Examination of Witnesses (Questions 460-479)
DEPARTMENT FOR
SOCIAL DEVELOPMENT
3 MAY 2006
Q460 Chairman: This Committee has
received evidence which would seem to indicate that a degree of
regulation and licensing, for instance, taxis and road haulage,
beyond what might exist at the moment would possibly be beneficial.
Do you have a view on that?
Mr McGrath: It is not within the
remit of the Department for Social Development to comment on;
again, we have no responsibility for it and I have formed no view
on it.
Q461 Chairman: Right; but that does
not mean that there are not people who have strong views on that,
absolutely?
Mr McGrath: No; and that is a
point maybe to pick up somewhere in the future discussions.
Chairman: Yes. Thank you very much indeed.
Q462 Mr Grogan: On the subject of
joint working, which perhaps naturally follows, in your memorandum
you refer to the Interdepartmental Working Group on Organised
Crime. How does this work; how often does it meet, what are the
sorts of current issues that are being looked at and who is represented
on it?
Mr McGrath: There is an overall
framework. The Interdepartmental Group on Organised Crime is one
of the strands within the overall architecture of the Organised
Crime Task Force, which is at ministerial level, and is headed
up by Shaun Woodward. The Interdepartmental Working Group on Organised
Crime is within the Northern Ireland Civil Service, it is chaired
by the Head of the Civil Service, Nigel Hamilton. To date, it
was set up in March of 2005, it has met on four occasions since
then and it is how you fit in the other issues with the civil
departments, departments such as ours, whose primary focus is
public services, how that feeds in to some of the issues that
the Organised Crime Task Force is dealing with. We are dealing
with liquor licensing and regulation of charities, we are also
dealing with social security, all issues like that will be dealt
with and fed into the more clear organised crime focus further
up the architecture, for the NIO, PSNI, Assets Recovery Units,
they all would feature. It is one of the wider strands of that
overall architecture which has been put in place between the Task
Force itself, the ministerial chaired one, the stakeholder group
and then this element to make sure that the civil departments
play a role, and the sort of issue that civil legislation is,
in a sense, crime-proofed or looked at is fitted in as well in
that. That is the overall architecture.
Q463 Mr Grogan: For example, when
drawing up the proposals on charities or on liquor licensing,
how much contact, and at what level, does the Department have
with the Organised Crime Task Force, or was this discussed in
the Interdepartmental Working Group?
Mr McGrath: There are two levels,
specifically on liquor and charities. There were specific working
mechanisms set up, and liquor involved PSNI and the Court Service
specifically to do the details, the nitty-gritty of the proposal
worked up in close relationship. In a sense, the wider package
was taken through that sort of higher strategic mechanism to ensure
that it fitted. Similarly on charities, in a sense, as Lady Hermon
said, there is a general view that better regulation should be
in force. There was a debate about whether the precise mechanisms
were again worked up in close consideration with PSNI and the
Revenue and Customs, and again would be seen at the strategic
level in the Organised Crime Task Force as an important response,
particularly to the points that have been made, and Lady Hermon
has referred to them, in IMC reports. There is the meshing of
the individual departments working on it and fitting it within
what their primary purpose is, which is not reducing crime but
ensuring that the overall strategic direction, in a sense, has
an element of crime-proofing within them.
Q464 Mr Hepburn: On the issue of
social security fraud, can you tell us exactly what sort of fraud
is going on; is it ID fraud or is it personal fraud and claiming
benefit fraud, and so on?
Mr Nevin: The main one involves
the person who is claiming the benefit or their spouse working;
your age, overstatement of disability or incapacity and probably
living together with someone, as a partner, when you claim not
to be. Those are probably the three main areas of fraud that we
are aware of and have evidence of. I think it is fair to say probably
there has been a bit of a change in recent years because we have
increased our steps to verify identity, and obviously the gateway
to the benefit system is through the National Insurance application
and getting a National Insurance number. The process of running
that has become more rigorous in recent years and we think that
has probably helped to reduce identity fraud. I think also another
factor that has contributed to it has been the cessation of payment
by order book, because one of the things that people did was try
to hijack various identities and then get order books. Then they
had payments for 26, 27 weeks, or whatever, and obviously benefit
could be paid of well over £100 a week, so if you had managed
to obtain these there would be quite a lucrative income from it.
I think, in actual fact, if you had been speaking to me five years
ago I would have said that identity fraud was a much greater problem
then than it is now.
Q465 Mr Hepburn: How widespread is
the problem? You have suggested that it is more or less individuals
involved, in personal fraud. What level of organisation, surely
there must be some level of parliamentary organisation involved
in security fraud?
Mr Nevin: We have no recent evidence
that there is any great level of paramilitary involvement. There
is some little evidence, we have had contact, for example, with
the PSNI, who have to tackle all the fraud going on, and incidental
to that it is involved in social security crime. In actual fact,
in the couple of cases which have been brought to my attention,
the level of social security crime, I can say this is purely relative,
if relatively small, a person, or maybe his spouse, claiming benefits,
I think probably as a front, to provide an income, so they had
a front and an explanation for having some income, and they were
there, taking the time that they had to do other crime. Whereas,
in the past, when there was more identity fraud going on, it was
actually being used to fund other crimes, or getting into drugs,
some paramilitary involvement, things like that.
Q466 Chairman: Is there any evidence
of one community being responsible for the application of a greater
degree of fraud than the other?
Mr Nevin: No, there is no evidence
of that; it seems to be very evenly spread.
Q467 Mr Hepburn: How does the problem
compare with other parts of the UK; would you say you have a worse
problem, or a similar one?
Mr Nevin: We have not, I think,
gone into the identity fraud end of it. All I can say to you is
that we and our colleagues in DWP carry out exercises to estimate
the levels of fraud and ours is very comparable with the level
in DWP. They have reported recently that under 1% of expenditure
on social security benefits is down to claiming fraudulently.
The latest estimate for the last couple of years is that we are
around 1% of expenditure. Across the whole fraud aspect, I think
we are very comparable with our colleagues in GB.
Q468 Mr Hepburn: The solution to
this and how you tackle it would be similar to other parts of
the UK?
Mr Nevin: We are very similar.
Q469 Mr Hepburn: There are no special
measures because it is Northern Ireland to deal with this particular
type of fraud?
Mr Nevin: No, and we keep in close
touch with our colleagues in DWP in Great Britain.
Q470 Dr McDonnell: Do you include
housing fraud in that 1%?
Mr Nevin: In fact, our investigators
act for the Northern Ireland Housing Executive in investigating
housing fraud. They do not have their own investigators for that.
They identify cases and refer them to us and we work closely with
them on it.
Q471 Mr Hepburn: So you include that
in the 1%?
Mr Nevin: That is included in
the 1%.
Q472 Lady Hermon: Are you ever invited
to give evidence by or to the Independent Monitoring Commission,
at any level, your Department, have you been consulted at all,
particularly by the charities?
Mr Wall: We get evidence as part
of the bigger charities legislation .
Q473 Lady Hermon: Thank you. Mr Nevin,
you made reference to co-operation, working closely with your
counterparts in Great Britain. Can I just say to you that, of
course, we are looking at, our specific inquiry is Organised Crime
in Northern Ireland, we are very, very aware that, in fact, the
border between the Republic and Northern Ireland makes no difference
to those who intend to carry out organised crime. I am sure you
are aware that last year there was an agreement signed off between
both the British Government and the Irish Government. I am just
reading the title here, on "Co-operation on Criminal Justice
Matters" and there is a working group established, as
I say, as of last year, to identify areas of co-operation on criminal
justice matters where they could be enhanced or initiated as appropriate.
Again, do you have any colleagues of yours who would attend these
meetings and sit within this working group?
Mr McGrath: I think we are dealing
with it on the social security side.
Mr Nevin: In actual fact, I was
not aware of that particular agreement.
Q474 Lady Hermon: I will let you
have my copy afterwards.
Mr Nevin: Social security has
actually had a memorandum of understanding, as part of the UK
Government, with the Republic of Ireland, on social security,
in fact, since 2000, and there has been very close co-operation.
There is a Management Committee, which meets three to four times
a year. There is regular liaison between ourselves and colleagues
in the Republic of Ireland at the operational level, to try to
detect and minimise cross-border fraud. On the memorandum of understanding,
the committee which deals with that, there was a recent conference,
which we hosted, in Armagh, which looked at cross-border identity
fraud and the movement of people across borders, so there is actually
work going on in the social security field between ourselves in
Northern Ireland, DWP in Great Britain and the Republic of Ireland.
In fact, this year, or last year I think, The Netherlands also
drew up a memorandum of understanding and they were present at
the conference in Armagh as guests because they were involved
in this and to bring a continental aspect to it.
Q475 Lady Hermon: I wonder if that
co-operation has been successful and beneficial?
Mr Nevin: It has; it has obviously
improved over the years as we have become more comfortable and
more familiar with the laws. The laws are not the same in both
countries.
Q476 Lady Hermon: Do you think that
could be mirrored by the charities changes as well, since the
IMC specifically looked at the jurisdiction?
Mr Wall: We have been having regular
meetings with officials in the Republic; they are going through
a similar process of review of their legislation. In fact, their
legislation is older than our own. Our charities legislation,
in fact, goes back to 1964, I think theirs goes back to pre-partition,
so they have similar problems to ourselves. The regulatory forum
that I spoke about will include officials from the Republic as
well as officials from the UK, so we are working proactively and
ensuring that there is good communication and we are looking at
mechanisms for transferring information between the regulatory
authority in the Republic and in the North.
Lady Hermon: That is fascinating.
Q477 Mr Fraser: Going back to the
licence situation, just to clarify something, one of you said
that the £140,000 licence is an asset on the books of a business.
That is correct, is it not?
Mr McGrath: I said, to be clear,
there is probably a variety of accounting treatments of this,
depending on whether it is a small, single-handed pub or the
licence-holder is actually one of the big conglomerates and it
may well have been written off. That is the point; there is a
mixed approach to that and therefore the impact of the proposals
would not necessarily be as draconian to some people, in asset
terms, in any terms, as to others.
Q478 Chairman: To the single person
operating one pub, it could represent a very significant sum?
Mr McGrath: It could represent
an asset, as I said, Chairman; it may well be not the sum that
they paid for the licence in the first place. It is presented,
in some cases, as the sort of pension fund.
Q479 Chairman: What we have to recognise
here, and I am sure you will recognise this, is that this is something
which, whether it should be there or not, in your opinion, in
fact is wholly legitimate, people are not trading in anything
that is remotely illegal or illicit. Therefore, where the impact
is going to be great upon, or potentially great upon, an individual
who had every reason to expect that this would be a realisable
asset then it is important that any change recognises that, which
is wholly different from the impact upon a company owning a chain
of things, so I guess that you need to take that one on board.
Did you want to say anything to us, finally?
Mr McGrath: No, I do not think
so, Mr Chairman. We have covered most of the points we wanted
to make and I hope we have given you as fulsome answers as possible.
Chairman: Thank you very much indeed;
you have been extremely helpful and we are very grateful to you.
It may well be that our Clerk will correspond with you about certain
bits of information, if we want a little bit more follow-up, but
we are grateful to you for coming. We wish you a pleasant and
safe journey, and I declare the session closed. Thank you very
much.
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