Social Security Fraud Bill [Lords]

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Mr. Rooker: I know that we have preached joined-up government in the past four years, but that does not mean that we are all in one big block. There are different Departments. The DSS administers the social security system and the Treasury and its agents—the non-ministerial departments of Customs and Excise and Inland Revenue—administer the tax system. There is no doubt that WFTC is part of the tax system, not social security, which is why it is not part of the Bill.

I accept that there is a read-across. I assume that a person can claim WFTC and receive housing benefit, child benefit and other such benefits. The Inland Revenue has powers to gather information and investigate cases of suspected WFTC fraud, including obtaining information from third parties—not anybody but certain third parties—through the tax credit regulations. The amendment is simply not necessary. A system in the Inland Revenue already deals with the problem and there have been prosecutions.

The WFTC is a new tax credit. There is obviously a change on the part of the Government in ensuring that it pays to work; to that extent, the WFTC is a great success. We must watch out for where fraud gets into the system, but the issue is being dealt with by the Inland Revenue and is not a matter for the DSS. On two occasions, the hon. Lady referred to the level and civil service grade of the staff, but that is a matter for another amendment.

The Government take welfare fraud in its widest sense extremely seriously. However, individual Departments are responsible for the legislation and either paying the benefit or the tax credit. The money comes from their budgets, so it is best left for them to deal with the legislation. We do discuss matters across Whitehall. The DSS is represented on the interministerial group on welfare fraud—indeed, I chair the meetings—as is the Treasury. Ministers and officials across Whitehall discuss anti-fraud measures. We recently beefed up our game with two new members of staff and a re-organisation involving a head of investigations and a head of intelligence who play an active role across Whitehall, but the Inland Revenue must be left to deal with the WFTC.

Mrs. Lait: I am grateful to the Minister for that explanation. He said that there have been prosecutions in cases of WFTC and CTC fraud. The detail is obviously a matter for the Treasury, which I hope will be forthcoming from parliamentary questions.

Mr. Rooker: I asked myself such a question this morning. I would not want the hon. Lady to go away, ask a parliamentary question, get a written answer and think, ``What a Minister, he did not even tell me that''. I understand that there have been two successful prosecutions—one involving an employer and one a claimant. Others are pending. It is a new tax system. She can, of course, follow the matter up in Treasury questions.

Mrs. Lait: I am grateful to the right hon. Gentleman. I was not impugning that he had not done his research.

Mr. Rooker: The hon. Lady would have done so later.

Mrs. Lait: That is a most ungenerous and uncharacteristic comment from the right hon. Gentleman. I was going to say that, based on the answers from the Treasury, we may or may not seek to return to the subject. However, at this stage, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr. Webb: I do not want to go over the same ground, and you would not allow me to do so, Mr. Maxton, but I want to draw the threads together and briefly pick up two points about the powers under the clause.

The amendments that we tabled related to our concern about independent scrutiny. I am not convinced that the Minister's responses have satisfied us on that point. He said that there are a lot of internal checks, which we do not doubt. He said that there is good training, which we do not doubt. However, he has also admitted that there are rotten apples in the barrel. I could not help thinking that Nick Leeson was probably subject to internal checks, yet he managed to run up billions of pounds of debts.

12.30 pm

Angela Eagle: He did not work for the DSS.

Mr. Webb: Had he worked for the DSS, I suspect that he would have done the same. It is not sufficient reassurance to be told that the Department does its own checks and that we should not worry. The powers under the clause are not subject to enough independent scrutiny.

My second substantive concern, which arose during our discussions this morning, is that the clause allows a person to be treated as guilty until proven innocent if he has undertaken one act of benefit fraud, has been found guilty and has paid the fine or other penalty. The Bill makes that perfectly clear, and I cannot understand why the Minister seeks to argue to the contrary. The clause contains no further check whereby someone who has previously committed an offence cannot have their bank accounts trawled through. The lack of independent scrutiny and the freedom to trawl through the accounts of someone who has once committed an offence mean that I am not happy for the clause to stand part of the Bill.

Mr. Rooker: I would like the hon. Gentleman to leave the Committee more satisfied than he is. The Bill has not appeared out of the blue. I draw his attention to the report published just over a year ago by Lord Grabiner on the informal economy. I have mentioned the scale of what the Department pays out each week. The amount of fraud is arguable, but we know that there is at least £2 billion. We are not prepared to put up with that. The taxpayers are being defrauded—including low-paid tax-paying workers and small businesses that are struggling to make ends meet. We have a duty to make sure that, in so far as is possible, fraud is eradicated from the system.

We have tried our best to pare the powers in the Bill to the bone. I freely admit that the drafts of the Bill and ideas that we were considering a year ago were much wider. We were not prepared, as Ministers, to defend some of the more extensive powers that we considered with our advisers. We are therefore convinced that the powers in the Bill are justified, and we are prepared to defend them robustly. My hon. Friend the Under-Secretary has made it clear that we do not intend that there will be fishing expeditions against individual citizens. If such expeditions take place, we shall come down on those responsible like a tonne of bricks, because that is not provided for in the Bill. It is to the credit of the Department that we sort out the bad apples rather than trying to cover things up. However, the extra powers are needed.

This Bill is part of the price that the country pays for not having an identity card system. We are virtually unique in western Europe in not having such a system. Other countries do not need this kind of legislation because they can carry out identity checks.

I should like the hon. Member for Northavon to be more content than he is about the issue in proposed new subsection 2C. We have taken the advice of our officials in relation to a person who has committed a benefit offence. Risk analysis is undertaken so that we do not waste the time of our staff. We know that certain people who claim a benefit are more likely to commit a benefit fraud during a particular period than others. Risk analysis allows us to find out when fraud pops up in relation to certain benefits. Some of those frauds are related to a time scale, which allows us to target them. However, if someone has committed an offence, that is no reason for ruling him out, but it must appear to the officer at the time that there are reasonable grounds to investigate. To approach the selected third parties, we must consider the thrust of the powers under the clause. In response to the hon. Member for Northavon, I should say that the power is an investigatory power. People undertaking the checks will not be those who decide whether benefit is paid. That is a different issue. It is not exactly Chinese walls, but there are different staff and rules in the Department for such decisions.

The power relates to section 109B of the Social Security Administration Act 1992. The officer must be investigating an alleged current offence, such as an allegation—whether or not anonymous—or a complaint from someone on the fraud hotline. There must be a reason for the investigation to begin. There must not be a fishing expedition. An investigation cannot take place because someone has a badge on his head, which says, ``I was once done for fraud''. There must be a current alleged offence. The official must then have reasonable grounds for believing that the new offence has been committed. I am confident that the Bill cannot be understood to provide a permanent power simply because someone has committed an offence, as a result of which his accounts will be inquired into ever more. That is not our intention.

The court would usually construe ``has committed'' in the light of the purpose for which the power is given. The power is given to investigate. The courts would take a harsh view if we operated that power in the way outlined by the hon. Member for Northavon. The court would apply the power to the offence under investigation. To be honest, my hon. Friend the Under-Secretary and I were not entirely satisfied with the way in which the hon. Gentleman asked the question and referred to the commas. We must consider the clause as a whole, taking into account how it will fit into the 1992 legislation.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2

Electronic access to information

Mrs. Lait: I beg to move amendment No. 22, in page 4, line 43, after `contain', insert `specific'.

The Chairman: With this it will be convenient to take the following amendments: No. 24, in page 5, line 16, leave out `particular' and insert `specified'.

No. 29, in page 6, line 8, leave out `particular' and insert `specified'.

No. 31, in page 6, line 24, at end insert

    `subject to the terms of the code of practice'.

No. 32, in page 6, line 24, at end insert

    `subject to the approval of a magistrate'.

No. 33, in page 6, line 26, after `information', insert

    `relevant to the investigation being undertaken and'.

No. 34, in page 6, line 42, leave out from `case' to end of line 43.

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