely clear that my hon. Friend and I would not suggest that even small frauds

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can be excused or exonerated. They are wrong and we should use strong measures to ensure that they are eliminated. We should try to change the culture and take steps to prevent and detect such frauds. Those who defraud the system in that way must pay either through an administrative or criminal process, but the punishment should reflect the severity of the offence and should not be designed to attract good headlines or be imposed simply at the behest of spin doctors rather than those who know how best to run the system.

Several other issues have been raised in the debate. One is the old faithful of national insurance numbers. I have some sympathy for Ministers when they are faced with the apparently alarming disparity between the 82 million national insurance numbers that have been issued and the 48 million people of working age and the 56 million in the total population. At first sight, it implies that there are 26 million criminals or, at least, 26 million identities claimed by criminals. However, the very size of the discrepancy indicates that that is not the case; it means that the causes must be major. As I recall, one cause is the fact that we keep people on the computer system after they have died because their widows and other surviving relatives may be entitled to benefits. There are also millions of people who have worked in this country for a time and then gone abroad, and their numbers remain on the computer.

If there were a small discrepancy between the number issued and the number of people at work, that would be much more worrying because it might be attributable to the crime that we fear may be prevalent. Obviously, there is an element of national insurance number fraud and cases of people creating false identities. I began a process of tightening up the national insurance system to make fraud more difficult, and I am pretty sure that the Government have continued the process with the officials who have worked throughout that time. I hope that fraud is becoming more and more difficult. By no stretch of the imagination can we suppose that there are 26 million false numbers created by criminals.

I understand why people raise the issue, and I hope that Ministers will publish the reconciliation between the number of people in the population and the number of national insurance numbers. The Secretary of State gave the wrong explanation for that discrepancy. It is not because of the extension of national insurance numbers to women and children because they are part of the population, although that seems to have escaped him. It is because of other factors, principally those that I mentioned.

There is misunderstanding also about organised fraud. It is a serious problem, which often involves large sums, and it is important that we tackle it. We now have specialist units homing in on it. However, it is important to recognise, as I am sure my right hon. and hon. Friends will, that it does not account for the major part of benefit fraud, which is committed on a small scale by individuals who are working and claiming, living together and claiming separately, not declaring assets or committing order book and giro fraud and theft.

That brings me to the benefit payment card. The Secretary of State said that it was a great disaster that the Government had inherited, but in fact it was a disaster that they seemed to allow to develop over a couple of years. The then Secretary of State for Trade and Industry, who as the Minister responsible for the Post Office was

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responsible for reporting to the Trade and Industry Committee on the matter, repeatedly told the Committee that the development of the benefit payment card was going well and would be completed on time, if not entirely within budget.

The process clearly did get behind during that period, which was probably because of bad management and lack of ministerial involvement. The Government were more interested in giving complacent reports to the Committees--the right hon. Member for Hartlepool (Mr. Mandelson) got rapped over the knuckles for trying to pull the wool over its eyes--than in jumping up and down on officials to establish what was going on and to make sure that the project was brought to a successful conclusion. The Secretaries of State for Social Security and for Trade and Industry had both been Chief Secretary to the Treasury, and the Treasury had never liked the project, so they closed it down summarily. We have lost it, at least for as long as the Government remain in power.

That is sad not only because the benefit payment card would have been an effective way of restricting fraud, by eliminating theft and the use of the order book and giro system, but because a related part of the system was the customer automatic payment programme, which set up an individual account for each claimant, so that all the benefits that they might receive could be dealt with together. That was going well. It was more or less on time and on budget. However, it seems to have lapsed. If that is not the case, I would be happy for Ministers to set me right. The programme had a great deal of potential and was an intrinsic part of creating a secure benefits system from start to finish for the process of allocating benefits.

The Bill at best makes a small contribution to a major problem. When I was in Slovakia, I went to see the little Tatra mountains. The tourist literature said, "Come to the little Tatra mountains, the biggest small mountains in the world." The Bill is the biggest small contribution that the Government can make to the elimination of fraud. However, any contribution is welcome, especially from such a source. I shall not oppose it, but I hope that after the general election my hon. Friend the Member for Havant will be in charge of the Department. He will give renewed momentum to the battle against fraud and to the reform of the welfare system, as he is singularly well equipped to do.

9.6 pm

Mr. Christopher Chope (Christchurch): It is a pleasure to follow my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), who spoke with such knowledge and ability. It is a great shame for the country that he was not able to carry on beyond 1997 the good work that he started in the previous Government. It is clear from his contribution that we would have got on top of the problems with his common-sense approach.

I understand that the debate is a farewell show for the Minister of State. I, too, pay tribute to him. We spent many long productive hours discussing local authority legislation. Above all, he will be remembered for bluntly telling the Prime Minister and the Labour party that they were wrong about the dome. He had the courage of his convictions, saying that he would never visit it because it should have been in Birmingham.

Since the Government came to power, we have fast become a nation of rip-off merchants. The Bill is another attempt to tweak the system by dealing with trivial

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matters, but fraud is rife. We heard today that the foot and mouth outbreak is thought to have started because of the illegal import of meat. My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) recently spoke in the House about the fact that the illegal importation of immigrants and asylum seekers has reached epidemic proportions. We know that the illegal import of tobacco, alcohol, fuel and drugs is higher than ever.

The Bill addresses the problem of £7 billion of social security fraud. It is important to tackle that, but why have the Government allowed fraud to develop elsewhere? I have spoken before about tobacco fraud. Once people get into the business of being able to defraud the taxpayer, they also feel free to defraud the social security system. They become fraudsters. It is amazing that in the Government's first year, the yield from tobacco tax was about £8.4 billion. This year, it is £7.4 billion despite the fact that smoking has increased and the tax on cigarettes has risen by a third.

Madam Deputy Speaker (Mrs. Sylvia Heal): Order. I have allowed the hon. Gentleman to speak for a few minutes on such matters, but he must now confine his remarks to the Bill.

Mr. Chope: I am trying to illustrate my argument by referring to other issues with which the Government have or have not dealt. Social security fraud is a substantial problem, but the Government's policies are making it worse. They are encouraging many people to become fraudsters because it is a way to make sufficient money.

Mr. Rowe: My hon. Friend has some justification for his line of argument. I live in Kent, and it is well known that vans cross the channel two or three times a day. They are driven by people who have nothing else to do. I have no doubt that many of those people are claiming benefit because the activity in which they are engaged is one that they cannot conceivably declare to the authorities. They therefore have to pretend that they are unemployed.

Mr. Chope: My hon. Friend is right, and I am grateful to him for making that point. The issues of tobacco fraud and the smuggling of immigrants, alcohol and fuel are inextricably linked with the lawlessness that the Government have encouraged through their taxation policies.

The Government say that they will be able to make savings by reducing social security fraud, but the evidence suggests that the savings will be nothing like those that could be made if the Government had a more realistic policy on tobacco fraud. It is estimated that that fraud is costing £3 billion a year. In a written question that was answered today, I asked the Chancellor of the Exchequer what targets he has set for the reduction of smuggling of tobacco, alcohol and fuel--

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