---

Benefit Fraud

4. Mr. Iain Wright (Hartlepool) (Lab): What his plans are to reduce fraud in the benefit system. [48322]
 
6 Feb 2006 : Column 584
 

The Secretary of State for Work and Pensions (Mr.   John Hutton): Fraud in income support and jobseeker's allowance has fallen by two thirds since 1997. Housing benefit fraud has fallen by a third. The amount of fraud is now at the lowest recorded level and we will continue to take steps to reduce these levels further in future. We are also taking more enforcement action. In 2004–05, in partnership with local authorities, 43,000 prosecutions and sanctions were imposed: a fourfold increase since 1998.

Mr. Wright: I appreciate what my right hon. Friend is doing, but in its report of last year on dealing with complexities in the benefit system, the National Audit Office stated that

"complex regulations may also make the system vulnerable to deliberate action by customers to falsify their circumstances or deliberately fail to report changes accurately or on time."

That fraud could amount to £900 million a year. What steps are the Government taking to simplify the benefit system to reduce the risk of fraud or to allow it to be more easily detected?

Mr. Hutton: I am grateful to my hon. Friend for making that important point. It is worth bearing in mind that the Public Accounts Committee has acknowledged the good progress that the Government have been making in recent years to tackle the serious problem of benefit fraud. Those who cheat and defraud the taxpayer must be prosecuted, because not only are they self-evidently breaking the law, they also undermine the legitimate claims of people on benefit, and we shall not tolerate that for a second either. In relation to my hon. Friend's specific point, chapter 7 of the recently published Green Paper on welfare reform set out a series of measures that will deal with the problem of complexity and benefit fraud. We are awaiting the response to the consultation, which will finish by the end of April.

Miss Julie Kirkbride (Bromsgrove) (Con): Does the Secretary of State accept that the recently organised scam of the tax credit system, which involved a loss of many millions of pounds to the taxpayer, was in large part due to the fact that the Government have made it too easy to claim tax credit? Bearing in mind that it is a duty of the Government to ensure that people who receive benefits should be entitled to them, will the Secretary of State promise the House to make it somewhat more difficult to claim tax credits so that the taxpayer can have confidence that the system pays people who deserve it rather than those who do not?

Mr. Hutton: All the arrangements for claiming tax credit, which is not a benefit, as the hon. Lady will know, have to be robust, because they involve public money and resources. She has offered her own interpretation of the events that led to that issue, and it is probably better for me as the Secretary of State to wait until the formal criminal proceedings and investigations are over before I add my ha'p'orth to the argument about how easy it is to claim benefits or about what the cause of that fraudulent series of applications might have been.

Mrs. Madeleine Moon (Bridgend) (Lab): Will my right hon. Friend tell us what steps he is taking to
 
6 Feb 2006 : Column 585
 
prevent the defrauding of the taxpayer by company directors who declare themselves bankrupt, leaving the Government to pick up redundancy and holiday costs for their work force, and subsequently set up a new company having failed to meet their obligations to their previous employees?

Mr. Hutton: I do not want to pass the buck, but I am tempted to say that those are matters for my right hon. Friend the Secretary of State for Trade and Industry. In all such matters, the law has to be, and will be, properly enforced and if the Department for Work and Pensions can make a contribution to that process, of course we stand ready to do so.

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): Given that 4.5 million people access their benefits and pensions through the Post Office card account, is not the Secretary of State concerned that shifting that many people to a new form of payment when the contract ends will offer massive opportunities for fraud, as well as inconveniencing many people and causing a loss of income for post offices? Is not that yet another reason why the card account should be kept beyond 2010?

Mr. Hutton: We have a clear understanding with the Post Office about the use of Post Office card accounts. It was always clear from the beginning that the contract—[Interruption.] Oh yes it was. It was absolutely explicit that the contract was to last until 2010. If the hon. Gentleman would like to see a copy of the contract, I should be happy to supply him with the details. I do not believe that he is right to draw a parallel between the use of the Post Office card account and BACS—the bankers automated clearing service—for benefit payments. With great respect to the hon. Gentleman, I do not think that he would say that BACS was inherently more susceptible to fraud; it processes hundreds of millions of transactions successfully for the DWP every year. It is a sign of the progress and modernisation of our benefits system that we are prepared to use BACS more widely and I am surprised that the Liberal Democrats seem not to recognise the progress and the efficiencies that the system represents for taxpayers.

Vera Baird (Redcar) (Lab): I understand that about £2.7 million was lost recently by the theft of about 7,000 identities of benefit staff. If those identities had been secured by three kinds of cross-checkable biometrics on the proposed national identity register, is it my right hon. Friend's considered view that the availability of those better checks might, or would, have protected any of those large pay-outs to the cost of the taxpayer?

Mr. Hutton: As my hon. and learned Friend will know, it is difficult to be absolutely clear about that. I can be clear to the House about this, however: we estimate roughly that £50 million a year is lost in benefit fraud through the theft of other people's identities. We—at least on the Labour Benches—are prepared to invest in new technology, where appropriate, such as biometric identification on identity cards, to tackle the problem of benefit fraud. The Conservative party, which used to trumpet its reputation as the party of value for money and defence of taxpayers' interests—

Mr. Speaker: Order.
 
6 Feb 2006 : Column 586
 

Gershon Review

5. Mr. Ben Wallace (Lancaster and Wyre) (Con): If he will meet members of his Department from the departmental site at Norcross to discuss the implications of the Gershon review for the Department. [48323]

The Parliamentary Under-Secretary of State for Work and Pensions (Mrs. Anne McGuire): As the hon. Gentleman is aware, I have previously visited staff and their trade union representatives at Warbreck hill, nearby in Blackpool. I plan to visit the Norcross site in the very near future.

Mr. Wallace: I am grateful to the Minister for that answer. The day after the Adjournment debate that I initiated and to which the Minister responded last week, 77 employees at the Norcross site were told that they were surplus to requirements. Will she now concede that the implementation of the Gershon review in her Department is incoherent? Will she give an undertaking to meet the employees from Norcross in my constituency with me, so that we can discuss the failures of her Department to manage the changes appropriately?

Mrs. McGuire: The hon. Gentleman needs to realise that there is a difference between staff being declared surplus to requirements and staff being made redundant. In fact, he quite rightly identifies that 77 staff have been declared surplus to their current posts, and a great deal of activity is going on in the Department to ensure that those staff will be redeployed either in other businesses in the DWP or with other Departments. I reiterate to the hon. Gentleman that, as I said during the Adjournment debate, there have been no compulsory redundancies in the Fylde area.

Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): May I thank my hon. Friend for the reassurances that she gave to me and the hon. Member for Lancaster and Wyre (Mr. Wallace) last week, but is she aware that there is a lot of interaction between the site at Norcross and the other large sites on the Fylde coast? When individuals are made redundant at Norcross, they are offered opportunities at those other sites. So when she visits, will she consider the job situation in the context of civil service jobs overall on the Fylde coast?

Mrs. McGuire: I thank my hon. Friend for the question—she has taken every bit as active an interest in the situation at Fylde as the hon. Member for Lancaster and Wyre (Mr. Wallace), who asked the primary question—but I trust that hon. Members will not assume that because jobs are declared surplus, there will be redundancies. In fact, I repeat that there have been no compulsory redundancies on the Fylde coast.

Mr. Tim Boswell (Daventry) (Con): With so many staff in the Department, both at the important Norcross site and elsewhere, under pressure to meet Gershon efficiency targets and with staff cuts in the Child Support Agency apparently impossible while its problems persist, does not the Minister appreciate that that
 
6 Feb 2006 : Column 587
 
throws yet further strain on the morale of all other parts of the Department and threatens its ability to achieve its agreed targets without an unacceptable decline in the quality of service to the public?

Mrs. McGuire: I am sure that the hon. Gentleman will not mind me reminding him that if we had implemented the James report, which the Conservative party introduced, even more cuts would have been made. We have achieved a reduction of 14,000 full-time equivalent jobs, and we are continuing to place the emphasis on our staff delivering for our customers. May I correct just one part of the hon. Gentleman's question that is inaccurate? In fact, the CSA has had an increase in staff over the past few months.

Mrs. Claire Curtis-Thomas (Crosby) (Lab): The DWP has 20 million customers and makes more than 840 million payments a year. I am aware that the Department has established targets to reduce the cost of making those payments. Indeed, it has been successful in converting people to direct debit payments, at a saving of 98p per transaction—down from £1 to 2p. The target was established at 65 per cent. of all payments made. Can my hon. Friend confirm that we have reached that target? Can she also talk about what we might achieve in the future in relation to benefits?

Mr. Speaker: Order. One supplementary question is fine.

Mrs. McGuire: My hon. Friend is right to suggest that there was an emphasis on trying, for all sorts of very good reasons, to encourage people to go for direct payment. I can confirm that we have not only met but exceeded the 65 per cent. target.

---