Social Security Fraud Bill [Lords]

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Mrs. Lait: First, I am happy to add my good wishes to the Govt Whip: it is always hard when people have to work on their birthdays. I am also happy to accept the Minister of State's strictures on the poor drafting of amendment No. 36. The issues can always be dealt with again on Report if necessary.

I was pleased to hear the Minister of State say that the negotiations may end with agreement. They are not yet ended. We do not expect the executive officers to be young, inexperienced or improperly trained. I accept the Minister's assurances that the officers will be of the highest calibre. I said so in my remarks.

The right hon. Gentleman said that the orders under RIPA had not yet been laid, so he could not comment. Potential problems stemming from the read-across remain. I hope that agreement between the Department and the industry will have been reached by the time we consider the Bill on Report and Third Reading. I withdraw the amendment on that basis, with the proviso that we may return to the matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.

Clause 4

Arrangements for payments in respect of information

Mrs. Lait: I beg to move amendment No. 41, in page 8, line 2, leave out from `by' to end of line 21 and insert

    `all persons who fall within subsection (2A)'.

The amendment is designed to ensure that any organisation that has to respond to inquiries under the Bill is recompensed. In the House of Lords regulatory impact assessment, the estimated cost to business was between £2.5 million and £7.6 million. Under the assessment from the Commons, the estimate was reduced to between £2.3 million and £7 million. Why? Irrespective of that reduction, a huge gap of £4.7 million remains in the estimate.

I have already referred to the £205,000 to £300,000 cost to Orange of upgrading only one system. The British Bankers Association estimates that the cost could reach £500,000 a year. The Secretary of State, however, believes that many costs will be marginal. He said on 5 March this year that

    ``the cost to a bank . . . in an entire year is estimated to be equal to just one hour's profit''—[Official Report, 5 March 2001; Vol. 364, c. 4.]

It is always easy to take a swipe at the banks. [Hon. Members: ``Hear, hear.''] It is also often popular, as we can hear from Labour Members. Not paying for this information is equivalent to a stealth tax on the banks. That brings the number of stealth taxes imposed by the Government—leaving aside the Finance Bill—to 46.

The credit reference agencies will be paid because they exist specifically to sell information. The Secretary of State can also make payments to telecommunications providers where they are asked to perform a unique processing service. Can the Minister give an assurance that Orange's fees would be met?

We have already discussed payments to the utility companies for the bulk information that they provide, and it seems sensible to us that the Government should be prepared to pay when they require such a service. It is easy to say that large institutions have the internal infrastructure to manage the processing and can therefore absorb the costs, but that approach, if taken across government, would mean that even the largest, most profitable and tightly managed company would eventually drown in Government demands and be deflected from its main purpose, which is to provide services to customers for which it is paid. The Government seem to be demanding a tailor-made service; therefore, they should pay, which the amendment would make them do.

11.15 am

Mr. Rooker: I will deal first with the hon. Lady's point about the difference between the figures in the Commons and the Lords regulatory impact assessments. The figures were changed from £2.3 million to £7 million to £2.5 million to £7.6 million by Lords amendments. In other words, the Bill changed when it left the Lords; clause 1 was amended, and proposed new subsection (2C)(c) was removed, which was the last part that could be construed as involving fishing.

We will pay credit reference agencies because they are in the business of selling information. That is fair; it would wholly unreasonable for the Government not to do that. We will also pay utilities when they supply information in bulk, because they will incur extra costs in doing so, but not when we make a personal inquiry about an individual, which we are entitled to do under clause 1. Hon. Members must appreciate that the utilities will be contacted in two different ways. There will be the bulk transfer of information on abnormally low usage based on addresses, and, as with banks, we will have the power to ask the utilities about individuals—how they pay their bills, for example. We will also pay telecommunications companies, because they have put in place special technology to meet Government requirements, such as the reverse searching of telephone directories. Other than that, organisations will not be paid; indeed, the Inland Revenue and Companies House are not paid now for supplying information to the Government or the Information Commissioner.

Mr. Webb: Table 3 on page 10 of the regulatory impact assessment shows that the utilities will have to do 60,000 searches for the DSS, while the banks will have to do 225,000 searches. I might be misunderstanding the terms, but one would have assumed that bulk searches and information would be easier to provide than individual information. That suggests that the banks have a stronger case for being paid than the utilities because they provide individually tailored information. Secondly, the banks are being asked to answer three times as many inquiries, all of which are individual, so they have an even stronger case for being paid.

Mr. Rooker: I shall take advice on that, but table 3 does not show figures on bulk information inquiries. Hon. Members should separate the utilities as a parallel issue. We will take separate powers to ask for information from the utilities on abnormally high usage of gas, water and electricity, which will enable us to data match our records based on addresses. That power has nothing to do with individuals and does not relate to individuals, bank accounts and credit reference agencies. Also, the table does not contain the number of inquiries, but our estimate of individual inquiries related to people for whom we have reasonable grounds to believe that they have committed, are committing or are about to commit social security fraud. The two are separate.

The Government require various bodies to provide information—for example, VAT returns from Customs and Excise. The banks must give information to the Inland Revenue in bulk on interest paid on savings, but are not paid for that, and the utilities must provide information to the regulator. Since the 1940s, the DSS has had powers to require information from employers about their employees, and we do not pay for that. Fraud is theft from the taxpayers; businesses are taxpayers and we are trying to reduce their taxes and ensure that we do not waste public expenditure.

I do not want to upset anyone, but we know that the Tory party is the bankers' friend. I do not want to goad members of the committee into getting up and making their election hustings speeches, but Barclays, for example, has made a 42 per cent. increase in profits, with profits before tax of £3.5 billion. Our estimate of the cost of this measure for Barclays is about 75 minutes of profit. Other banks have reported huge increases in profits, which caused the Bankers Association to publish a special briefing defending what people might think to be excessive profits.

Even if banks made less generous profits, however, the arguments would still apply, as they apply to everyone else who gives the Government information. Organisations such as Companies House and the Inland Revenue give information to the Information Commissioner in the normal course of events. We do not seek to put extra burdens on those organisations, although there will be a cost. We are using our best endeavours to reduce the high levels of social security fraud without being oppressive or imposing onerous burdens; one can never eradicate such things, and keeping up to speed is a constant job. We are making only modest demands on those organisations and, when a company exists in business to provide information, it is only right that we should pay for that information when we obtain it.

Mr. Webb: On a brief point of clarification, I had not understood that the bulk request for information was not included in the table in the regulatory impact assessment. That prompts two questions. First, will the utilities be paid for the bulk information alone, not for the 60,000 inquiries referred to in the table? Secondly, the Minister implied that he did not know how many bulk requests would be made because the pilots had not happened, but the table states a figure of 60,000 for individual requests. Does the Under-Secretary have any idea of the scale of the bulk information? Are we talking in millions, for example?

Mr. Rooker: I draw the hon. Gentleman's attention to paragraph 21 of the regulatory impact assessment, which contains bullet points in relation to the

    ``estimate of the costs of obtaining information in bulk from utility companies . . . the cost of extracting data from utility companies . . . the cost of investigating additional referrals''.

That represents our best estimate at present, based on the fact that we have not done the pilots. It is true that the numbers may run high because, when the utility companies trawl their accounts and build a computer programme, someone will have to work out a definition of abnormally high or low usage for a series of dwellings, so that we are given the information that we will match within parameters agreed by all parties. Those figures represent our best estimate.

The companies may have to trawl millions of accounts to find abnormally low and high usage. Off the top of my head, I think that there are 27 million dwellings in this country. They do not all have gas, especially dwellings in the old mining villages that were prevented from having gas in the old days. Those issues must be considered, and we will base our decisions on the information that is agreed. We must be reasonable in that respect, so we will do the pilots to check the parameters.

Mrs. Lait: As I said, it is easy to take a pop at the banks. We shall probably return to the matter on Report, but for now I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

        It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

        Adjourned till Monday 9 April at half-past Four o'clock.

The following Members attended the Committee:
Maxton, Mr. John (Chairman)
Atkinson, Mr. Peter
Burden, Mr.
Davidson, Mr.
Eagle, Angela
Hepburn, Mr.
Humble, Mr.
Mountford, Kali
Pearson, Mr.
Prentice, Mr. Gordon
Rooker, Mr.
Watts, Mr.
Webb, Mr.

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