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The House will unite in agreeing that, as the Minister rightly said at the beginning, every pound erroneously paid out by the Department because of fraud or error is a pound that could have gone to a vulnerable claimant in real need and that benefit fraud must be rooted out. The Department argues that it is rooting out benefit fraud and error. I shall argue that proper scrutiny of the figures reveals that the Government are doing less well than they claim, that they could do much better and that they would do much better if they applied two sensible principles for reform.
One person who agrees with me that the Department could do much better is apparently no less a person than the Prime Minister himself. According to a Channel 4 news report broadcast earlier this week, he has written to the Secretary of State to ask for action on incapacity benefits, presumablyI can think of no other reasonon the basis that a significant percentage of the payments are being claimed fraudulently and paid erroneously.
Labour Members may have seen those reports. The Secretary of State presumably agrees with the Prime Minister. He has recently referred to the current situation as "crackers", so he presumably thinks that the Prime Minister is right. I wonder therefore whether he has confidence in the latest estimate by his Department, which was issued earlier today in a document that I shall come to later, that there is £10 million worth of fraud in incapacity benefit. So I have a question for the Minister, and he is welcome to intervene on me in response: has the Department ruled out time-limiting incapacity benefitsa rumour that some of us heard before the general electionand has it ruled out a two-year cut-off date? There is no answer from the Minister. Those present must make of that what they can, but the Department certainly has not ruled it out.
The Department has estimated up until todaywe will come to today's figures in a momentthat of the £109 billion spent on benefits and employment programmes last year, £3 billion may have been lost because of fraud and error. That is less than 3 per cent. of the total. However, we must apply to all these figures what I will call the Rooker principle. In 2001, Mr. Rooker, as he then washe certainly is not nowsaid that in relation to fraud and error
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"the £2 billion is what we know about. Another £2 billion may be regarded with a high level of suspicion and there is a weak suspicionsometimes, no more than a hunchabout another £3 billion".[Official Report, Westminster Hall, 8 February 2001; Vol. 362, c. 303WH.]
In other words, Lord Rooker, as he is now, believed four years ago that benefit fraud and error could be more than three times as high as the official figure. If we apply the Rooker principle today, the total amount lost last year in fraud and error could have been £9 billion rather than £3 billion.
Let us assume for the moment that the Rooker principle does not apply and let us return to the official figures. Yes, on one hand, according to the latest Public Accounts Committee report, to which the Minister referred, and according to the National Audit Office, the fraud element has indeed fallen from £2 billion to £1.5 billion. On the other hand, however, the error element has risen from £1 billion to £1.5 billion.
The Minister invited me a few moments ago to do a calculation and my hon. Friends will have been able to do it too. We and the whole House do not need arithmetical genius to grasp the point that there has been no net fall in fraud and error since 2001, and the losses to the taxpayer are, to borrow a word from the Public Accounts Committee's latest report, "astronomical".
In the document issued today by the Department, lo and behold, we have a new figure. The Department claims that its latest best estimate of fraud is around £0.9 billion, so how did it get from £2 billion to £0.9 billiona quite staggering reduction? Well, we find that £400 million is
Let us look at these other benefits more closely. I draw the Minister's attention first to table 1 in the appendix to today's document, which I shall also wave in the direction of the Liberal Democrat spokesman. According to this table, disability living allowance fraud has fallen from £500 million last year to only £40 million this yeara dramatic drop. That gives the Minister some £400 million of his £700 million saving. However, I now draw the Minister's attentionhe may not think that we read these documents, but we certainly doto footnote 2 at the bottom of table 1. It says that
The Minister and the Department are quite entitled to change the methodology, and the Minister referred to that point in his speech, but how is it possible to claim a £460 million saving while conceding that the figures on which the savings are based are not comparable?
Does the hon. Gentleman agree in return that it would have been completely impossible to
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have had a debate of this nature between 1979 and 1995, because the then Government made absolutely no effort whatever to measure benefit fraud?
Mr. Goodman: The Minister asks whether I agree in return, which means that he is conceding my point and conceding that the two are not comparable. In 1997, he fought the election on the manifesto pledge that Labour
Labour was not saying that the then Government were doing nothing at all; it was saying that we were doing something and that it would build on it. He has just conceded that the basis on which the claim is made is simply not comparable.
The Government have failed to reduce the total amount of taxpayers' money being wasted, so can the Minister explain why his written statement issued earlier today mentioned only a fraud figure and specifically failed to mention an error figure? Indeed, was that admission itself an error, or perhaps something worse?
Furthermore, figures issued by the Department up until today have been rounded to the nearest £500 million, as the Minister said, so they have scarcely been a measure of exactitude. The figure is important, because an error margin of such a size would be more than enough to cancel out the 38 per cent. fraud reduction in income support and jobseeker's allowance reported by the Public Accounts Committee. The Committee's report said:
I make it clear that we welcome the new rounding to the nearest £100 million, although being £100 million out scarcely represents an accurate calculation either, so the Department will want to work on that. The Secretary of State is in the Chamber. If he sold his memoirs, as he might do, for £100 million and was overpaid so that he got £200 million, or underpaid so that he got nothing at all, he would certainly want to know about it.
of the estimated £9 billion overpaid during the past three years. It also notes that of that £9 billion, only £550 million has been recovered. Furthermore, some of the estimates on which the figures are based are more than six years old, because the Department has rightly given priority to high-risk benefits, such as income support, jobseeker's allowance and housing benefit.
The Minister said, in effect, that the Department has a good chance of meeting the target of reducing income support and JSA fraud and error by 50 per cent. from 199798 levels by March 2006. However, we must consider the target of reducing housing benefit fraud and error from the 200203 levels by 25 per cent. by March 2006. In the baseline period of 200203, the amount of benefit overpaid to working-age claimants in the housing benefit review samplea sample must be used when examining housing benefit because getting to the bottom of it is complicatedwas estimated at 6 per cent. of total benefit paid. Last year, the figure was estimated at 5.8 per cent., which represents a drop. The
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latest estimate from "Fraud and error in housing benefit" by National Statistics is 6.66 per cent. below the baseline level. I shall not let my imagination linger over the figure 6,6,6. Is the Minister confident that the 2006 housing benefit target will be hit, because there is speculation that the Department might not do so?
The Department is right to prioritise income support, JSA, housing benefit and now pension credit in its examination of fraud and error. I certainly concede that examining fraud and error more widely would result in cost to the taxpayer, so a fine balance must be struck. However, it cannot be right to assume that some benefits, such as the incapacity benefits that Mr. Crowson was claiming, should remain measured inexactly. That brings me to the principles for reform.
First, the tax and benefits system needs to be made more simple. The Chancellor of the Exchequer, who, since 1997, has been in effect the real Work and Pensions Secretary, has created a cat's cradle. The system is not simple; it is complex and getting more complex. That is not simply the view of the official Opposition or the Liberal Democrats. Thomas Boyd-Carpenter, the recently retired chairman of the Social Security Advisory Committee, wrote in his final report, which was something of a cri de coeur:
He said bluntly that the system was now "alien" to the people who rely on it. Hon. Members in the Chamber know that what Sir Thomas said as chair of his committee in Whitehall was but an echo of what we hear each week in our surgeries and during our daily phone calls from constituents.
That does not sound too hopeful. The Committee rightly recommends that the Department, together with the National Audit Office, should find out what could be done to compare its present performance with that of major private sector financial institutions.
The Department is, as we all know, being asked to shed some 30,000 jobs, which is about a quarter of its work force, at a time when it is trying to tackle the persistent causes of fraud and error. I asked the Minister about the hotline, because I have heard some of the Department's critics argue that the fall in the number of calls answered by the hotline, from just over 211,000 in 200304 to 199,000 last yearonly 0.24 per cent. of these calls lead to a court convictionmay be related not only to advertising but to ongoing changes.
The Department argues that job reductions will not affect efficiency and delivery, and far be it from us to argue. However, the Department must ensure that any reductions affect back rooms and not the front line. In
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particular, it should, as the PAC said, assess the savings that can be derived from deploying additional staffing on effective fraud prevention and detection activities such as data matching and intelligence analysis.
We proposed at the election that Jobcentre Plus staff should be transferred to the private and voluntary sectors with no compulsory redundancies and that the role of those sectors should be expanded. We believe that that is a model for the future.
We owe it to the taxpayer and to the vulnerable, and to the constituents whom we see in our surgeries and to whom we speak each day, to deliver a system that is as free from fraud as possible. I acknowledge that some good work has been done, but much remains to be done. As we have seen today, given the dexterity with which the Government slipped out two figures which are inconsistent with each other, we can have no confidence that the Department is free from error. I saw today, before I came into the Chamber, that Harold Pinter, one of our greatest playwrights, has just been awarded the Nobel Prize for literature. If the Department is to rely on the statistical sleight of hand that is illustrated on page 33, the Minister may risk being awarded the Nobel Prize for fiction.
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