Social Security Fraud Bill [Lords]

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Mrs. Lait: I beg to move amendment No. 51, in page 11, line 35, after 'proceedings', insert

    `where benefit is in payment or, if benefit is not in payment, when the entitlement first arises,'.

The Chairman: With this it will be convenient to take amendment No. 52, in page 11, line 37, at end insert—

    `(6A) The Secretary of State shall provide for a central record to be maintained of

    (a) all convictions for benefit offences

    (b) all subsequent periods of disqualification of sanctionable benefits

    (6B) Such records shall also include reference to the National Insurance Number held by the individual concerned.'.

Mrs. Lait: I thought that considering the amendments together would be easier for the Committee, because amendment No. 52 is consequential on amendment No. 51.

The purpose of amendment No. 51 is to include the sanction implied in page 29, paragraph 106 of the explanatory notes to the Bill, which state:

    ``The offence for which the second set of proceedings has been brought must occur within a period of three years of the date on which the offender was convicted for the first offence.''

If such a hazard exists, it should be dealt with by the Bill. If the two-strikes provision is to be effective as a deterrent, it must be clearly enforced.

Amendment No. 52 sets out the measures that should be consequent on amendment No. 51. The most important factor is the use of fraudulent national insurance numbers, which are known to most of us as NINOs. That matter is dealt with in the second part of amendment No. 52, which would also provide for the keeping of a clear and precise record of offences that would enable an enforcing officer at the Benefits Agency or the Department to ensure that the claimant served any period of disqualification. The loss of benefit provision must be properly enforced to provide the deterrent that the Government seek.

Amendment No. 52 reflects the concern that we all have about the large number of national insurance numbers in operation. There are more than 81 million such numbers, and the Minister of State has helped us by breaking down where they come from. We understand that every person in the country, whether they work or not, has a national insurance number. Therefore, that accounts for about 60 million. Roughly 12 million NINOs remain in existence that belong to people who have died whose estates may affect other people's entitlement to benefit. That makes roughly 72 million, so about 9 million are going begging.

5 pm

In a reply to a question about NINOs asked by the right hon. Member for Birkenhead (Mr. Field), the Minister of State said that

    ``only in 11 cases has it been established that the account was deliberately created in order to establish a false identity and fraudulently gain access to benefits.''—[Official Report, 13 March 2000; Vol. 346, c. 53W.]

The Balham experiment, which showed that there were about 220,000 mismatched numbers, resulted in about 166 arrests and six deportations for identity fraud. In a debate on the Bill in the other place, Baroness Hollis said that extending the experiment to neighbouring Benefits Agency offices in 1999 resulted in a further 46 arrests. The Balham experiment suggests that the problem with NINOs is much larger than the Department found when it made a computer check. I understand that the computer check is being run again. Is the Minister of State planning to extrapolate the Balham experiment to other benefit offices so that we can get a feel of whether the 9 million missing NINOs is made up of the 220,000 mismatched numbers multiplied by the number of benefit agency checks required? That may give us some idea of what percentage of those 9 million NINOs are fraudulent and, therefore, how tough the Department will need to be to sort out the national insurance numbers system.

Taking the two amendments together has made it easier for the Committee to debate the problem of benefit fraud. I look forward to the Minister of State's response.

The Minister of State, Department of Social Security (Mr. Jeff Rooker): I think that I can satisfy the hon. Lady--I cannot accept the amendment, but I can do the next best thing. I shall not read my speaking notes, but shall use the pre-note. I am told that amendment No. 52 would have no effect; what it states is precisely what the Department intends to do. Regulations will be made once the Bill is enacted. I shall not speak about the technicalities of amendment No. 51. The argument is flawed, but that is inevitable because of the way in which such measures are drafted. However, such a measure is not needed.

We intend to prescribe in regulations made under the powers in clause 7(6) that the disqualification period will start either within 28 days of the second conviction if, at that point, the person is entitled to a sanctionable benefit or, if the offender is not entitled to a sanctionable benefit at the time of the second conviction, when he first becomes entitled to a sanctionable benefit within three years.

I shall try to be as brief as I can—I could be a lot more wordy if I used my speaking notes. We can deal with the points raised by the hon. Member for Beckenham. First, I have outlined how we intend to operate. Secondly, that will be made clear in regulations. There will be no doubt about when the ``two strikes and you're out'' provision will be used, and I repeat that it cannot be used unless there has been a second conviction. The Department will not operate on the basis of punches; it will require convictions in a court of law before the ``two strikes and you're out'' sanctions can be applied.

There are not 9 million missing NINOs or missing people. Without the benefit of my notes, I can tell the hon. Lady that the figure of 60 million, to which she referred, plus the 12.5 million numbers relating to deceased people, which are kept on the system, make up the 72.5 million. That leaves another 9 million to make up the 81 million. Since the national insurance system started, anyone who has worked here or who was born here and left the country permanently has had a NINO. Those numbers still exist.

Anyone who came to the country for a couple of weeks' fruit picking in East Anglia or in Scotland was allocated a NINO. They might never come back to the country, but they have been given a number. Millions of people have left the country since 1948 and, over those 50 years, others came to work here temporarily. They were given a NINO, but they may have left and might not come back. They amount to a substantial number of people. I am not saying that that represents the grand total, but it is substantial. There are not 9 million missing people or missing NINOs.

As to data cleansing, on Second Reading I said that in the last year for which we have figures, we cleansed and removed more NINOs than we did in the previous few years combined. However, I do not have the exact number. During the cleansing operations, we have found instances of either one person with two NINOs or two people sharing the same one. Such things happen, perhaps because an employer supplies the wrong number or because of human error during data inputting, but discovering such discrepancies is part of the cleansing operation; then we can upgrade the system.

The NINO system is an actively managed operation. It is not a static list of 80-odd million numbers, locked away in the Department's computers and left there. Where there are doubts or suspicions, flags are placed on numbers so that if they are ever activated again, the system will show that that has happened and that we need to investigate why and by whom the number is being used.

The hon. Member for Beckenham referred to the Balham project, which was a pilot. We have put it on record that the Balham techniques of in-depth analysis and more systematic questioning about NINOs are being rolled out across the country, virtually as we speak. They will be fully rolled out by October, so there will be designated people across the country trained in those techniques. I have sat behind an interviewer at Balham who was going through the process and I know that we shall apply what we learned at Balham across the country. That is not to say that we can in any way extrapolate the Balham arrests and deportations. However, we can say that those who were interviewed in Balham about national insurance numbers were spoken to on the basis that they had a job offer, but did not have a NINO.

That situation can apply only under a peculiar set of circumstances. It does not occur in the case of 16-year-olds born in this country, because their NINOs are activated automatically. In the light of the Balham project, the issue of national insurance numbers will be a much more tightly controlled and systematic operation. The fruits of that will become clear as the months pass.

I have been as brief as possible, and I hope that I have answered the hon. Lady's points about the amendments and about the Balham project. However, I am happy to answer any other question that she has.

Mrs. Lait: I am grateful to the right hon. Gentleman for saying that our amendment was correct. It seems unfair that it should not be included in the Bill, but no doubt a version of it will be included in the regulations. Will those regulations be subject to the affirmative resolution procedure? If so, I am sure that we will meet in this Committee Room or another to thrash out the question in due course.

It is nice to know that we are on the right track. I am sure that the right hon. Gentleman or his successor will keep us and the country abreast of progress on the cleansing of the NINO records. That is crucial—I have constituency cases that are affected by the problem.

Mr. Rooker: I can confirm that the regulations will be subject to the affirmative resolution procedure.

Mrs. Lait: That is the best news that we have heard today. On that basis, I beg to ask to leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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