Tax Credits Bill

[back to previous text]

Mr. Clappison: I have listened carefully to what the Minister has said, and he has deployed his powers of advocacy to the full. He has made the best fist of what I think is a bad case. In former incarnations, he will often have had the experience, entirely on instructions and quite properly, of painting a picture that bears only a thin relationship to the facts. He has done the same today. He has done it to the best of his ability, but notwithstanding his considerable ability, the position remains entirely unsatisfactory.

The Minister said that we should not simply be ratchetting up the maximum sentence and that that will do no good in itself. I have served on a number of Committees since his party has been in government, as he may have done himself, at which an entirely different view has been taken. When the Government have wanted to emphasise a particular offence and suggest that it be treated with greater seriousness, they have increased the maximum sentence. They have done that for a range of offences, where they have considered it important and proper for an offence to be taken more seriously.

We think that that applies here and that this offence should be taken more seriously than it has been in the past. In some of the Minister's wider comments, he moved away, failing to understand the wide-ranging consensus in society that people who cheat the system are cheating other people and should not be allowed to get away with it. It is on that basis that we have all the hotlines, helplines and means of uncovering fraud that different Governments have introduced. Ordinary people get so annoyed and hot under the collar when people cheat the system that they want to pass on the information and ensure that the offenders are brought to book. The tragedy is that far too few are brought to book.

Mr. Steve Webb (Northavon): I understand what I hesitate to call the hon. Gentleman's convictions about the matter, and his desire to signal his party's perfectly legitimate concerns about fraud. However, does he really think that someone considering fraud of the order that might give rise to a seven-year sentence is going to sit down and think, ''I'd risk seven years in the slammer, but now it's 10 years, I certainly won't touch it''? Is that realistic?

Mr. Clappison: The Government certainly seem to think so. Their series of television advertisements about benefit fraud feature a man sitting in a cell and ask whether it is worth getting away with benefit fraud. There are very few prosecutions for such fraud. The Minister referred to a selective policy, and it is a very selective policy that generates only 22 prosecutions. The chance of being prosecuted at all for tax credit fraud let alone receiving a substantial sentence is very low.

Ms Karen Buck (Regent's Park and Kensington, North): In responding to the hon. Member for

Column Number: 213

Northavon (Mr. Webb), the hon. Gentleman has made the Minister's case for him. Surely, the important element of the advertising campaign is the chance of being caught. Its point is that the calculation is not the length of the sentence, but the statistical chance of being caught out.

Mr. Clappison: That advertisement is, then, a work of fiction, and will be seen to be such in the case of tax credit fraud. There have been only 22 prosecutions during two years. There may be debate about how much fraud there is in the tax credit system, and how susceptible it is to fraud, but there is a history of fraud in other forms of benefit and credit. There was fraud in family credit, over which I do not intend to draw a veil, and a wealth of stories of fraud in the tax credit system, as we heard from both sides of the House on Second Reading. On any reasonable view, the number of prosecutions is low. It does not signal to people that the matter is being taken seriously.

We do not have the necessary deterrents for those tempted to commit fraud. They should receive a strong message that we are not prepared to put up with fraud and that if they commit it, they will not only be investigated but run the risk of prosecution and a prison sentence. As matters stand at the moment, given the evidence and facts about the number of prosecutions, that is simply not the case. We must improve that unsatisfactory situation, and the amendment is one way of doing that. I am not convinced by the Minister's arguments, although I shall reflect on them, as he invited me to. I shall be interested to receive the statistics, about which he promised to write to me, giving the breakdown of sentences for those convicted of tax credit fraud.

Mr. Boateng: In the interim, I can assist the hon. Gentleman on that. The statistics are that 5 per cent. received probation orders, 26 per cent. community sentences and 26 per cent. custodial sentences. That gives him some flavour. I shall ask for further breakdown so that we can assist on those whose disposals are not included in those figures.

I should say that I well understand the point that the hon. Gentleman makes. It is one thing to call for a more rigorous prosecution policy by the Revenue—getting the balance right is a matter for the Revenue and the commissioners, not for Ministers—if that is what he wants, but it is quite another to believe that that will be achieved by ratchetting up the maximum sentences. With respect, I suggest that that is not the way forward. However, I am grateful that the hon. Gentleman has said that he will reflect on the matter, and, no doubt, those responsible for prosecutions who have heard his call will reflect on the merits of what he has said.

Mr. Clappison: As I have already said, the argument on ratchetting up is not borne out by the steps taken by this and previous Governments, over certain offences, where they have increased maximum sentences to mark that the offences should be regarded more seriously in the future.

Mr. Boateng: This is an important debate, and the hon. Gentleman makes an interesting point. If my memory serves me well, I have in this Room accepted

Column Number: 214

amendments tabled by the hon. Gentleman and his colleagues on criminal justice matters to increase maximum sentences where pubic protection is an issue. It is entirely right to do that. Where public protection is involved, the basis for increasing maximum sentences has been not some vague desire to send a message, but a determination better to protect the public.

On this offence, we are putting in place powers of sentencing that, in our view, will protect the public, and ensuring that those responsible for prosecution policy get the balance right: bringing prosecution and civil penalties, and deterring fraud or negligence, but not deterring genuine claimants. That is important too, and the balance must be right. The hon. Gentleman made a point about the number of prosecutions and that point has been heard. However, we do not feel able to engage in what would amount to gesture legislation by simply upping the maximum sentence from seven to 10 years without any effect at all.

Mr. Clappison: The Minister makes a valid point about increasing maximum sentences. Without too much research, I could find many cases in which this Government have increased the maximum sentence to emphasis the seriousness of an offence. The Minister says that there is a difference between situations in which public protection is an issue and this one. We can also identify a public interest that needs protection: the taxpayer's interest in not being defrauded. That means that the large sums of money going into tax credits must be paid to those who should be in receipt of them, and that is also in the interests of honest recipients. The Minister is right to draw attention to the position of those who are honestly claiming in the system, and, as I hope I made clear in my opening statement, this does not relate to them because they need to be protected from this sort of thing as much as everybody else.

In a previous debate we argued that negligence and fraudulence should not be lumped together, and we wish that the Minister had also taken that view. The Government have bracketed honest taxpayers—somebody who is negligent is still honest—with those who fraudulently attempt to deceive. We are not satisfied on that point, and we are not satisfied with his general remarks. There is an issue about public protection because defrauding public funds is regarded less seriously than defrauding the private sector. Where the private sector is subject to fraud through offences such as obtaining by deception from banks and building societies and the fraudulent use of credit cards, prosecution policy is more vigorous than that in the case of false applications and defrauded tax credits. There is a lack of vigour in that respect, and we must send a message throughout the system that this will be treated more seriously in future.

I was not over-impressed by the Minister's comments, but I shall reflect on these matters and the statistics that he has provided. My limited ability at maths leads me to believe that they indicate that three or four people have received custodial sentences for tax credit fraud. We may want return to this important issue at a later stage because we are

Column Number: 215

currently dissatisfied. In order to make progress, and to give myself time to reflect on these matters more fully than we have done so far—I want to come back to this at a later stage after that period of reflection—I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Clappison: I beg to move amendment No. 23, in page 21, line 40, at end add—

    '(3) The Secretary of State shall within one year of this section coming into effect and every year thereafter make a report to Parliament on—

    (a) the extent of fraud in claims for tax credits, and

    (b) the measures he has taken to deal with fraudulent claims for tax credits.'.

The Chairman: With this we may discuss clause 33 stand part.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 24 January 2002