Mr. Plaskitt: With the leave of the House, I should like to respond to the points raised in the course of the debate. I appreciate the time that hon. Members have taken to debate combating benefit fraud. If I do not manage to cover all their observations in my winding-up speech, I shall want to reflect on them further.
We all appreciate the seriousness of benefit fraud. It is not the victimless crime that fraudsters like to think it is. It is theft from the taxpayer and theft from the most vulnerable people who would benefit more substantially from the total resources allocated if others did not choose to exploit the system for their own gain.
The hon. Member for Wycombe (Mr. Goodman), who led for the Opposition, challenged me over the forthcoming reform of incapacity benefit. I suggest that he wait a little longer, because the consultation process is not far off now. When the consultation process commences shortly, he will receive useful advice on the questions that he tempted me to answer now.
The hon. Gentleman also asked whether we had had any success in meeting targets on fraud and error in respect of housing benefit. Thus far, progress has been pretty encouraging, but I want to be perfectly candid in saying that these are tough targets. They are targets that we, as well as the 408 different local authorities that administer housing benefit, have to work on. Control over managing that benefit is more dispersed than for others, which makes the target serious, challenging and tough, as it should be. I am optimistic that progress will be made. With particular respect to error over housing benefit, I can tell the hon. Gentleman that the level has fallen by 9 per cent. over the last 18 months.
The hon. Member for Wycombe also accused the Government of some sleight of hand over the statistics in the document published today. I am forced to repeat that we could not have had a debate like this at all during the first 15 years of the last Conservative Government, because no serious attempt had been made to measure fraud and error in the system. The Conservative Government came to that issue late in the day and I hope that the hon. Gentleman would acknowledge that our determined efforts to measure it have allowed us to have a serious discussion of the matter.
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Not only did the previous Conservative Government come very late to the concept of measuring fraud and error, their record on prosecutions does not stand much examination either. In the final year of that Administration, 12,000 people were prosecuted, whereas last year, under this Government, 42,000 people were subject to sanctions, administrative action or prosecution for fraud in the benefit system. That is nearly a fourfold increase. The hon. Member for Wycombe might also want to reflect on the fact that, in 1997, one claim in 10 for income support and jobseeker's allowance was wrong. The figure now is one claim in 25. Although in this debate I have freely accepted that there are still plenty of problems in the system, that many challenges remain and that we are still not content with the level of fraud, the hon. Gentleman should acknowledge that the position now is considerably better than what we inherited in 1997.
Mr. Goodman: According to the Department's own figures, fraud savings in 199596, when my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) was in office, amounted to £1.4 billion. However, the latest figures put the total at £0.9 billion, which suggests that my hon. Friend the Member for Ludlow (Mr. Dunne) was right.
Mr. Plaskitt: As I tried to explain earlier, the footnotes show why the base has moved. That is all in the interest of achieving a more accurate measurement of the fraud that exists in the system so that we can target our efforts more precisely.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) asked for the latest figures on fraud and error. To clarify the situation, I should explain that they are better than those cited in the PAC report because that was based on assessments made 18 months ago. Progress has been made since then. As was noted in the debate, fraud is now estimated at £0.9 billion, customer error at £0.8 billion, and official error at £0.9 billion. The hon. Gentleman challenged me on the amount of error, which represents 2.4 per cent. of the total spend. We have made progress on reducing error, and although I have acknowledged that it remains a challenge, we should consider it in the light of international standards.
For example, official error in Ireland and France stands at 4 per cent., in the US it is 6 per cent., and in the Netherlands it is at least 7 per cent. That is not to say that our rate of 2.4 per cent. is justifiable or acceptable, but it suggests that our record stands up reasonably well to international comparison.
The hon. Gentleman also asked what the Government were doing to make more progress in dealing with error. I can tell him that we are making a greater effort in respect of the verification of claims, to make sure that they are correct from the outset and that they remain correct. That will help to reduce a great deal of the customer error, and we are also imposing tougher performance standards for administrative staff across the board.
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As was noted in the debate by various hon. Members, we will make a good deal more progress in the reduction of error if we can continue to strive for greater simplification in the benefits system. That is right, and it is why the Government have a benefits simplification programme under way. We shall continue with that process, and the hon. Member for Inverness, Nairn, Badenoch and Strathspey should anticipate the Green Paper on welfare reform that we are about to publish. That document will return to the important question of benefit simplification.
Danny Alexander: I assure the Minister that I look forward with eager anticipation to the welfare reform Green Paper, but perhaps I misunderstood what he said about error. He gave the House figures for customer and official error that add up to a total of £1.7 billion. In contrast, the PAC report gave figures for 200304 that estimated fraud at £2 billion and error at £1 billion. When Richard Mottram gave evidence to the Committee, the matter was discussed further, and the figures were corrected to £1.5 billion for both fraud and error. The figures are now put at £1.7 billion for error and £0.9 billion for fraud. That suggests that the estimate for error is creeping up, at the same time as the figure for fraud is going down. Would that be the correct interpretation of the statistics?
Mr. Plaskitt: As I have said throughout the debate, the Department tries to ensure that the measurement of fraud and error is as accurate as we can get it. The hon. Gentleman should study the report that we have published today, because it has important explanatory information at the back about rebasing the calculations. The answer will become apparent if he looks at that.
The hon. Gentleman put several other issues to me and I shall try to speed through them. He asked about our use of credit reference agencies and the cost. It is a commercial arrangement, but I can say that we anticipate that it will pay for itself in terms of the information that is provided. We hope that we will be able to achieve a further £40 million reduction in fraud as a result.
The hon. Gentleman also mentioned lie detector software. It is a slight exaggeration to call it that, as it is actually voice stress technologyas another hon. Member mentionedand it has been employed quite successfully in the insurance business. We are thinking of piloting it for disability living allowance applications and we think that it will be helpful. It does not in itself prove that fraud is taking place, but it is an indicator that can be matched with other information to suggest that fraud may be taking place and to trigger an investigation. It is an addition to our armoury and individuals will know that the system is in operation.
The hon. Gentleman also asked me to comment on local authorities and the administration of housing benefit, and he was not the only one to raise that issue.
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He should know that my Department has helped local authorities to achieve better administration of housing benefit. We have provided financial assistance to local authorities for that purpose, and the vast majority have taken it up. I have visited several local authorities in various parts of the country to see how they have deployed those resources, and the best are very good at administering housing benefit and are making significant gains in performance. However, performance still does not come up to standard in too many local authorities, and we have an inspectorate to work with them. The Department also remains happy to work with them to improve their performance. All local authorities should reach the standard of the best.
The hon. Gentleman asked about benefit underpayment, as did other hon. Members. He is right to say that it should be assessed against the issue of fraud and, as I said, the Department has several programmes to try to ensure that benefit is taken up. He asked about our progress on debt recovery and I can tell him that last year we recovered nearly £200 million of debt. I think the figure is actually £189 million, but he can check it in the recorded information.
The hon. Gentleman also asked about welfare reform and hoped that it was driven not only by a desire to crack down on fraud but by wider objectives. I can assure him that it is driven by a much wider perspective. He will recall that we published the principles of welfare reform recently and I hope that he has had time to study them. They drive the Government's welfare reform programme and will be elaborated further when we publish the Green PaperI am sure that the hon. Gentleman eagerly anticipates it.
I am grateful to my hon. Friend the Member for Hayes and Harlington (John McDonnell) for welcoming the Government's long-term strategy to tackle fraud and error. He asked whether there was a conflict between achieving staff reductions in line with the Gershon review and combating fraud. I hope to reassure him that those two objectives are not in conflict. We will not reduce the 2,000 fraud inspectors. Indeed, we will transfer 1,000 additional staff from the functions that they currently perform into the front line to work on customer compliance to help to ensure that the benefit paid is right at the outset. In fact, I can tell my hon. Friend that when I come to the House with legislation to reform housing benefit, I shall try to resolve another issue in the system that currently prevents local government officials working on housing benefit from investigating possible fraud in nationally delivered benefits. We want to take powers to correct that, which could mean that another 2,000 or so officials in the system will be able to work across a wider range of fraud than those associated only with housing benefit.
My hon. Friend was right to say that to progress staff reductions requires dialogue between Department managers and staff. That dialogue is in place and it needs to continue. There is no doubt that the Gershon challenges are tough and it is extremely important that we proceed through dialogue, and we intend to do so.
Let me deal with the remaining speeches from Opposition Members. I was charmed by the belief of the hon. Member for Newbury (Mr. Benyon) that the Conservative party's proposed privatisation of
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Jobcentre Plus would not have resulted in job losses. Happily, we shall not find out because that is not going to happen, but it is a quaint belief.
The hon. Gentleman rightly moved on to disability living allowance. I am pleased that he has been examining overpayment and underpayment. We made a thorough reassessment of DLA this year to establish the exact position. That is one of the factors that has led to changes in the numbers. After careful re-examination of DLA payments, we found that, although some were inappropriate, they were not fraudulent, yet they had previously been classed as fraudulent payments. It is important to clarify that as it helps us to understand issues in the administration of DLA.
The hon. Gentleman concluded by suggesting that the Government should go for greater simplification in the benefit system. We agree. That is why the benefit simplification programme is under way, with more to come, which I am sure he is eagerly awaiting.
The hon. Member for Ludlow (Mr. Dunne) asked whether things were improving. They are. The figures that I announced and clarified for the hon. Member for Inverness, Nairn, Badenoch and Strathspey show that things are improving. We can report that the situation is better than the £3 billion-plus total that the hon. Member for Ludlow has already seen and which was mentioned in the Public Accounts Committee report.
I am pleased that the hon. Gentleman is a member of the Select Committee and I look forward to seeing the Committee's deliberations on incapacity benefit. I am pleased also that he praised the efforts of his local authorities in helping us bear down on benefit fraud. He was right to do so, and I am happy to add my praise for any local authority, whatever its political complexion, which helps us to bear down on benefit fraud. A significant number are and we are grateful for their efforts. I can reassure him that there will be no reduction in the number of staff tackling benefit fraud.
The hon. Gentleman rightly praised the work of citizens advice bureaux and I am happy to add my praise to his. As well as the CAB, other voluntary organisations, such as welfare rights groups, work hard for no reward to help people deal with the benefit system. They do extremely valuable work.
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Eliminating a culture where defrauding others is seen as acceptable is part of the Government's respect agenda, but it is also vital in maintaining support for the welfare state and a caring and compassionate society where self-help and mutual help go hand in hand. Our aim is to reduce loss to the benefit system still further. The strategies we have in place and the further actions I have outlined during the debate will enable us to do just that.
I close our debate by sending a clear message to those who seek to defraud the benefit system. They need to understand that we have more powers than ever to detect, prosecute and punish those committing benefit fraud. By using better technology and effective data matching, fraudsters are being investigated without their knowledge. They will be caught and they will be punished.