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The noble Lord said: My Lords, there were press headlines yesterday and today about fraud within the European Union. As earlier debates and exchanges in your Lordships' House have shown, there is much general support for the tough and determined action which is required to deal with this wholly unacceptable problem. Today we are debating an equally unacceptable fraud within our own national social security system. I trust that this short debate will show the same widespread and general support for effective campaigns to combat this selfish and monstrous abuse of our benefit system.
I am delighted that two of my noble friends, Lady Anelay of St. Johns and Lord Rotherwick, have chosen this debate in which to make their maiden speeches. I know that the noble Baroness, Lady Anelay, brings great authority to these issues with her long experience as a member of a social security appeal tribunal and of the United Kingdom Social Security Advisory Committee. I fear that I do not
As was widely recognised in all parts of your Lordships' House during debates on the Housing Bill in the previous Session, one of the most consistent subjects of complaint by constituents to their Members of Parliament concern people jumping the housing queue to the detriment of sound and solid citizens who have been waiting patiently. During my 22 years as an elected Member of another place I found that another major area of complaint, which aroused equal emotion, concerned fraudulent claims for social security benefits of one kind or another. Let us make no mistake about it, neighbours and nearby local residents, particularly those living on housing estates or in close knit communities, almost always have a good idea of those who are abusing the system.
I must confess that as a Member for a west London constituency I was quite familiar with the anguish and frustration referred to by Frank Field, the Chairman of the Social Security Select Committee in another place, during the debate on benefit fraud on 18th June when he quoted from a letter he had received that very day which stated:
The letter was addressed to Frank Field rather than to Peter Lilley. I shall return later to that comment about my right honourable friend the Secretary of State. Having mentioned Frank Field, I at once pay tribute to his quite outstanding work as chairman of the Commons Select Committee on Social Security. The committee's report Housing Benefit Fraud is an important and instructive document which deserves careful study, together with the Government's reply which was published in June as Cm. 3299.
Inevitably, estimates of fraud are tentative. These can provoke somewhat arid argument, as was seen in another place last June. However, there can be no doubt that within the total social security budget of some £90 billion a great deal of fraud exists. I hope my noble friend the Minister can give us the latest figures but there seems little doubt that more than £3,000 million of public money, taxpayers' money, is involved. The two main areas of fraud are income support and housing benefit.
Fraud takes many forms from individual claimants massaging details of their claim, or not disclosing essential facts, to collusion between employers and employees and between landlords and tenants. Housing benefit provides a wide range of opportunities, particularly as it is dealt with differently by the various local authorities responsible for it.
There are some quite extraordinary cases of fraud on record. I refer just to one. I understand that in Oxford in 1982, 254 people were recorded as living in one four-bedroomed house. Presumably all of them were claiming and receiving benefit. People living abroad have been claiming benefit from addresses in the United Kingdom and then having relatives or friends forward the payments to them overseas. False identities, multiple identities, overseas bank accounts, phoney illnesses, forged papers are but some of the devices used to frustrate the system.
I am delighted and encouraged by the steady progress being made to combat fraud. I believe that my right honourable friend the Secretary of State fully deserves the praise that he receives, often from rather unexpected quarters. For example, the Social Security Select Committee in another place stated in the opening paragraph of its Housing Benefit Fraud report,
Apparently even more favourable words were proposed to the committee by the chairman, Frank Field. Such consensual behaviour seems more appropriate to this House than another place and it is therefore a real tribute to the Secretary of State. He took over as Secretary of State in 1992 and has given top priority to the fight against fraud. In that year fraud savings were some £500 million. By 1995-96--the last full financial year--they had nearly tripled. The Government expect to save some £1.8 billion in the current financial year. I have seen estimates that savings will amount to £5 billion a year by the turn of the century. I would be grateful if my noble friend the Minister could give us more information on that admirable objective.
I have looked through a number of press releases from the Department of Social Security which set out some of the initiatives and campaigns directed against fraud which are underpinning the significant improvements that are being made. The "Spotlight" campaign, launched in March in Croydon, Haringey and Enfield, and since then extended to other areas, appears to be working well.
The "Beat-a-Cheat" telephone hotlines are proving a useful innovation. Of course some people were worried that those telephone lines would be used to settle personal scores. I believe others were worried about what could be described as "sneaking" or "grassing" on mates. However, benefit fraud is a selfish evil and an old fashioned, kid glove approach is quite inappropriate to deal with it. Fortunately there are enough solid citizens who are providing accurate
I gather that good progress is being made in recovering lost or stolen order books by the use of bar code scanners. The books are now identified in a unique fashion. If they are stolen or misused, they can often be identified. I hope that my noble friend will give us some update and a progress report on the rewards scheme for Post Office staff who identify stolen or fraudulent order books and giro cheques.
I have but skimmed the surface of the enormous range of activities deployed in the fight against benefit fraud, but more can be done. Even greater co-operation from the Post Office is required. Much fraud is linked with mail being redirected by the postal service. I hope that the department has overcome, or will soon overcome, the refusal of the Post Office to implement the "do not redirect" imprint on benefit payment envelopes; and access to the computerised mail redirection database of the Post Office would also be very helpful to those investigating fraud. Further effort is required to bring greater order to the whole system of national insurance numbers. It is generally satisfactory, but, like Topsy, the system has grown and grown over the years and is now in some disarray.
A most important element in the prevention of fraud will be the widespread use of the new benefit payment cards which are now being introduced. However, like credit cards, I imagine that criminals will be searching for ways to manufacture forgeries. I hope that the authorities are keeping in close touch with banks and others who face similar problems so as to share technical expertise and help outwit the crooks.
Last but by no means least, I have not forgotten the benefit fraud Bill. This Bill should help by giving fraud investigators the tools and access to the information they need. It will increase the range and severity of penalties for benefit fraud. It will improve local authorities' performance in dealing with housing benefit and council tax benefit fraud. It will provide incentives and pressures upon them so that those who have lagged behind in these campaigns can be made to catch up with those local authorities which are setting good examples. Perhaps the Minister will let us know when he expects the Bill to be published. The more that can be done to share information between local authorities dealing with housing benefit and the Benefits Agency the better. At present I understand that the computers do not talk to each other. I hope that ways will be found for allowing that to happen.
I began by talking of the anger of ordinary people against the fraudsters in their midst, on the housing estates or in local communities; but I have also noticed, in particular among younger people, a willingness to accept, even sometimes to admire, the fiddling, the petty swindling and fraud of public authorities. This corroding trend must be fought, resisted and defeated, and effective campaigns to combat benefit fraud will help to achieve just that. My Lords, I beg to move for Papers.
Baroness Anelay of St. Johns: My Lords, I crave your indulgence. I stand before your Lordships in some trepidation having been introduced to this House a mere eight days ago. On that day one of the supporters of the noble Lord, Lord Alderdice, told me that when he took his seat, he was given some advice by a senior Member of this House: that he should settle in before making his maiden speech and that about three years should do the trick. I only hope that by the time I sit down today, your Lordships are not all wishing first, that I had also been given that same advice and, secondly, that I had heeded it.
But I could not resist the temptation to add my voice to this debate because my work in social security over the past 20 years has shown me that social security policy touches all our lives. I have sat as a lay member of a social security appeal tribunal and worked for 20 years with my local citizens advice bureau. This work has reinforced my belief that campaigns against fraud, in particular those which seek to prevent fraud, are vital because they protect the interests of genuine claimants--and it is their needs which are of importance to me.
The security and control programme launched in July last year has already complemented existing detection methods with an increased emphasis on the prevention and deterrence of fraud. The programme consists of more than 30 separate projects. I promise noble Lords that I do not intend to list them all. Some of those, like the Housing Benefit Matching Service, rely upon the development of information technology systems. But other projects rely upon the good old-fashioned human system of look, listen and learn. One such project is the extension of home visits and 1 million of these are being made to income support claimants during the current year 1996-97. While I was sitting as a member of an appeal tribunal earlier this summer, the presenting officer gave details of a successful home visit day--successful from his point of view because his local office had given one week's notice of its intention to visit eight long-term claimants. Then, hey presto, six of those claimants had phoned the office the next day to tell him that he did not need to visit them after all because they
But home visits are also of great value to genuine claimants. They are just as capable of uncovering under-claiming as of revealing over-claiming. The home visit is much valued by honest claimants because it gives them the chance to discuss all their circumstances in private, in familiar and reassuring surroundings with all their evidence to hand.
Cheats can give all claimants a bad name and can deter those who are genuinely in need from claiming benefits to which they are entitled. During my years working with my local CAB as a voluntary adviser, I came across far too many cases of people who would not make a claim because they did not want to be tainted by association with those who fiddled the benefit system.
If potential claimants can be confident that cheats can be readily identified and prevented from making a fraudulent claim, they can be more confident about making a claim themselves and retaining their good name.
So I welcomed the announcement earlier this year that a benefit payment card would be introduced for use by those who collect their benefit from post offices. This should virtually eliminate instrument of payment fraud which currently runs at between £150 million and £200 million each year.
The instrument of payment fraud which so often grabs the newspaper headlines is that which is carried out by organised gangs stealing or counterfeiting order books or giros. This type of fraud is already reducing as a result of the introduction recently of measures such as the electronic stop notice system, the redesign of giro cheques and order books, and the introduction of secure delivery. But it is the introduction of the benefit payment card which should at last all but eliminate this type of fraud.
There is another type of false identity fraud which is far less well known publicly but is particularly vile. It involves loan sharks who prey on those who are vulnerable. I well remember one particular case. A mother who had recently been deserted and left with three small children had borrowed just £30 for a new jacket. The debt of £30 was to be repaid at the rate of £2 per week over a period of a year. But after six weeks she stopped paying. She had just received a large heating bill covering the time when her husband was still living at home and bringing in a wage. She was on income support. She paid the heating bill and for a while managed to dodge the loan shark. Finally, however, he tracked her down at home. He grabbed her handbag, took the child benefit book and "persuaded" her, with the help of two other gentlemen in the background, to sign enough counterfoils for him to be able to obtain money at the post office--not the £92 that she still owed, but over £200. The family was therefore forced to go without child benefit for several weeks as a lesson to her and her friends that she should never again fall behind with her payments. That is not an unusual story now. But it
I have been impressed with the plans for this system. Those who designed it have taken into account that it is important to combine the need to fight fraud with the need to provide a flexible service to claimants. That is the sign of success in any benefits system: the ability to be fair to all, yet meet the needs of the individual. Fraud endangers access to benefits by the genuine claimant. I welcome measures that are being taken now and will be taken in the near future to detect, and above all prevent, the commission of fraud. In that way we can protect the vast majority of claimants who are honest. That must be the best course of action.
Earl Attlee: My Lords, the honour falls to me to congratulate the noble Baroness on her excellent maiden speech. I am very relieved that she did not wait three years before talking on these matters. It shows the advantage that this House enjoys. We have many Members who have a great depth of experience in their subject.
The authorities regularly carry out what are known as multi-agency checks on goods vehicles. Every time they do such a check they find several drivers who are claiming social security benefit while they are working. The Government's idea might be to ban those drivers by removing their vocational driving licence so that they can no longer perpetuate such fraud. I would counsel against that.
This type of fraud gives rise to unfair competition for operators who would like to work legally. I therefore propose that, instead of attacking the drivers, who are largely being forced to carry out benefit fraud, it would be better to attack unscrupulous operators by taking away what is known as their good repute. An operator needs to be of good repute in order to retain an operator's licence. The Minister, having previously held a post at the Department of Transport, knows all about that particular aspect. I hope that the opportunity will arise during discussion on the benefit fraud Bill to address this particular point.
Lord Rotherwick: My Lords, I should like to thank noble Lords, the officers of the House and the staff for their kindness and succour. Without it, I suspect that a new boy such as I would be lost for ever, roaming the maze of corridors and chambers in this House. My grandfather, a Baronet, was elevated to this House in 1939, with the motto, "Caute sed impavide"--cautious but fearless. Any government wishing to succeed with a £90 billion social security budget must be cautious but at the same time fearless
Monday was Remembrance Day. At the eleventh hour, on the eleventh day of the eleventh month, most of us stood in silence for two minutes remembering those who gave their lives for their country. Today, social security looks after the needs of the survivors and widows. Against the background of the courage and honesty of those who gave themselves to serve their country, we must view deception and fraud in the social security system by selfish individuals as abhorrent.
There are those who claim that a loss of around 3 per cent. from a £90 billion social security budget is inconsequential in the context of the overall budget. The attitude of some to fraud is to pretend that it is not very big; another attitude is that it is not very important. It has also been said that shoplifting is just a case of lone parents and other poor people helping themselves to a treat. However, I feel confident that most people feel committed to rooting out fraud, however small or unimportant. The benefit fraud Bill will galvanise poor-performing authorities to investigate fraud, enable better detection of fraud and bring forward more meaningful measures for punishing fraud.
To lose around 3 per cent. of the social security budget, amounting to approximately £2.7 billion, through fraud might seem small to some. But it represents some 9.5 per cent. of the pension budget. The mind boggles at what good that large amount of funds could achieve if placed in the right hands.
At present, each working person funds the social security budget by £15 every working day. However, the Benefits Agency must be applauded for detecting 400,000 welfare cheats last year, 10,000 of whom were prosecuted and were mainly persistent offenders and gangs.
At present many offenders, by the very virtue of being on social benefit, live on minimum resources. One of the punishments in this area is simply to return the money. Many of us might be encouraged to buy vast numbers of lottery tickets if our stake were handed back when we lost. The lottery system would fail if that were the case. In this area prevention rather than penalties must be the way forward. The identification of valid claims using the most up-to-date technology will surely be invaluable; whereas draconian penalties must be the way forward for sly, fraudulent landlords.
Our attitude in aggressively tackling such fraud is of paramount importance. I believe that the majority of people agree. The new "Know of a benefit rip-off? Give us a telephone tip-off" advertising campaign has resulted in a highly successful hotline. It opened in the summer and received 70,000 calls in eight weeks. It seems that there are those who pay attention to such values as truth and honesty.
The second most common type of fraud involves cohabiting couples claiming to be single. It represents 28 per cent. in this category. At a time when we are concerned about the social fabric, it is worrying that in some situations such attitudes prevail.
Perhaps the saddest and most tragic deception is to be found in the area of asylum seeking. Britain will remain a haven for those who are genuinely fleeing from persecution. However, at the end of the period from 1988 to 1994, 10 times as many people claimed asylum as in the year 1988. Yet fewer than one claimant in 10 is found to be a genuine refugee and therefore a genuine social security claimant.
It does not matter how small or trivial welfare cheating is. It is the issue that is important. It must be vigorously arrested. I welcome the benefit fraud Bill. I hope that above all it will drastically reduce such deception and dishonesty and will kindle better attitudes, akin to the attitudes of those who gave so much in armed struggles in order to preserve the freedom and honesty of this country.
Lord Birdwood: My Lords, it is rich pickings in a debate with so few speakers to have two maiden speakers, and I am delighted to be in a position to be following both. In my noble friend Lord Rotherwick we heard the voice of compassionate outrage. He spoke for the silent millions. In the noble Baroness, Lady Anelay, we had that joy in the House of hearing an expert with decades of experience. I was particularly pleased that in the trifling six minutes that she allowed herself, she brought out the point that fraud militates against the honest claimant in that the honest claimant is reluctant to be seen in the company of the fraudster. That is an extremely good point and I had hoped that it would be raised in this debate. It was nice that it was raised in a maiden speech.
The usefulness of a debate in advance of the publication of a Bill sometimes escapes me. I do not disapprove of it as a sort of mini vox pop exercise. It provokes some focused thinking from the Front Benches. But one feels that, defending or attacking, one is punching empty air. When preparing what I should say this afternoon, I skimmed some relevant papers, such as the Housing Benefit Fraud Report of last May from another place, the fraud and security section in the appropriation accounts from the same source, the debate in March and Questions in both Houses. It seemed the least I could do as a courtesy to the House this afternoon, but it had the effect of confirming to me how very out of my depth I should be if I pretended to any expertise in this crucial area of political management. In any case, others who will speak this afternoon have spent entire careers looking at these issues. We are fortunate to be able to share in that depth of experience.
The manning levels of these areas in the service are largely appropriate, or would be if the service had the right tools for the job. The management information system (MIS) has the unlovely acronym of FIBS, standing for "fraud in benefit" or whatever. FIBS is now five years old, which in MIS terms is very old. It is built on SUPERBASE, which, though rugged enough in its original application, is less than amenable to network use. I am told by the people who have to make it work that, in computer-speak, it is constantly falling over.
One of the problems of trying to patch and mend an older system is that exasperation turns to distrust which turns to fear. I am worried that we could be on the way to turning the men and women who man the fraud service away from an easy acceptance of the next generation of technical tools which they must have--not may have, but must have--if the fraud Bill is to meet its next thresholds of target.
I have homed in on the issue of fraud at the point of claim because it is at that point, the contact moment between the claimant and the cash box, so to speak, that the tools which the Government could implement now would transform the accuracy of matching claim to claimant. The Bill will address the barriers to information comparison, which is the minimum default procedure that its drafters will tackle. My experience in other environments where very large databases are shared leads me to hope that, for instance, risk-assessment architectures in expert systems will feature critically in the implementation procedures. A mortgage company can deliver overnight a solid decision on the validity of a request. I believe the benefit service takes nearly three months to obtain a result with data of a lower level of complexity. I am sure that in the agency as a whole there are teams working with tools such as regression analysis to cope with this.
Perhaps what I take for granted should not be taken for granted; namely, that the staff whose job it is to have the contact with the claimant must always be separate from the fraud service's employees. This, in agency terms, is probably heresy. Claim-level staff are not equipped to behave like pocket detectives. Their job is already stressful enough, but this process, which one might call "post-referral identification and detection matched against point-of-claim", can have an immediacy which the technology can deliver and which will be a real disincentive to the attempt at fraud.
There are now enabling technologies to deliver process improvements against low-level fraud. I say "low-level fraud"; and I think this point needs to be made. We are talking in statistical terms of many individuals doing what people do when they have nowhere else to go in their own lives and are often
I wanted to use my inexpert contribution to this afternoon's debate to widen our reflections on social security fraud in order to say something about the nature of our society. There is broad agreement among people who make it their business to look into the future that full-time work will cease to be the automatic expectation of an adult in a developed society. Work will be project-based, transient, remote and even possibly an elite activity. As this scenario unfolds, we shall see unprecedented strains in the stuff of society, tectonic strains which will cut across demographic boundaries. As an earthquake brings buildings down, so these changes will crack and tumble social structures which seem to have been part of our landscape for ever. At the same time, we are troubled by a seeming loss of moral self-worth, expressed by the endless questing for new moral absolutes. We cannot look into each other's minds to find reassurances about a general morality, so we are forced to look only at each other's behaviour. It is the only evidence we have. It may be blindingly obvious to state this, but all a government can do is to measure what a person has done against the rulebook which applies at the time, which we usually call the law. The media is luckier in this respect; it can prattle on about moral changes, make moral judgments, wring its hands or point the finger.
A moment ago I touched on the changing nature of work. As is usually the case, changes in society are taking place before any act of Government can respond. As I speak, all developed communities continue to make hard distinctions between work and welfare. All politicians, without exception, metaphorically draw that boundary in the sand: "This is work," they say, "and this is welfare." Politicians know their business, and they read correctly the deep resentment which colours the attitudes of those in work to the welfare moonlighter or the bent landlord.
Where my argument is leading, based on irrevocable trends in the patterns of work itself, is toward work and welfare, rather than being areas with a hard-edged boundary between them, having to start to blur together. Of course, that is already happening, with government after government lubricating unemployment statistics by stealth. I believe my own party to be more honest about those figures than any other political ideologies on offer. It is no accident that socialist societies trumpet their full employment status, at least until real life catches up, as it always will.
Any observer of a community where a legal framework has evolved for the management of that society will be confronted by the paradox that in terms of perception, there are individual acts which are wrong
Benefit fraud is unusual in terms of social perception, because it is uniquely pervasive, and for the honest claimant--or indeed the honest taxpayer--uniquely offensive. Benefit fraud is theft. Notwithstanding the ebb and flow of our view of wrong, theft can never be any part of this country's sanctions of what is right.
Earl Russell: My Lords, we have been privileged today to hear in this debate two notable maiden speeches. I listened with pleasure to the noble Lord, Lord Rotherwick, who said, many things with which I agree and said them very well. I should also like to welcome the noble Baroness, Lady Anelay, not only to the House but to a very much smaller body: the team of social security specialists in the House. Since the death of the late and much loved Lady Faithfull, the Conservative Back Benches have been very short of specialists in social security. I look forward to hearing the noble Baroness on many future occasions, arguing with her on a few, agreeing with her on others and always learning from listening to what she has to say. I shall take up later a few points that she made but, since I agree with them all, I shall not thereby make them controversial.
When I think about the subject of this debate, I remember a highly successful advertising campaign run by the Conservative Party in the long climb back towards the general election of 1964. The opening and paradigm advertisement in that campaign had a large picture of a CND demonstrator waving a placard saying "Ban the Bomb" and the caption was "Meanwhile, the Conservatives sign the Test Ban Treaty". Today, the boot is on the other foot. The Conservatives have started a campaign against social security fraud and meanwhile Liberal Democrat councils have scored more success in combating social security fraud than have councils of any other party.
Having said that, I do not feel that any of us should come into this debate claiming moral superiority. There may be other reasons for that, as well as the excellence of our councillors which is very great, but I shall not attempt to argue in those terms. We are all agreed that fraud is theft and fraud is wrong. Fraud takes money out of the pockets of those who should have had it and puts it into the pockets of those who should not have had it. I hope we can take that as something which we all feel equally in every quarter of the House. There is nothing new about it either. In 1614 a beggar was arrested outside St. Margaret's, Westminster. It was found that in his pocket he had £30, which was then approximately two years' wages for an ordinary labourer. He was offered an acquittal but discharge if he would give £5 to the poor. He plea-bargained it down to £4 and got off. So there is nothing new about any of this.
Dealing with fraud is hard, long, slow and dull work. There are not many headlines to be got from it. Combating fraud also is a function of the accuracy of the system as a whole. So one should look at the accuracy of the delivery of benefit as something general: the more organised the system, the less easy it is to defraud. I look forward to the fraud Bill and, as the noble Lord, Lord Birdwood, pointed out, there is a lot that we cannot say until we see it. It is clearly right that there must be interchangeability of government data. But that will involve a fairly considerable check on the accuracy of government data. It has been suggested that many government agencies, particularly I am told the DVLC, hold a lot of data which are not entirely accurate.
There are certain tests which work against fraud must pass. One relates to justice and accuracy. In the haste to condemn the guilty, we must be equally sure that we acquit the innocent. By the way, we have had benefit agency figures quoted for amounts of fraud among different categories of people. Those figures are taken together: confirmed fraud and suspected fraud. People cannot be condemned because they are suspected of a crime. It is like the case in the papers when I was a boy of someone prosecuted for loitering with intent to press Button B. The magistrate threw out the charge and I was very glad that he did.
In considering accuracy we also need to be careful of targets. I remember the noble Lord, Lord Boyd-Carpenter, once asking the Minister how he knew the amount of undetected fraud. He did not receive a particularly convincing answer and the question needs to go on being asked. So, when I hear about targets I wonder how they have been arrived at and how accurate they are.
Secondly, we need to consider the test of proportionality. In that context, I was very pleased to hear what the noble Baroness, Lady Anelay, had to say about under-claiming. It is an equally serious problem. I agree with her that combating fraud leads to under-claiming. We should look with equal intensity for people who ought to be receiving benefit and who are not doing so. For that reason it was a little unfortunate that the fraud hotline was instituted at the same time as a cutback on the helpline. It gives a slightly unfortunate impression.
There is another case where proportionality is an issue. I have sent in Questions for Written Answer but the Answers have not yet arrived. I asked how many people are employed and at what cost in combating social security fraud; and how many are employed and at what cost in the Serious Fraud Office. I shall read those Answers with interest and I hope that others will do so too. That needs thought also.
We have to consider the effectiveness of measures. In that context, I am glad of what the noble Lord, Lord Hayhoe, and many other speakers had to say about housing benefit fraud by landlords. Landlords are in a position to do that much more easily and on a much bigger scale than many other people.
I was interested also in what was said about collusion with an employer in relation to income support. I wonder whether a minimum wage might make the temptation to do that a bit less than it is at present. I will look at that with interest; the situation needs monitoring. I say no more than that. I will also watch with a certain amount of anxiety what the effect of the "change" programme on all of this may be. I know and I am glad that the fraud programme is ring-fenced from the change programme. But I come back to the point with which I began; that a disorganised department is more easily defrauded than a well-run one. So there is perhaps a risk that if the change programme were to go too fast it might become easier to defraud the Department of Social Security than it is at present. That will need watching as we go along.
In relation to the benefit payment card I agree with what has been said. On other occasions I have heard the Minister give very good answers to the questions asked today about the danger of somebody stealing a benefit payment card for purposes of fraud. I hope that he will be able to repeat those answers and reassurances a little further.
It always seems to arise at periods when the burden on the system is heavy, and indeed it is natural that it should. The last part of the reign of Elizabeth I is a case in point. I shall therefore be glad to hear the Minister say at the end of the day that the vast majority of social security claimants are honest and that nothing any of us have said in this debate is in any way meant to cast doubt on that.
I agree with what the noble Baroness, Lady Anelay, said about the danger of giving all claimants a bad name. Widespread fraud does that. But widespread campaigns against fraud risk doing it also. So we must all--I am addressing myself too--be careful about that as we go along.
I am afraid I share some of the anxieties in relation to the benefit of a cheat hotline. Reliance on the informer has always been risky. It has been done many times before in many other contexts, usually in hunting either for heresy or for witchcraft. Of course, whether or not the information is true is not the same question as whether it is given in malice. The story told by the noble Baroness, Lady Anelay, about the child benefit book and the loan shark is a good illustration of that point. I shall remember it and, if I may, I may quote it again.
We may therefore be encouraging malice even where genuine fraud is being detected. That would not be unmitigated gain. There is also a risk of informing for profit, especially in cases like the Post Office system where there is a bonus for informing. There used to be professional informers who made their living from it. In the city of Gloucester one of them was dealt with by being thrown into the River Severn. There was one who used to work at the Somerset Quarter Sessions who was appropriately named "Mr. Knowman".
I do not want to see anything like that system coming back. If there are to be reports, they must be on a small enough scale to make sure that they give no rise to temptation of that sort. With those safeguards we are doing something important. But I hope the attempt to combat fraud will continue carefully, laboriously, dully and with those safeguards in mind. With that, I am happy to support the Motion of the noble Lord, Lord Hayhoe.
Baroness Hollis of Heigham: My Lords, I am sure I speak for the Whole House in first thanking the noble Lord, Lord Hayhoe, for introducing this debate in such a sane and balanced way so that he commands the assent of the Whole House. Again I am sure that I speak on behalf of the Whole House in congratulating our two maiden speakers, the noble Baroness, Lady Anelay, and the noble Lord, Lord Rotherwick, on their thoughtful, stylish and well-informed speeches. We hope to hear from them again very soon.
The significance of this debate is that it concerns the accuracy of the delivery of benefits. The DSS has too often fallen short on the accurate delivery of benefits in three ways. First, we have had an unacceptably high rate of departmental error in calculating and paying out benefit, not just as regards the Child Support Agency where still one quarter of all assessments are wrong, but also as regards income support, where only 78 per cent.--barely three-quarters--of the payments are accurate according to the National Audit Office and the Benefit Agency's own quality support figures.
Secondly, not only do we have an unacceptably high rate of error, but also--this was mentioned by the noble Earl, Lord Russell--we have unacceptably low rates of take-up, especially in family credit where only two-thirds of families with children claim the benefit to which they are entitled and with pensioners, some 700,000 of whom are on state pensions and fail to claim the income support top-up to which they are entitled worth £14 a week. That would float many of them off poverty and enable them to afford winter heating.
Thirdly, we have had and continue to have a worrying and unacceptably high level of fraud. The DSS survey in 1994 showed that nearly 10 per cent. of income support and 8 per cent. of unemployment benefit claims were possibly fraudulent. Other research suggests that perhaps one in five housing benefit claims may be equally dubious, and that is the subject of today's debate.
I am sure that there is no division between us in this House on all those concerns--the need to minimise error, the need to increase take-up and the need to reduce fraud. We all agree that fraud is theft; that every pound fraudulently taken is a pound denied to someone in need. It is not just about saving money; it is also about the integrity of the welfare state itself. If the welfare state is perceived to be riddled with petty and not so petty fraud, it will not inspire the confidence of those who are funding and contributing to it. People will not willingly see their taxes going into a system where they believe millions and billions are creamed off in fraud.
The Government have been in office for 17 years. It is only in the past couple of years, prodded in large part as the noble Lord, Lord Hayhoe, generously acknowledged, by the work of my honourable friend in another place, Frank Field, that the issue of fraud has come so much to the top of the agenda. The Government estimate that perhaps £3 billion has been lost in fraud. It may be more than that if we take some of the more pessimistic figures in relation to housing benefit fraud. But only a small proportion of that is being uncovered by government. Much of that fraud has been a byproduct of government policy. Why has it increased?
First, over the past 17 years we have seen a growth in part-time, low paid, irregular and insecure work in which people at the bottom of the wages pile are churned on and off benefit into low paid work and back again on to benefit. For example, they may be on income support but have part-time work as casual building labourers, minicab drivers, care assistants and cleaners and do not report it. They are often encouraged not to report it by unscrupulous employers who can then pay low wages instead. Some of them simply fail to resist temptation, though they should do so.
The problem has been worsened by the increase in means-tested benefits which are now double the proportion of DSS budgets that they were in 1979. Now, for example, a husband is likely to lose income support benefit if his wife is in work, and there may be the temptation not to declare. Equally, we have the situation of lone parents--lone mothers in particular. A lone mother may share her bed with a boyfriend, but not necessarily the household budget, and given that the boyfriend is too often unreliable, it is not surprising that she may feel that financially she is on her own.
However, others are clearly not possible victims but downright rogues. The DSS reports that one inspector found a roofer 20 feet up at 8 a.m. who claimed he was bird watching. Another fraud inspector arrived at an Oasis concert site at 7 a.m. to find that the stage hands on his presence fled behind trees, where they stayed for several hours until they realised that the inspector was not going to go away and then they trickled out. A similar surprise awaited the van driver who brought the portable toilets and the bus driver who brought a load of fans. There are undoubted rogues, and they should not be tolerated, but nonetheless to some extent we must take responsibility for the growth in the part-time, low paid, insecure work which has churned people on and off benefits very rapidly. The temptation then not to declare earnings has increased.
A second reason for the growth in fraud is that the DSS system itself has become more complex. Since 1988 the National Audit Office has refused to pass income support accounts because the error rates are so high. The line between error, where the department overpays, and fraud, where the customer does not repay that overpayment, is a slender one. Many such territories have been created by government themselves. For example, when government insisted that mortgage payments covered by income support be paid direct to the building societies without appreciating the administrative complexity that would follow, they landed many customers in arrears through no fault of
A third reason for the growth in fraud is that the Government have reduced home visits. In 1979 there were 6.5 million home visits to a much smaller number of claimants, not just encouraging people to take up benefits but also detecting fraud. Two years ago the figure had fallen to barely half a million visits. Belatedly, the Government are realising the wisdom preached by the noble Baroness, Lady Anelay, today, that home visits are essential if one is to ensure that accurate information goes into the DSS data base. As Peter Lilley wrote to William Waldegrave when the Treasury Secretary was proposing to cut the administration of the DSS by a further 25 per cent. and therefore also such possibilities as home visits:
More worrying also is the growth now not of what I might call victim crime or rogue crime but of organised fraud in which giro books are stolen or forged and in which false national insurance identities circulate. We now have around 2 million insecure national insurance numbers floating around the system and no way to check. It is true that we are going to have a new passport system, but anyone who has acquired a forged national insurance identity will be asked identification questions which they will easily be able to answer as they will have given the DSS that information in the first place. We hope the Minister will be able to assure us that in the new fraud Bill there will be more stringent methods of controlling national insurance numbers than we have so far been told about.
Finally, and most worrying of all, is the organised crime associated with housing benefit, a point to which the noble Lord, Lord Hayhoe, drew attention. In the past five years the Government have deregulated housing rents. Housing benefit has doubled in real terms since 1990. Two-thirds of that housing benefit--65 per cent.--is paid direct to landlords, very often as a condition of tenancy. It has become a charter for cheating. Perhaps one of those payments in five is corrupted. The fraud may well exceed £2 billion out of the £11 billion spent currently on housing benefit. Some greedy landlords are milking £100,000 a year out of the housing benefit system. They claim for tenants who do not exist, they claim for tenants who speak so little English that they cannot contradict and they claim for tenants who have moved on or died.
Local authorities want to tackle this problem. I hope the Minister will resist the temptation of fingering local government for its inability fully to tackle landlord fraud. This year 90 per cent. of local authorities have
The Government have been notoriously soft on landlord fraud. Not many months ago we completed the Housing Act. We on the Opposition Benches moved amendment after amendment to give local authorities more powers to tackle landlord fraud. All of those amendments were resisted by government. We asked that local authorities should be able to withhold payments from landlords where they were in doubt about their honesty. Local authorities wanted, but were not allowed to demand, proof of identity. Local authorities wanted, but government refused them, a list of all the properties that the landlord owned so that they could cross-check with other information. Why did the Government refuse local authorities that power? I fear that it was because they believed that to do so would be hard on landlords.
We wanted, but government refused to let us have, a national licensing system of houses in multiple occupation. That would have had a huge effect on checking fraud. We were not allowed to have lists of redirected mail from post offices, which again would have been a huge help to local authorities tackling landlord fraud. On top of that the Government cut the subsidy for managing housing benefit and tackling fraud and allowed landlords to gain repossession within eight weeks rather than 13 weeks, thus increasing the pressure on local authorities to deliver housing benefit speedily without necessarily going through all the checks.
In the recent Housing Act we tried amendment after amendment after amendment to strengthen local authorities' powers to tackle landlord organised fraud. The Government resisted every one of those amendments. The Minister may not have been responsible for all of the stages of that Bill but some of us on these Benches moved the amendments that were resisted. It may be that the provisions we asked for then but were refused will be in the new fraud Bill, in which case we will welcome it.
Instead, we have had Operation Spotlight, in which inspectors have parachuted in. We hope that the effect of their spotlight will be to continue to deter fraudsters. But we need to see more evidence that it will. At the very same time as the take-up helpline was closed down we have seen the opening of a fraud hot-line, which has received around 100,000 calls. But as far as we can tell from the research so far done, about half the calls are unreliable and grudge inspired.
Coming through the system there is the fraud Bill, which seems to have as its main purpose that central government will use their inspectors to encourage local authorities to pursue fraud more vigorously. If the Government had accepted our amendments on the Housing Bill, a good deal of that would have been quite unnecessary. There is also Project Work, the latest activity of government, in which two pilot areas were
If the Government are serious--as I hope they now are--in tackling fraud as we have been pressing them to do, they will tackle the issue of landlord fraud and give local authorities the powers they need. They will increase home visits not just from 500,000 to 1 million, but nearer the much larger figure that we had a few years back. They will also tighten up and clean up the National Insurance system so that we can be assured that people are not falsely claiming benefit to which they are not entitled. These three things alone will almost certainly save £1 billion of fraud money. We would welcome the Minister confirming that those things will be included in the fraud Bill.
Perhaps I may make one final point. All of us in this House want to eradicate fraud from the benefit system. There is no division about this. We want to see a renewed welfare state built on trust. The other side of that proposition is that people who are entitled to benefit also get it. Can we hope that the new information technology in the new fraud Bill will give benefit to those who at present do not get the benefit to which they are entitled? We hope that it will allow very many elderly people and families with children living in poverty to be floated into a better and higher standard of living. As I say, if the Government use Project Work and the fraud Bill not just to penalize culprits but to rebuild our trust in the welfare state, to that degree it will have our support. We welcome the Government to a belated concern for the issue of fraud after 17 years of stewardship.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, my noble friend Lord Hayhoe has tabled a vital issue for debate. Indeed, I thought that I was going to be able to say that the debate had been conducted pretty well in a spirit of all-party agreement, but the noble Baroness, Lady Hollis, managed to introduce perhaps more controversy into the debate in her speech than the sum of the controversy put in by all the other speakers. I may be unable to resist the temptation to take up one or two of the points that she made.
First, I join other noble Lords in welcoming the maiden speakers to our midst. I congratulate them on their speeches. My noble friend Lady Anelay is no stranger to social security matters. As she told us, she served for some time on the Social Security Advisory Committee of Great Britain and Northern Ireland and for about 14 years, I believe, she has been a member of a social security appeals tribunal. On the other side of
My noble friend Lord Rotherwick made some very telling points in his maiden speech. His career includes an interesting cross-section of interests, one of them being horse racing and horses. So perhaps your Lordships will be able to go to him for tips about the horses which are most likely to succeed. My noble friend reminded us of one very important matter, which I often repeat at the Dispatch Box--that is to say, the cost and size of the social security budget. He redefined £90 billion in a way that is perhaps more meaningful to most of us who cannot really think in terms of billions of pounds. He reminded us that it actually costs every working person every working day about £15. That money goes to a number of different groups. Many of the people in those groups thoroughly deserve the benefits. The working man contributing his £15 and indeed the population at large are, I am sure, perfectly happy to make that contribution.
We have an increasing number of elderly people which affects the cost of pensions. We are to have a debate on that issue next Wednesday. We have a rise in the number of single parents, a subject now being addressed by the wider public looking at some of the consequences of that rise other than the straightforward financial ones. We have sickness, incapacity and unemployment.
Once again today we have the extraordinarily good news of another monthly fall in the unemployment figures. This time there has been quite a large fall, taking unemployment in Britain down to 7.2 per cent. That is splendid news. Indeed, Eurostat, which compiles the unemployment figures for the whole of Europe on a common base, points out that across Europe unemployment rates remain constant at nearly 11 per cent. whereas we in the United Kingdom are virtually alone in having falling unemployment.
Looked at conversely, we have 70 per cent. of our people of working age with jobs in Britain compared with 65 per cent. in Germany and 59 per cent. in France. It would have been nice if the noble Baroness--who normally chastises me by reminding me that one of the reasons for the £90 billion budget is unemployment--had recognised that once again today, as is the case every month, it is the success of the Government's economic policies which have brought about the fall in unemployment. I shall resist the temptation to remind your Lordships, as noble Lords were reminded at Question Time, of the dangers that signing up to things like the European social chapter will bring to the successful economy we have had in this country--the rise in jobs, the fall in unemployment and the attraction of inward investment.
I return to the debate and to my noble friend Lord Hayhoe. He reminded us of the sterling work that my right honourable friend Peter Lilley has done since he became Secretary of State for Social Security. In a careful and painstaking way he has tackled all the benefits one at a time. He has looked at them, how they have grown, and why, and what we can do to make certain that the help we give to people is targeted on those who deserve it. In addition, he has looked at safeguarding the benefit system from fraud.
What we want to do is shift the emphasis as far as we possibly can away from catching people who are making fraudulent claims to making it pretty difficult for people to make such fraudulent claims; in other words, to deter them from making them. In addition to the work done in my department under the guidance of Mr. Lilley, we have a new inter-departmental ministerial committee on countering benefit fraud which was formed last July. It is chaired by the Secretary of State for Social Security with senior Ministers from across Whitehall. That group mobilises the full force of the Government in the fight against benefit fraud.
A number of your Lordships referred to the fact that very soon we shall be seeing a Bill which will further strengthen our hand in the fight against fraud. The Bill's purpose is to make social security fraud a much less attractive proposition. It will do so in two ways. First, it will give fraud investigators the tools they need to catch and penalise fraudsters. For example, access to data held elsewhere in government will make it much harder for fraudsters to lie or conceal information. New options for penalising those who commit fraud will make it plain that fraud is not a soft option. We can and will take sanctions against the fraudsters.
Secondly, the Bill aims to improve local authorities' performance against fraud by a process of inspection and recommendation, backed up by the power to impose financial sanctions on those which do not improve.
Meanwhile, we are pressing ahead with our existing programme of anti-fraud work. In July 1995 two nationwide programmes of visiting new customers and reviewing existing claims for income support were begun. New claims for the job seeker's allowance were included from October. Virtually--of course, virtually--all claimants are honest. I am happy to make that point. I believe that I was invited to do so by the noble Earl, Lord Russell. But we do have to protect the system against the dishonest minority. So the Benefits Agency selects new claims in high risk categories and then carries out home visits to check that people live where they say they do, are who they say they are, and that all the other relevant personal and financial circumstances are correctly reported. That subject was mentioned by my noble friend Lady Anelay.
These initiatives are proving to be very cost effective. Almost 300,000 new claim visits were carried out in the past financial year, resulting in savings of £162 million. Reviews of selected existing claims, which are targeted reviews, are also being carried out by visit, post or by telephone. Almost 550,000 targeted reviews were conducted last year resulting in a saving of £79 million.
In March this year we launched a "spotlight on benefit cheats" campaign, which has been mentioned once or twice. It involves a series of month-long anti-fraud drives in specific areas across the country with special area-based publicity before each drive starts. The objective is to encourage people who have drifted into benefit fraud to put their claims right before the campaign starts. There are many people in that category who have just drifted into it, perhaps because they have taken up a bit more work. They are given the opportunity to put their claim into the correct position as soon as they can and before we start our investigation. We shall then bear down hard on those who have failed to take the opportunity to come clean.
Each campaign involves the national benefit fraud hotline, with local exercises matching data across benefit to detect inconsistencies--a point made by my noble friend Lord Birdwood who spoke about the use of IT--higher profile visits and other checks on customers, and the use of bar code scanners in selected post offices to detect stolen order books. My noble friend Lord Hayhoe and a number of other noble Lords mentioned that. About £200 million of savings were achieved last year through using bar code scanners. They are an important tool, and bridge the gap between today's technology, using order books and girocheques, and what will happen in two or three years' time when the benefit payment card, to which I shall return, has been rolled out in its entirety. In those specific areas we have also had special drives on employers and self-employed people who are likely to be involved in benefit fraud. We are giving a higher profile to all benefit fraud, including housing benefit fraud, in particular--the noble Baroness, Lady Hollis, will be happy to hear--where the landlord is involved.
The total amount of benefit fraud stopped by the first phase of campaigns is about £42 million. In addition, in some of those areas and in other parts of the country, we have taken part in recent road stop exercises, as mentioned by the noble Earl, Lord Attlee. We have made considerable savings there. In addition to the few lorry drivers we picked up, who are working and claiming, we have found a number of people doing the same thing in the taxi business where checks, not merely in the special areas but across the country, can often reveal people who are claiming and at the same time working.
The noble Baroness referred to the case--amusing, if it were not so serious--of the outdoor pop event, which I have to admit took place in Scotland, where the benefit fraud office found vast numbers of people coming to work who were also customers of the Benefits Agency. They were taking a day off from the Benefits Agency to help set up the pop concert. There are a number of different cases: the unemployed man who receives benefit but works as a night watchman because that is the easiest way to go to and from one's work without the neighbours seeing. His wife, too, claimed benefit by saying that she was a single parent, but she did it
In a way those cases are amusing, but they are serious because, taken together, they add up to a great deal of money and give the impression, when one reads of them, that everyone who is on benefit may be on the same lines. That, as I have said, is just not the case.
The national benefit fraud hotline we have now wheeled out is one of the successful elements of our spotlight campaign. The public response has been considerable. There have been about 100,000 calls. We have made savings of about £15 million. Some of the calls give us enough information to follow up clearly; others do not. There is no evidence of a huge number of malicious calls. Many calls are far from that. Partners--these days one has to call them partners, I suppose--splitting up seem to be a small seam of reporting with the partner who has been split from, so to speak, deciding to report the other half for whatever chicanery they are up to. In one case, two or three hours later, the person phoned up again and said, "Can I take all that back? He has come back to me."
To tackle fraud effectively we need to be one step ahead of the fraudster. In looking at our programme of benefit reviews, as part of our strategy we are trying to establish how much benefit is incorrectly paid and identify the causes of those incorrect payments. The noble Earl, Lord Russell, mentioned that in the general term of accuracy of the social security system. Via the change programme and policy simplification we are addressing how we can achieve our objective, much more often than not, of paying the right benefit to the right person at the right time. That involves some simplification of the systems and the use of IT.
Also on the use of IT, we come to the issue of national insurance number fraud. We are taking steps to address that kind of fraud and to use datamatching and the searching techniques, mentioned by my noble friend Lord Rotherwick, which give us powerful tools in the modern world to pursue people who are attempting to defraud the system--attempting to be people other than who they are.
One important point I have mentioned to the House previously--a number of noble Lords have referred to it this evening--is the move to the benefit payment card and away from the old fashioned girocheque system and payment book, both of which are open to fraud. They also lay people, especially elderly people, open to theft. A thief knows that an elderly person is likely to have a book in her handbag and that if he can steal the bag he may well obtain a benefit book with a number of payments in it which he can use fraudulently in post offices.
We believe that the payment card will be easy to use. We are starting with child benefit. The first steps of the process are taking place in Stroud but it will take a while to introduce. It is a big programme. It is not just the card, or the reader: it is the large system behind it called the customer accounting and payment strategy. This is the computer system which will control payments in all post offices around the country and ensure that the person obtaining benefit is the right person.
Within the Benefits Agency itself a generalised matching service has been developed which matches the internal benefit data bases to look at inconsistencies. The two classic ones, I suppose, are the child benefit base and the income support database. Many claims are not fraudulent. It is just someone giving a middle name in one application and not in another, but they can easily be eliminated. The person can be shown to be one and the same person. Where a suspicion of fraud remains, that can be passed on. There are major savings on those databases.
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