Examination of Witnesses (Questions 120-139)
MS RACHEL LOMAX, MR JOHN CODLING AND MS ALEXIS CLEVELAND
MONDAY 4 FEBRUARY 2002
120. I am not aware of having had it yet.
(Ms Lomax) You should have had it today.
121. I checked the Table Office at lunchtime, so if I have not yet seen it, it is the doorkeeper's fault.
(Ms Lomax) I made a particular point that you should have done.
Mr Bacon: I shall look forward to reading it.
Chairman: Can the rest of us be let into this? When did you write?
122. I did it on 8 January, the first day we were back this year, precisely so I would have it in time for this hearing. It was to ask in which years in the last 30 years the accounts have been qualified and for what reasons. I received a holding answer on 15 January. The Secretary of State last Monday, a week ago, said that he would look into it, so it has taken nearly one month and as of one thirty this afternoon the Table Office still had not seen a reply.
(Ms Lomax) You should have one waiting in the Table Office now. I am sorry that it has taken a long time. Mr Codling can explain why it took so long. We actually had some difficulty in digging out your information.
(Mr Codling) Our records did not immediately allow us to go back more than ten years.
123. Do you not keep that each year going back into infinity?
(Mr Codling) The organisation does. I personally did not have that.
124. I did not mean you personally, but this is thousands of millions of pounds each year and it would seem to me sensible to keep this always.
(Mr Codling) We have now replied.
125. But you do not keep the Appropriation Accounts each year within the Department.
(Mr Codling) We do.
126. You do?
(Mr Codling) We do. It is on that basis that we have now replied.
127. Was it not a case of just looking through each book each year?
(Mr Codling) It was.
128. Why did it take so long?
(Mr Codling) This was only brought to my attention late last week. It is to do with our internal processes in answering PQs and the particular location of our documentation in a particular library. It is a purely practical problem which inhibited the reply. I can assure you that it was not a strategic one or one of intent. When it came to my attention last week, I caused it to be replied to more accurately than the draft and it is now certainly on its way to you, it is despatched. The essence of the answer is that from 1988-89 onwards the Appropriation Accounts have been qualified for essentially the same reasons we have been discussing today, fraud and error, but not prior to 1988-89. I cannot answer the question you might ask me: why were they not qualified previously?
129. I shall read the answer rather than take up the time of the Committee and perhaps come back later. In the area of benefit review which I was looking at, it states what the estimated fraud and customer error for Income Support is and then in a subsequent paragraph talks about a further set of cases which are highly suspected and another set where there is a low suspicion. I just want to be clear. Is this figure of £890 million in paragraph 3.5 of the C&AG's report, the £890 million to which everyone has been referring, a total figure of fraud from income support or fraud and error, be it customer or official error, or is it a figure merely of what it describes as validated data? Would it be the case that there are other lumps of money on top of that where there is a high suspicion or low suspicion or does the £890 million include both?
(Ms Lomax) The £890 million includes fraud, customer error and official error. It is the total of these losses and means these amounts of expenditure were irregular, and had to be reported here.
130. In the March 1999 document Safeguarding Social Security—A Contract for Welfare, which I think was a White Paper, referring to total fraud and error across your Department, in paragraph 1.4 it refers to fraud of at least £2 billion plus a further £3 billion where there were strong indications, a strong suspicion but which could not necessarily be proved, and a further £2 billion where the evidence was weak, making a total of around £7 billion. In addition to those three items, £750 million had been overpaid and £600 million had been underpaid. Could you say what the comparable figures are for today?
(Ms Lomax) I want to draw a sharp distinction between Income Support and Jobseeker's Allowance where we have done an enormous amount of work trying to understand what we are losing across those benefits, Housing Benefit where we have done a certain amount of work, and elsewhere across the benefit system where what we have done is a series of snapshots on much smaller samples. We have great difficulty in saying with a high degree of confidence what the level of fraud and error is across the whole benefit system.
131. I appreciate that this classified them pretty much into: certain £2 billion, high suspicion £3 billion but no proof and low suspicion £2 billion but no proof. I appreciate there will be figures about which you have more certainty and figures about which you have less certainty. I am asking which would be the comparable three figures: definite, high suspicion but no proof, low suspicion but no proof?
(Ms Lomax) These are figures for losses across the whole benefit system, not just IS and JSA.
132. Yes, this first page of the White Paper is talking about the whole lot, £7 billion.
(Ms Lomax) That is right. I find it very difficult to update those figures or to understand what the basis for them was.
133. You find it difficult to update them.
(Ms Lomax) Yes.
134. You find it difficult to understand what the basis for these figures was.
(Ms Lomax) I draw a distinction between figures where we do have a fairly good and statistically robust idea of what we are losing, which are the figures which are here in this document today, and those much more speculative numbers which were put together several years ago on the basis of—
135. Am I right in thinking this was a White Paper, Safeguarding Social Security—A Contract for Welfare?
(Ms Lomax) This was about four years ago. It was a Green Paper.
136. March 1999. Unfortunately I do not have the original.
(Ms Lomax) It involved a great deal of by and large estimation. You are asking me to update it and I am saying I am not in a position to do that.
137. I appreciate that if you cannot update it that is plainly the case; if you cannot, you cannot. I am surprised that figures would be tossed around in a Government White Paper which were so speculative—
Chairman: Is that an answer?
(Ms Lomax) No, I was just looking.
138. If you cannot update these figures, what figure do you carry around in your head for the total quantum of fraud and error in your Department?
(Ms Lomax) The figures I carry around are the ones we put in the notes to the accounts. Note 31 says that the Department estimates there is some £2 billion fraud within the Social Security system.
139. In total.
(Ms Lomax) In total. That is across the whole range of benefits.
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