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Lord Dixon-Smith: My Lords, does my noble friend agree that the American record on unemployment is particularly impressive because its economy is dependent on a deregulated market in enterprise and, more importantly, a deregulated market in employment, both of which are inimical to a great deal of mainland Europe's practice?
Lord Mackay of Ardbrecknish: My Lords, my noble friend underlines the point I made earlier: that indeed labour market reforms in the United States have led to very considerable job creation which has not been replicated in Europe. However, at least one of the reasons that we are doing better than our European friends is as regards our non-wage labour costs expressed per £100 of wages. Our figure is £15 per £100; in Germany it is £31; and in France it is £41. It is no surprise that firms want to invest in this country, including firms such as Siemens which has announced an investment in the north east of England.
Police (Health and Safety) Bill
3.8 p.m.
Brought from the Commons; read a first time, and to be printed.
Building Societies (Distributions) Bill
Brought from the Commons; read a first time, and to be printed.
Sexual Offences (Protected Material) Bill
Brought from the Commons; read a first time, and to be printed.
Police (Insurance of Voluntary Assistants) Bill [H.L.]
Lord Brabazon of Tara: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.--(Lord Brabazon of Tara.)
On Question, Motion agreed to.
Local Government (Gaelic Names) (Scotland) Bill
Lord Gray: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.--(Lord Gray.)
On Question, Motion agreed to.
Telecommunications (Fraud) Bill
Read a third time, and passed.
Social Security Administration (Fraud) Bill
3.10 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I beg to move that this Bill be now read a second time.
It is estimated that fraudulent claims to welfare benefits total in excess of £4 billion every year. That is an enormous sum of money, even by the standards of the £90 billion we pay out each year.
The fight against fraud is one of the major challenges facing the Department of Social Security. Indeed, my right honourable friend the Secretary of State said during the Second Reading of this Bill in another place that he regards the rooting out of fraud and abuse as his top priority, and he has translated those words into actions. Year on year, record amounts of fraud have been detected and stopped. The House will be heartened to learn that the department anticipates that its counter-fraud work will save taxpayers £7 billion over the next three years.
Some of the examples of frauds committed against the benefit system would be amusing if the issue were not so serious. Your Lordships may remember that during our debate in November initiated by my noble friend Lord Hayhoe I regaled the House with the story of the marathon-running mountaineer who for 15 years had claimed invalidity benefit. There was a celebrated case a year or so ago where the leader of a local council, claiming benefit on the basis that he was disabled and could hardly walk, was filmed by investigators bounding up the steps of his town hall two at a time. A recent case involved a clerk employed by a local authority who used his position to create bogus accommodation agencies for fictitious claimants to housing benefit. He managed to defraud the system of some £97,000 in a six-month period. After that deception was uncovered, it transpired that he had defrauded another authority for whom he had previously worked of a further £48,000.
We have many cases of organised gangs attempting to defraud the system by using multiple identities. In March last year six people operating a multiple identity
fraud in London and the Midlands were each sentenced to between 18 months and three years' imprisonment. They had created 70 false identities and fraudulently obtained about £250,000 in benefit. In December, four men were gaoled for a total of 17 years for masterminding a counterfeiting ring producing forged girocheques. By the time they were caught the gang had cashed over 6,000 forged cheques with a total value in excess of £1.2 million. As the House can see, this is not a trivial matter. It is a very serious matter involving fraud, sometimes on an organised scale, at others on an individual scale.Despite such attempts to fleece the system, we are having success with our comprehensive anti-fraud strategy. As part of that strategy the Government have placed greater emphasis on anti-fraud initiatives and increased the resources available for this work; improved the training given to investigators and other staff; and improved front-end security to stop fraud entering the system in the first place. In addition, we have introduced a number of specific initiatives such as: the "beat-a-cheat" hotline, which has received over 150,000 calls since its inception in August last year; challenge funding for new and innovative ideas; the spotlight campaigns on benefit cheats in particular areas; and we are beginning the process of introducing the benefit payment card which will virtually eliminate instrument of payment fraud via the book or the girocheque.
However, those intent on committing fraud are becoming more sophisticated and ingenious and as one opportunity is denied to them they seek to open up others. To keep ahead of fraudsters we need to be sure that those dealing with fraud at first hand have the tools they need for the job. The Bill will provide a range of measures which will be of assistance in the fight against benefit fraud.
The Bill will permit the Inland Revenue, Her Majesty's Customs and Excise and certain other government departments to disclose relevant information held by them to the Department of Social Security. The purposes of any such disclosure are limited specifically to the prevention, detection, investigation and prosecution of social security offences and for checking and, where appropriate, amending or supplementing existing social security records.
The intention is that information supplied to the department will be used in data-matching exercises which will compare the information supplied with that we already hold. Where information from another department does not correlate with that held by the DSS the discrepancy can be investigated. The discrepancy may be indicative of fraud, in which case further inquiries will be made; or the discrepancy may simply indicate that the records the DSS hold are wrong or out of date--for example, we may have the wrong post-code, in which case they will be corrected.
Access to this data may, for example, show a person registered for VAT or claiming tax allowances and yet declaring no earnings to the DSS. Or that another is receiving income from savings and investments while not declaring capital for benefits purposes.
During the passage of this Bill in another place my honourable friend the Member for Dorset, South related the tale of when he used to run an employment agency in Yorkshire. One day he was visited by an officer of the DSS who was investigating an allegation that an individual was working at his agency and claiming benefit at the same time. When the investigator checked through the agency's records he discovered that one-third of the staff employed there were also claiming unemployment benefit, despite the fact that they were all paying taxes on their earnings. That sort of fraud may be highlighted and uncovered by data-matching. Allowing the Department of Social Security access to Inland Revenue data has the potential to prevent this type of situation occurring.
The Bill will also allow for greater sharing of information by those agencies charged with the administration of various parts of the benefit system. It will improve the efficiency of benefit administration, especially in relation to anti-fraud measures, by allowing local authorities to share data with the DSS and with each other for relevant purposes. Authorities play a very important part in the delivery of the housing benefit system.
Expenditure on housing and council tax benefits totals about £12.5 billion a year. Although local authorities are responsible for administering the benefits, the Secretary of State has a clear duty to ensure the protection of public funds, especially as the majority of the expenditure on benefits and the costs of administration come from the department. Our best estimates indicate that housing benefit fraud amounts to about £1 billion, of which about 15 per cent.--that is £150 million--is fraud by landlords and the other 85 per cent. is fraud by claimants.
In 1993 the Government introduced financial incentives for local authorities to detect and stop housing benefit fraud. I am pleased to say that, nationally, performance in combatting this type of fraud has risen sharply, from £92 million in 1993-94 to £224 million last year.
But this national average masks wide variations in the performance of individual authorities. Some are devoting resources and managements skills to the problem and achieving good results. But others are scarcely addressing the problem and 14 authorities report that they have uncovered no fraud at all.
So, the provisions in this Bill will allow the Secretary of State to examine closely the way in which housing and council tax benefits are administered and to make directions and recommendations as to improvements that might be made. In the case of an authority failing to achieve standards set in these directions the Secretary of State will be able to reduce subsidy payments and, in extreme cases, order the work to be put out to competitive tender, making achievement of the standards part of the obligations under the contract.
However, we do not only want powers to deal with those authorities which are not taking the issue of fraud seriously. We want to help the many which are. This Bill will give two important new tools to local authorities to assist them in their anti-fraud activities.
The first will enable them to require landlords or agents receiving direct payments and whom authorities suspect of some impropriety in connection with a claim to benefit to supply details of all other properties they own or have an interest in. This will provide a useful source of information to facilitate the investigation of cases of landlord fraud by making it easier to assemble evidence and to uncover large multiple frauds from a single lead.The second provision will allow local authorities to appoint inspectors to obtain information from businesses--that is, employers, landlords and letting agents--to check benefit entitlement. This will include a provision enabling them to enter business premises. These powers, which are broadly analogous to those already available to inspectors appointed by the Department of Social Security under current legislation, will prevent unscrupulous landlords and employers from frustrating an investigation by the simple expedient of denying an investigator access to relevant information.
The Bill will create a new offence of dishonestly making false representations or dishonestly failing to notify a material change of circumstances. This new offence is necessary because recent court judgments have compromised our ability to prosecute people under current provisions. In 1996 the Court of Appeal ruled in effect that specimen offences could not be relied on to reflect the full extent of a fraud. The implication for social security fraud is that, unless the defendant agreed otherwise, the court would only sentence on the basis of the specimen offences, which might relate to benefit for a period of just a few weeks out of a much longer period during which the fraud was perpetrated.
It is intended that the new offence is to be used as a continuing offence to deal with cases of serious fraud where benefit was dishonestly obtained over a period of time as a direct consequence of a single false statement or failure to notify changes of circumstances.
This offence will be punishable either, on summary conviction, by a prison sentence of up to six months, a fine of up to £5,000, or both; or, on conviction on indictment, by a prison sentence of up to seven years, an unlimited fine, or both.
The Bill will also extend the current offence, used in more minor cases of fraud, to encompass failure to report changes of circumstances. Many frauds start with a genuine claim. Then the claimant's circumstances change--they get a job, the husband who deserted returns, and so on--and the claimant knowingly omits to inform the Benefits Agency as required. The extension of the offence will ensure that this type of fraud is encompassed.
The Bill will enhance and improve the range of penalties available against those who abuse the system. It will enable the DSS and local authorities to invite a person who has been overpaid, and against whom proceedings for fraud could be instigated, to pay a penalty of 30 per cent. of the amount of the overpayment as an alternative to prosecution.
There are some 100,000 cases a year where the DSS believes that there are grounds for prosecution but only 12,000 or so of those are taken to court. The new penalty
will not be offered in all cases of fraud. However, we anticipate that the new provision will mean an additional 25,000 cases per year facing some form of punishment, which should act as a deterrent to others. As well as ensuring that more fraudsters face the consequences of their actions, this will allow the Department to use specialist prosecution resources much more effectively by enabling them to devote more time to preparing the most serious cases for court.Current legislation permits that overpaid housing benefit paid direct to a landlord may be recovered from that landlord. The Bill will allow recovery to be effected from any other benefit payments due to that landlord, something which is not permissible under current legislation. This will remedy the perverse position we are faced with now whereby an authority seeking repayment from a reluctant debtor with one hand has to continue paying him benefit with the other.
The provision includes safeguards for tenants whose benefit payments are reduced in this way by treating their rental obligation as met irrespective of the fact that a deduction has been made.
The Bill also includes measures to bring procedures for checking the correctness of existing awards of disability living allowance, attendance allowance and disability working allowance more into line with those for other benefits. It clarifies the Department's right to gather evidence to establish the correctness of an existing award of disability living allowance or attendance allowance. It also provides that, where there is doubt about the correctness of an award, the claimant may be required to undergo a medical examination--normally in his or her own home--in a similar way to the existing provision for new claimants.
The Bill also extends to all benefits a requirement that the claimant produce information or evidence to allow a national insurance number to be traced and confirmed or awarded.
Finally, the Bill includes two measures relating to the re-direction of benefit mail. First, it will allow the Department of Social Security or a local authority to require the Post Office, or other postal conveyor, not to re-direct social security mail but to return it to the sender. Secondly, it will allow the DSS and local authorities to obtain information from the Post Office about re-directions--for instance, to check whether payment in respect of one address is being redirected to another.
These provisions will help to counter a common type of fraud whereby the perpetrator sets up false identities in false addresses and then uses the re-direction system to forward the fraudulently obtained benefit payments.
The Bill contains a wide range of important measures to strengthen the hand of the Department of Social Security and local authorities in their counter-fraud work. These measures, taken with other initiatives the Government have introduced or are in the process of introducing, will ensure that fraud investigators have the weapons they need to fight benefit fraud effectively and successfully. I commend the Bill to the House.
Moved, That the Bill be now read a second time--(Lord Mackay of Ardbrecknish.)
3.26 p.m.
Baroness Hollis of Heigham: My Lords, we thank the Minister for introducing the Bill so clearly. With this Bill the Government are finally accepting the argument that we on this side of the House have consistently put to them that there is an unacceptably high level of error and fraud in a wide swathe of benefit payment. That must be stopped. It wastes public money and reduces public support for the welfare state. We want to renew the welfare state; for that to happen the welfare state must regain esteem for its effectiveness and accuracy in delivering benefit as well as for its decency in relieving need and, where possible, encouraging people back into work.
We have also emphasised that, although there is an unacceptably high amount of what I call endemic low-level fraud--the lone parent with the live-in boyfriend, the man on JSA driving a mini cab--which we in no sense condone, we have repeatedly said to Government that they have been irresponsibly lax over the past 18 years in the field of organised benefit crime.
Let me give two examples. First, the loose attitude to national insurance numbers which allows the construction of false identities, a major concern of the Social Security Committee in another place. Our confidence was further eroded when we learned that nearly 80,000 blank birth certificates had gone AWOL.
Secondly, the subject of significance of this Bill, the blind eye that has been turned for so long to organised private landlord fraud. According to the Social Security Select Committee, £2 billion worth of taxpayers' money is wasted every year on housing benefit fraud--£1 in every £5. Much of that fraud is landlord fraud, not tenant fraud. Yet the Government have been soft on it, presumably because landlords rather than tenants were the fraudsters.
We warned Government; Government policy has only made matters worse. Government have cut back on the number of visits to check on frauds from 6.6 million a year under the last Labour Government to only half a million now, although belatedly Government are coming to recognise what folly that cut has been. Until 1993 Government penalised local authorities by their subsidy rules for uncovering fraud; it is therefore not surprising that local authorities did not spend much time uncovering it.
When the Housing Bill was passing through this House last year, the Government persistently refused our efforts to strengthen controls over private landlords. For example, when we tried to require local authorities to license all their houses in multiple occupation and to allow them to keep a register of all properties held by individual private landlords, the Government blocked our amendments. Yet those amendments would have been a significant tool in local authority attacks on landlord fraud.
Housing benefit fraud is of concern because the housing benefit bill is so large. Five times more money is now spent on housing benefit than in 1979: housing benefit then cost £2 billion; it now costs almost £11 billion. That is not simply because the number of claimants has doubled but because Government
foolishly deregulated private rents in the late 1980s, saying that housing benefit would take the strain. So the amount of housing benefit claimed by the private sector has risen from £1.4 billion to £5.5 billion since 1985. Twice as many people are claiming four times as much benefit, thanks to the Government's kindness to private landlords.We do not doubt that housing benefit is sometimes mispaid to tenants who mis-state their domestic circumstances. An adult son may move back home and the mother on housing benefit fails to report it because she does not realise the implications of complex housing benefit rules. Nonetheless, all the evidence suggests that such fraud is far less significant than organised landlord fraud. Because landlords demand direct payment of housing benefit cheques to them before they accept a DSS tenant and thereafter, sometimes in collusion with shady managing agents, they then go on to invent fictitious tenants for fictitious rooms at fictitious rents and enjoy a very affluent lifestyle, courtesy of the taxpayer.
That is not error perpetuated by the confused; nor is it fraud perpetuated by the hard-up or temporarily tempted. It is serious, sustained, expensive and organised white-collar fraud. Hence, in another place at Report stage, the Labour Party called for a specific offence of landlord fraud to target landlord cheats with tough new sanctions. We need that because fraudulent landlords too often conceal their responsibility behind the tenant. Such landlords, who receive direct payments with money passing direct from the local authority to the landlord without going through the tenant, will still try to argue that it is the tenant's job and not the landlord's job to inform the local authority of changes of circumstances. Responsibility for fraud then becomes hard to locate and prove. Yet the Government refused in the other place to accept such amendment.
Likewise, when the Housing Bill was before this House and we sought amendments to require local authorities to licence all HMOs and to be allowed to compile a register of all properties held by private landlords, the Government unwisely resisted our amendments, which would have done much to eradicate organised fraud.
Local authorities need to know who is claiming from whom, where it is happening, how much is involved and for how long. We want local authorities to have the full right to demand that information from landlords about the properties for which any claim for housing benefit is made. If the Government do not give in this Bill local authorities all the powers that they say they need to check landlord fraud, we shall want to know why the Government, despite all their strong words, remain soft on it and go for the little people but let the bigger fraudsters escape.
If the Government want our full co-operation on the Bill--and given the time pressures faced by the Government, they may need it--they will have to move toward us on this matter. I do not see why that should present any difficulty between us as we share the same concerns. I hope that we shall hear friendly words from the Minister on this matter when he comes to wind up the debate.
One of the Government's responses in Clause 16 is to allow local authorities to recover money from a landlord overpaid for tenant A by deducting it from the housing benefit due to another tenant, tenant B, of that same landlord. The Minister explained his thinking, which is ingenious and we understand the reason for it. But despite government assurances that the rental liability for that tenant will be discharged, many of us fear that it may place that tenant, tenant B--the innocent vehicle for public reimbursement of another tenant--in a precarious position with his landlord, at risk of eviction and having a non-housing benefit tenant replacing him. Keeping administrative track of separate rental and housing benefit accounts for separate tenants will become difficult, particularly if tenant B has his own problems with the top slicing of JSA for his utilities debts or past housing benefit debt. The problem will be compounded if he shares a flat with others. It will be an administrative nightmare.
We understand that one does not want to see one part of a local authority's housing benefit section paying money to a landlord while another section of the same department seeks to recover money from that same landlord. Nonetheless, we shall want to see whether we can tackle the problem in a more effective way.
Nor are we convinced that the same rules of recovery should apply to socially registered landlords, such as housing associations, as apply to private landlords. At Committee in another place, the Minister said that up to 20 per cent. of registered social landlords were failing to refund overpayments, and so on. We shall ask the Minister to produce the evidence for that and again see whether we can produce a more effective way forward than has so far been suggested.
In principle we welcome data matching so that local authorities and DSS managed benefits share a common IT architecture along the lines of project accord. But we shall want to take great care that that it does not unreasonably invade the privacy of tenants and, of course, the national and international rules about data protection. It is important that claimants can ensure that information passed from one agency to another is correct. A common spine of IT is only valuable in so far as it is accurate; otherwise, errors become exponentially multiplied.
We shall want assurance that the Bill provides adequate safeguards for data protection. We believe that that may be best achieved, as the data protection registrar says, through a statutory code of practice. Let me quote the letter of the data protection registrar to Mr. Lilley on 10th January this year:
- "When I commented on the text published for Second Reading, I expressed my concern at the very wide powers given in respect of data matching activities. In the light of this concern, I have come to the firm view not only that there should be a code of practice but that it should have statutory force. The existence of appropriate safeguards would go a long way to providing assurance to the public that such data-matching exercises will be properly regulated to minimise the possibility of any adverse consequences for innocent individuals".
A position calling for a stringent statutory code of practice is strongly supported by the Post Office. We shall expect the Government to accept such a code of practice and allow the registrar a supervisory role of audit over data-matching activities.
We recognise that the Government have to be concerned about the existence of fraud in any benefit, including disability benefits. But we shall seek safeguards from the Government concerning Clause 15 to ensure that the strain on disabled people and their vulnerability are recognised in the way that the Government seek to eradicate error or fraud in that range of benefits.
Similarly, we shall ask the Government to look closely at the issue of appointeeship, to prevent people with learning difficulties from being cheated by others. We shall ask the Government whether they are concerned about disability benefits, why they refuse to allow local authorities to extend their fraud-chasing remit to other local authority administered benefits, such as education awards and contractor fraud. Currently the London local authorities are promoting such a Bill. It would be helpful if the Government could indicate their thinking on this matter and, better still, allow the Bill to be a vehicle for checking fraud in associated fields also.
We all want to review the arrangements for subsidy for fraud work as well as the "finders keepers" rules. We shall also want to clarify the role of the new inspectorate. The assumption behind the Bill, confirmed by the Minister's introduction, is that the local authorities are being dilatory in exposing housing benefit fraud and need a diligent inspectorate to push them into action. That is nonsense and the Government know it. It is the Government who penalised local authorities until 1993 for uncovering fraud by taking away their subsidy. Even now, the Government penalise local authorities who prevent fraud from happening by punishing them for failing to detect what has not happened--a non sequitur if ever I heard one.
One other aspect of the subsidy rules concerns us. A subsidy from government will in future come from uncovering fraud but not from reducing error. If overpayment is due to local authority error, there is no subsidy. If overpayment is due to claimant error, there is 25 per cent. subsidy. But if it is due to claimant fraud, there is 95 per cent. subsidy. Therefore, local authorities have an indecent incentive to classify error as fraud in order to maximise subsidy. Innocent claimant error associated, for example, with an adult son coming home and the household becoming entangled in the extraordinarily complex non-dependant adult deductions of housing benefit can be classed as fraudulent in order to extract benefit.
We are not opposed to an inspectorate but we wish to emphasise that the demand to recover and stop housing benefit fraud has been led by local authorities. A year ago, across these Dispatch Boxes, the Minister was telling these Benches and myself that our assertions of housing benefit fraud, based on figures supplied by the Local Authority Associations, were wildly exaggerated. Now we notice that the Government accept our broad figures.
Since 1993-94, savings detected from fraud by local authorities have risen from £93 million to £220 million in two years and this should exceed £300 million in 1997-98. Of some 400 local authorities, 367 will exceed their fraud targets set down by government even though those fraud targets for 1996-97 are 50 per cent. higher than in the previous year. I only wish the DSS was half as efficient. In the field of fraud it is the Government and not local authorities who have dragged their feet.
Finally, we see this Bill not just as a vehicle for the more effective tackling of fraud, of paying money to those who are not entitled to it, we also see it as a vehicle for delivering benefit to those who are entitled to it but are not receiving it. That is particularly a problem for our poorest pensioners. Nearly 1 million poorest pensioners, over 40 per cent., who are entitled to income support do not claim it. They are losing, on average, £14 a week as well as entitlement to £8 a week cold weather payments. Similarly, Age Concern estimates that a third of a million pensioners are not claiming the housing benefit to which they are entitled, worth nearly £20 per week, and that 1.6 million pensioners are not claiming the council tax relief to which they are entitled, worth over £5 per week.
It is especially nauseating that in a month when the Government introduced the fraud hotline, they closed the benefit helpline. It seems that the only way the Government have of financing their tax cuts is not through economic growth but by discouraging our poorest pensioners from claiming the benefit to which the Government say in law they are entitled.
We may not have time on this Bill to use it as a vehicle for benefit entitlement but we want it clearly signalled that the Government, if they had so chosen, could have done so and we are setting down a marker that we shall do so.
To conclude, we are at one with the Government in wishing to check fraud wherever it occurs. In so far as this Bill will effectively aid local authorities in doing this, we welcome it. But if the Government want our wholehearted co-operation and speed on this Bill--and I rather suspect they do--we must make it clear that that is conditional on the Government meeting us on two points which they ought, in all conscience, to be able to do.
First, the Government must join with us in strengthening the powers of local authorities to deal with fraudulent landlords, perhaps by a specific offence of landlord fraud. The Government do not go far enough in this Bill to stop landlord fraud. Secondly, the Government must bring before us, in principle, a code of practice or at least insert the regulatory powers for a code of practice for data protection to ensure the proper handling of data; that it is accurately collected; that it is used for its proper purpose; that it does not give rise to abuse of confidentiality or the hounding of vulnerable people. A proper balance must be kept between collecting information to check fraud and respecting the rights of individuals to privacy, especially the rights of the poorer and less powerful people to privacy.
If the Government can meet us on these two points, and I really cannot see why they should not, then we will co-operate in all ways possible to see this Bill on the statute book.
3.44 p.m.
Earl Russell: My Lords, before getting down to business, I would like to offer the Minister an apology for asking him an inaudible question a few minutes ago. I did not react fast enough to a certain amount of noise in the House and I am sorry that that was so.
In that same spirit, in spite of the slightly end-of-term atmosphere we heard a few minutes ago at Question Time, I shall attempt, unless provoked beyond endurance--and I shall make my endurance as long as possible--not to use the Bill for scoring party points. I say that not out of moral virtue--both the Minister and the noble Baroness know that I am not above scoring a party point when I think it appropriate--but because I think it is in our mutual self-interest. On the Bill all three of us will be vulnerable because we face a clash between conflicting priorities, all of them legitimate.
First, we all agree that fraud is a crime. It is properly prosecuted under the Theft Acts. Money is taken which should have belonged to somebody else and is nefariously misappropriated. That, I think, is common ground between all three of us. But equally all three of us are and must be concerned to show that we are trying to act in the interests of claimants, which may, on occasion, unless we have very careful drafting, conflict. Also, all three of us must be concerned to show that we are acting in the interests of justice. As soon as we start to accuse each other of being too soft on fraud we are liable to get back across the Chamber the accusation of not being sufficiently concerned with justice, and so forth. So if we use this Bill for party purposes, we set up a merry-go-round from which I believe none of us will gain.
The Minister will remember that I gave the Bill a guarded welcome in the debate on the humble Address. I repeat that but, having done a good deal more work on the Bill since, I find that the guardedness is slightly clearer than the welcome. Obviously we need a Bill on this subject more or less of this type. However, looking through the actual drafting of the Bill I cannot help being struck by the sense that this is the sort of Bill that one gets at the end of a parliament. Also, I cannot help being struck by the sense that when, among three conflicting and more or less equal priorities, one singles out one of the three for legislative attention, one makes the task of balance a great deal more difficult. I hope that in Committee we shall be able to restore that balance.
First, I shall deal with the legal issues which have arisen in relation to Clauses 1 to 3 since the Bill was tabled. We have first the problem of the European Convention on automatic data processing which lays down that personal data held for any purpose shall not be used or disclosed in a manner which is incompatible with that purpose.
I do not think we take enough account of the resistance of the public to supplying information which is wanted for official purposes. To take an example, which obviously from its nature I would not have taken for partisan purposes, I heard very recently from somebody I have known for a great many years who was objecting passionately to supplying to her local authority the information required under the Energy Conservation Bill recently sponsored by my honourable friend, Mrs. Maddock. She was quite convinced that there was some nefarious purpose behind the demand for this information and nothing I could do could convince her otherwise.
Therefore, in requiring official information, we have to concentrate on the question of preserving public trust. In computer matters that has already become more difficult because of the spread of hacking. In 1994 there were 665 Whitehall cases of hacking. The majority of those were in order to disclose information to an outsider. We should all remember that one of the major causes of this sort of problem of unauthorised disclosure arises in domestic violence cases where the violent former husband tries to trace a wife who has taken flight. I would like to think that before the Bill is completed, the Minister will have taken advice from Women's Aid and other concerned organisations on the risks to which the disclosure we are interested in may perhaps give rise.
Next we come to the question of the European Convention on Human Rights. Clause 8, the privacy clause, lays down the requirement that disclosure should be in accordance with law, which means that the law should be formulated with sufficient provision to enable a citizen to regulate his conduct. That is not a piece of nasty foreign law. It is a good, basic English legal principle. I am not going into 17th century jurisprudence. I shall quote only the memorable phrase used by George Digby in another place in 1641:
- "Let the mark be set on the door where the plague is,
And let him that will enter in die".
I am not sure the Bill passes that test.
It must also be for a legitimate aim. Prevention of crime clearly is a legitimate aim within the meaning of the European Convention. There can be no dispute about that. But checking the accuracy of data, I suspect, is not a legitimate aim, although I speak as an amateur and in a case which has not yet come to court and which will take a considerable while to come to court. It would mean that it would be possible to get hold of the whole of a political opponent's tax records just in case he might be claiming income support under another name. It is the kind of thing which in a future atmosphere--perhaps 10 or 15 years down the road--could get quite seriously out of hand. We need to be careful how we go about it.
We need to be clear, in defining the circumstances under which disclosure is to be allowed, first, that overpayment is not necessarily the same as fraud. There has to be a mens rea established before overpayment can constitute fraud. We need a tighter definition of the circumstances in which disclosure is to be allowed.
We need some requirement of suspicion. Your Lordships may remember the outcry which has been caused at various times in the past about the notion of the police carrying out random breath tests. The case for restriction here is a good deal stronger than it was for random breath tests. There must also be a provision for review of the exercise of these powers; otherwise, as Belloc has it,
- "It would not do
For people such as me and you
Who pretty nearly all day long
Are doing something rather wrong".
Those clauses need a good deal of thought before we leave them.
On the later clauses there is a good deal of work to do, but there are not such big issues of principle. The basic aims of Clauses 5 and 6--the sprucing up of local authority administration of housing benefit--need to be supported. However, I am a little worried by the provision in Clause 10 for subsidy to a local authority for success in detecting fraud. The decision whether something is or is not fraud is in form at least resembling a judicial decision. Financial incentives to take a potentially judicial decision in one way rather than another cause me a certain number of misgivings.
In Clauses 9 and 10 the Minister touched on provisions for subjecting the local authority to a financial penalty or contracting out. I entirely understand why the Government are thinking in those terms. After all, I live in the London Borough of Brent, and I know something about what inefficient local authorities have in the past been like. However, the financial penalty is a little like the charge from the bank for going into overdraft. I recall a social security case of someone who went into overdraft by 10p. The bank charged her £10 for it. She challenged that. The bank waived the £10 penalty but charged her £10 for the letter saying that it was doing so. This does not always help. I am unhappy with those provisions but I do not at present see an alternative. I do not intend to make any large fuss unless or until I see an alternative.
Clauses 13 and 14 are provisions on changes of circumstances. Those also cause me some misgivings. I want to ask the Minister about the use of the word "dishonestly" at the beginning of Clause 13. How much restrictive force does that have? Is that a requirement for mens rea, or is "dishonestly" being used loosely simply as a synonym for inaccurately? The answer to that question will make quite a lot of difference to me.
I was also a little taken aback by the requirement to report all changes of circumstances required by any regulations. I shall not force the Minister to plead his privilege against self-incrimination, but if I were to ask him to name the content of all social security regulations requiring disclosure of change of circumstances, it might give him a little hard work. If the Minister felt anxiety about that, what would the average benefit claimant feel? Most people are not at all sure which changes of circumstance need reporting and which do not. Above all, the change of circumstance requirement does not really keep up with the flexible labour market, with fluctuating wages changing every week. For income support there is a simple form for reporting a change of
circumstance. Would the Minister consider the possibility of introducing a similar form for housing benefit, and would it not save us some trouble if he did?In Clause 15 overpayment is automatically, as far as I can see, taken as fraud. We need some proof of mens rea before that is understood. There are plenty of cases of overpayments arising because people have been given mistaken descriptions of exactly what was required of them. I have some such cases before me but I shall not detain the House with them now because time is running short. However, we may hear more of those later.
In Clauses 17 and 18 the requirement for medical examinations for people with various disability benefits has caused concern to the Royal National Institute for the Blind and is likely to do so to other disability organisations. Now we are calling in the informer through the fraud hotline, everyone is open to notification from any enemy, former lover or spurned lover alleging various forms of fraud. Some disabilities, notably acute heart trouble and epilepsy, are not at all visible to anyone who sees you about in the street, so they might think you are perfectly fit and notify you as a fraudster. I entirely agree with the Minister that fraud happens in this as in all other areas and there must be measures to check it. What I do not want is any danger of this turning into a witch hunt. I should like to know the circumstances in which regulations are likely to prescribe extra medical examinations. I should like to know how often these new medical examinations may be required. We shall have to look at that more closely in Committee.
Clause 19 concerns failure to supply information for checking a national insurance number. Again, I sympathise strongly with what the Government are after here. I wonder how it will work in practice if you apply it, say, to the street homeless, who are not very well equipped with places for keeping records; if you apply it to illiterates, with whose rights I have always had a concern; if you apply it to people with the various forms of learning disability, which are not unknown among people on benefit; or if you require alcoholics to supply this kind of information. They may not even understand your question. To take that as fraud is straining the meaning of language. Before we leave the Bill I should like to be sure that we are not going to come up with a lot of merely misguided and incompetent people when we are looking for criminals.
Clauses 20 and 21 refer to the provisions for redirecting post. I am concerned about how the prohibition on redirecting giros might affect people who have suffered from eviction, those who have suffered from matrimonial breakdown or who have fled from domestic violence. This may be a procedure which is a little too inflexible for the need that it has to meet. The Post Office is concerned about the provision in Clause 21 for gaining access to its database in order to redirect mail. I entirely understand why. Not all of those people by any means--they allege less than 1 per cent.--are involved in any sort of benefit business. Again, that is just the kind of thing which could be used regularly to trace people fleeing from domestic violence.
When we look at the Bill--which I hope that we shall do with great care--we must not look at it with tunnel vision, but with sympathy and from a good many other angles as well as looking at its effect on fraud. Then perhaps we might get it right.
4 p.m.
Viscount Chelmsford: My Lords, I am no expert on social security neither do I have a great deal of knowledge about fraud, but I do have practical private sector experience of administration and I shall approach the Bill from that angle.
I choose to split fraud between skilled fraud and unskilled fraud. Skilled fraud is always with us since whatever one man can do another will find a way to undo. If we leave the door open those with little principle will walk in, but when we lock it such people have neither the skill nor the determination to get inside. So there is a lot that we can do to learn from our mistakes, to tighten our vigilance and routines and to manage better.
Here is a true and recent story taken from a different discipline, but the points are nonetheless instructive. A container load of cigarettes was sent from the USA to Angola. The first leg was by ship to a Scandinavian port; the second by French truck to a Spanish car park and the third was supposed to be by local movement to the port of Vigo except, of course, the cigarettes were never seen again once they had left the car park.
No one at the Scandinavian port asked why a cargo for Angola ever came there in the first place. No one checked to find out whether that had happened before--it had--and the details of the previous theft were well known to the authorities. An investigator had no difficulty in following the journey south. The crooks were so relaxed that they had even used the same name each time when clearing Dutch customs. The investigator is on record as saying that that could not have happened a second time had there been a computerised record with the opportunity to match data.
Of course, they may have been skilled criminals, capable of moving on to different ways of achieving dishonest income, but there was nothing very skilled about what they actually did. The world is full of unskilled people who can and do take advantage of incompetence--what the Army calls "making". Computers are a prime weapon in the battle to achieve competent management because they do not work if you offer them a fudge. Computers force us to be tidier: to be more disciplined. Block the avenues of incompetence and a lot of people who only drift into crime will no longer offend.
Computers also force us to be exact. They give us the opportunity to collect and use information in new ways but, being exact, they require common definitions. There is an amusing story to illustrate this. The Ministry of Defence must have some difficulty in using headcount statistics if the following allegation, which was told to us in PITCOM recently is true. It is said that in the Army personnel are either "men" or "apprentices". In the Navy, they are either "men" or "officers" whilst in the Air Force all personnel are "men", including women.
I return to the subject of fraud. How does one stop someone on social security from forging a second card and applying for two benefits at two different post offices? One answer is to issue claimants with plastic cards containing unique reference numbers; build a common network across all post offices; only pay weekly benefits to authorised benefit holders and know instantaneously each time a claimant asks for a benefit which has already been paid elsewhere.
Such a system is now being implemented. It restores competence. It will eliminate another element of fraud. It will take some people out of the fraud game, and not necessarily through arrest or conviction but simply through lack of opportunity.
The consultation period on the Green Paper government.direct has just ended. The prospect is that information given once to one government department will be used by all departments. The good news is that, instead of being sent a form to your correct address and finding that the first question says, "Please fill in your name and address", the form will arrive with this already shown. In Denmark, the tax form already reaches the citizen partly filled in from existing records.
The bad news is that information held by the Inland Revenue will be available to the DSS--or is that bad news? That depends on one's outlook and, it seems to me, on whether you have anything to hide. We spend a lot of time these days extolling government and corporate transparency. It puzzles me why the thought of individual transparency gets such a bad press.
Of course, the information must be accurate, and this brings us to the other side of the equation. We need to know that information about us is accurate and is used only for such purposes as have been advised to us before we donated the information. We have the Data Protection Act to give this the force of law. There is an irony in this, in so far as concerns accuracy, because there is ample proof from the private sector that single entry of information is not only significantly less error-prone than multiple entry, but also that a wrong single entry gets discovered far faster than the one error within the multiple entry system.
The Data Protection Registrar tells us that the UK Act avoids the use of the word "privacy" but that Article 1 of the European directive, which the United Kingdom is required to implement, states that privacy is a fundamental human right. She suggests that data holders should take great care to specify the purposes for which such data may be used before they collect it, thus avoiding compliance costs later. It is in the data holder's interest to work out in advance how to avoid alienating citizens afterwards.
The Electronic Commerce Association suggests that while information supplied to government should be available to all who require it within government, the citizen must be confident that it will never be disclosed outside government, except in unidentifiable statistics, and also that the information will never be subject to the jurisdiction of any other government.
Government departments may well be advised in future to have a statement on all their forms stating that,
- "in the interests of more efficient Government, any data supplied thereon may be passed to any or all other Government departments for use in respect of any of the purposes published and registered under the Act".
I think that that would satisfy the current Act.
Everyone must decide for themselves whether this would constitute "Big Brother" or simply represent common sense. I suspect it depends on culture and outlook. But I forecast that what is now being called "data matching" will happen and that those nations which implement it last, or indeed implement it unsuccessfully, will lose competitive advantage in the global struggle to increase living standards.
So, if it is going to happen, then the sooner the Government move ahead in general with the implementation of their Green Paper government.direct the better. As regards this Bill, we would do better to look for checks and balances to protect the data subject than to reject the data-matching concept. There is already an avenue for checking whether a data holder complies with the Act. The names of all those registered as data keepers are now live on the Internet. The list gives contact addresses which citizens can use to find out what data is held about them. Something must be going right since the registrar says that she now gets better quality complaints.
So far as concerns this Bill, the registrar wants, as we have heard, to see a statutory requirement for a data holder's code of conduct, which complies with the existing eight data protection principles. Having spent much of my own life as one who was governed through a code of conduct, I commend such an approach. Lloyd's of London has not had much praise in this House recently, so I am delighted to tell noble Lords about something which I believe it got right. If a broker is found to have transgressed his code of conduct, it is not automatically considered to be a disciplinary offence, rather it is a matter that can be taken into account in any disciplinary hearing. This gives a powerful flexibility to the operation of a quite tough code.
In passing this Bill, Parliament will have further enhanced the importance of the registrar's position as the keeper of the checks and balances between government (the data holder) and the citizen (the data subject). I conclude by quoting from a EURIM brief, which was also its response to the Home Office concerning the need to implement the European directive. It states:
- "The Registrar's function needs review. It should be more of a Parliamentary Commissioner than a business Regulator, particularly in respect of complaints regarding Government Departments. The advisory role of the Registrar should be enhanced: fees should be de linked from registration, becoming variable and work related. Primary legislation is highly desirable. There are potential dangers of confusion if the UK Act and the EU Directive are left separate and structural change is anyway desirable".
We need this Bill. We also need an effective Data Protection Registrar for balance. I suggest that these two strands cannot be separated.
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