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4.9 p.m.

Lord Stallard: My Lords, I listened with great respect to the noble Viscount, Lord Chelmsford, especially when he said that he did not know much about local authorities or social security. I hesitate to say this, but I am bound to do so: many of my former constituents or those whom I helped when I was a member of a local council would not have understood what the noble Viscount meant when he spoke about the Internet and the rest of it. Those things are light years away to many pensioners.

I turn now to the Bill. Any Bill purporting to deal with benefit fraud could be expected to attract universal support--and rightly so. However, the very first sentence of the Explanatory and Financial Memorandum to this Bill states:

In that sentence, the Government are admitting straight away that they are concerned with only two benefits. Although the Minister when introducing the Bill said that it will give local authorities new powers to deal more effectively with benefit fraud, in my view the Bill does not go anywhere near far enough. It does little in practical terms to tackle other types of fraud. From reading recent reports, I understand that there is a great deal of fraud in the education world, relating to grants and awards. There is certainly a great deal of fraud with contractors, particularly in local authorities. Such fraud is not mentioned in the Bill.

What puzzles me is that there is another Bill--the London Local Authorities Bill which I know has been in preparation for almost two years now. I also know that it has been awaiting its Second Reading for many months. I noticed this morning that, according to the Notices and Orders of the Day in the Minute, that Bill is due to have its Second Reading on Wednesday. Had I known earlier that that Bill was to have its Second Reading on Wednesday, I would not have put down my name to speak on this Bill. I would far rather have waited for the more comprehensive Bill that has been produced by London's local authorities because that Bill deals with many more types of fraud at greater length and far more thoroughly than does this Bill.

I shall deal with only one or two examples today. First, the London Bill will deal with fraud relating to education grants and awards. It will also deal with landlord fraud far more deeply, in much more detail and with much more practical understanding of the difficulties than does this Bill, which seems to concentrate on fraud involving individual applicants. Although I am aware of the changes that were made to these provisions in another place, in my view the Bill still does not deal adequately with fraud such as landlord fraud which, according to many reports, exists on a large scale. The London Bill is much more specific and requires landlords who ask for the benefit to be paid directly to them to supply details of all the other properties that they control in respect of which housing benefit is claimed. Local authorities will understand that. Local authorities are also to keep a register of

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landlords who receive direct payments of housing benefit and are to pass that information to other local authorities. That is another good idea. Local authorities will also have specific powers to refuse to make direct payments of benefit to landlords if they believe that fraud is involved. In such cases, the benefit would be paid directly to the claimant.

I make those points to show that the London Bill was conceived and its provisions drafted long before this social security Bill was ever thought of. In fact, I believe that this Bill was produced in response to the local authorities Bill and that it replicates some of its proposals. So, far from the Government producing a fraud Bill in response to a lack of action by local authorities, a point on which the Minister elaborated when opening the debate--the reality is that the Government's fraud Bill has been produced in response to the initiative taken by the London boroughs in bringing forward private legislation.

I may be totally out of touch, but I do not believe that that Second Reading can now take place on Wednesday. It does not seem possible to me that we can discuss this Bill on Monday and then discuss a similar but more detailed Bill on Wednesday. In my mind that raises the question of why we are doing this. As far as I am concerned, it is being done for only one reason: the Government are in a hurry to produce something which they and their managers deem to be electorally desirable. If I were a cynic I would believe it to be true that the Government hope to rush the Bill through within the next few days or so, so that they can begin to boast about how tough they are on tenants--and on some landlords. If we were to discuss the other Bill on Wednesday, we could have a much more leisurely discussion on that Second Reading and far more detailed and specific discussions in Committee. However, I do not see how we can do that now--and certainly not in this Session. Are we saying that we shall pass this Bill now, have a Second Reading of another Bill dealing with similar provisions on Wednesday, and God knows when that second Bill can be given its Committee stage? I am sure that I am more or less right and that the Government are in a hurry because they want to be able to show in their manifesto how tough they are on fraud and what they are doing about it. However, at the same time they are saying, "We shall not boast about what we are doing to landlords because that might not be so electorally desirable". I ask the Minister whether the Second Reading of that London Local Authorities Bill is still to take place on Wednesday.

In turning to my next points I must declare my interest. As chairman of the All-Party Lords Group on Ageing Issues, I have attended a number of meetings with colleagues, and joint meetings with the Commons All-Party Group. We have met representatives of pensioners' organisations and representatives from Age Concern. Their general criticisms relate to the fact that this Bill concentrates only on taking benefit away from those who should not be receiving it. It does not take the opportunity to encourage people to take up the benefit to which they are rightfully entitled. Nothing in the Bill deals with that.

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Some figures have already been quoted, but perhaps I may repeat that as many as 1.1 million pensioners are not claiming income support and that the average amount of unclaimed income support is £14.10 per week. As much as £800 million-worth of income support benefit is not being claimed by those pensioners who are eligible. There is a similar story with housing benefit because 320,000 pensioners are not claiming the benefit to which they are entitled. That means that 14 per cent. of eligible pensioners do not claim. The average unclaimed benefit is worth £19.70 per week. As much as £330 million worth of housing benefit is not being claimed by those who are eligible. As many as 1.6 million pensioners are not claiming the council tax benefit to which they are entitled--or 37 per cent. of eligible pensioners. The average amount of council tax benefit left unclaimed by eligible pensioners is £5.60 per week. As much as £480 million in council tax benefit is not being claimed by elderly pensioners.

It may be argued that the issue of take-up should have been included in this fraud Bill. It could be argued that where a council or government department fails to take adequate steps to identify people who are entitled to receive benefit but who are not receiving it, those people are being defrauded of that benefit. It certainly appears that the present publicity and advertising are insufficient. The Government boast that they are spending millions of pounds on advertising campaigns to publicise benefits. But would not that money be better spent in other ways? We are contacted regularly by post to ensure that our names are on the electoral register and we are contacted every so often in relation to a census. I imagine that the names and addresses of pensioners are on local and national computers and are known to voluntary organisations. With some assistance, I do not see why it is not possible to identify those people to ensure that they receive that to which they are entitled. There are a whole number of reasons, which I do not have time to go into, why people are in that situation.

We know that people are not receiving those benefits. We could find out who they are if we were prepared to divert some of the millions which are spent in the wrong direction. Could it not be said that if those sums are not paid, the people in question are being defrauded? I have mentioned sums of £800 million, £330 million and £480 million. That is £1,610 million. I wager that if pensioners were withholding any payment due or claiming that to which they are not entitled, they would soon be identified and punished. It would not take long to identify a pensioner who was fiddling his pension or cheating on his income support. Yet it is not possible to identify him when he is not receiving that to which he is entitled. I am saying that we should direct more money and time in that direction.

Age Concern has raised another matter about the structure and system of benefit appointeeships and agencies. The fraud Bill makes no reference to reviewing that system. There is no monitoring of those people who are appointed agents or appointees. Those of us who have served in local government and know the problems at street level know that there is a whole

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area of fraud in that sphere. We know it goes on. We have all had experience of someone who has been appointed to assist a person who is perhaps not totally mentally alert and has been found to be defrauding the person entitled to the benefit. That is not mentioned in the Bill but Age Concern is concerned about it, as I am. There should be a whole review of that system; there should be a system of monitoring those who are appointed and the means to deal with anything that happens in that process.

There is no formal review mechanism. The Benefits Agency provides limited public information on the system and conducts limited, if any, monitoring of appointees and agencies. That also impinges on the implementation of the benefit payment card. Therefore, we must look at that when we are looking at all the other aspects and problems.

I received another piece of information from the Royal National Institute for the Blind which is concerned mainly about Clauses 17 and 18 which relate to disability benefits. The society asks why a Bill which is aimed at tackling fraud includes two clauses which deal with disability benefits. When that point was raised in Committee in another place, the Secretary of State said that fraud was not an issue in that respect. He said that the Bill is a convenient vehicle to deal with disability matters; that is despite the fact that their inclusion in a Bill dealing with fraud sends out all the wrong messages. I can understand that; noble Lords can understand that. If it is not an issue, why are those matters included? It is said that those two clauses have no connection with fraud, but they are contained in a fraud Bill. Therefore, we are sending out a message that there may well be fraud among members of the blind community. I think that that is a point which requires more of an answer than has been received so far.

When the Minister winds up, perhaps he will tell me how the Government justify placing clauses dealing with disability in a fraud Bill. The RNIB would like an assurance that the whole context of the report on DLA and incorrectness will be made available and that no decisions are taken on tackling incorrectness without full consultation with disability organisations. I should like the Minister to deny, on behalf of the Government, the rumours about changes in the interpretation of the "ability to walk" provisions. I ask the Minister to give an assurance that there will be no changes which may diminish the right of blind and partially sighted people to receive the lower rate of the mobility component of the DLA. I do not think that that is asking for too much on behalf of people who have been insulted by the inclusion of those two clauses in a fraud Bill. I hope that the noble Lord will be able to reply to those matters.

As I say, I should have liked to have spoken a lot longer and I would have done had the Second Reading of the other Bill been on Wednesday. I do not know whether it will be. I should like the Minister to tell us whether or not that is to take place on Wednesday.

4.26 p.m.

Lord Lester of Herne Hill: My Lords, I begin by apologising to the House for the fact that, unfortunately,

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I cannot be here for the whole of the debate and in particular to hear the Minister's reply to it. I have written to him with my personal apology. When I put my name down to speak in the debate, far fewer noble Lords then had their name down to speak in the debate.

As almost all noble Lords have said, the Bill has entirely laudable aims--the aims explained so clearly by the Minister. The Bill has been widely welcomed. The question which I should like to raise--and it has already been raised by noble Lords--is whether the means chosen to achieve those laudable aims contain adequate safeguards to ensure respect for personal privacy. I hope and believe that the Minister shares that concern and that he would be open-minded about the strengthening of privacy safeguards in the course of the Bill's passage to strike and maintain what my noble friend Lord Russell described as a fair balance.

Until about five years ago, data-matching was virtually unpractised in this country. Data-matching means the computerised comparison of two or more sets of records with the main aim of searching for records relating to the same individual. There are several variations of the data-matching technique currently in operation; but they are limited in scope. However, this Bill will allow wholesale data-matching; that is, a sharing of information across government departments which at present would be unlawful.

The Bill will empower public authorities to use data-matching to reveal inconsistencies in an individual's record and not only to confirm an existing suspicion, as is already permitted under the existing social security legislation. Inconsistencies which government computers highlight, at least in theory, could be the basis for further investigation by a computer-generated decision whether with or without the exercise of further human judgment.

The Bill represents a significant extension of state power. For the first time, Clauses 1 and 2 would allow the Secretary of State to collect relevant information from the Inland Revenue, Customs and Excise, agencies dealing with passports, immigration, emigration and prisoners, and, in completely cavernously open-ended language,

    "any other matter which is prescribed".

That last phrase would be in new Section 122(B)(1)(b) of the 1992 Act, inserted by Clause 2(1). I await with interest the report from the Delegated Powers Scrutiny Committee on that particular provision.

In all cases, the very wide power to which I referred is to apply not only to the

    "prevention, detection, investigation or prosecution of offences",

but also for use in checking the accuracy of information and, where appropriate, amending or supplementing it. The Inland Revenue will have greater powers to supply information relating to contributions to the Secretary of State who, in turn, will be able to supply it to local authorities, which will be able to exchange the information with each other. Some of this may well be happening already. But, if so, as with police practice in relation to electronic surveillance, it is happening without proper lawful authority, without legal certainty

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and without adequate safeguards against misuse. The Bill is most welcome in putting some of these matters right.

Data matching will of course occur without the knowledge of the access subject. Computer errors, like human errors, will inevitably occur, and outdated stale information soon becomes inaccurate information. A common source of fraud is to use the national insurance number of someone else; so there can be cases of mistaken identity because of the activities of a fraudster. Errors are also inevitable because of the large scale on which this information is collected and the different contexts in which the information was obtained in the first place. Added to that is error which may arise from the different quality of different databases.

The Data Protection Registrar, to whom reference has already been made, is, if I may say so, a most impressive, independent expert authority to whom we would wish to pay tribute. In her annual report some years ago, the registrar drew attention to the fact that:

    "Information can be used out of context to the detriment of individuals, unjust decisions can be taken on the basis of a computer generated profile which causes them to be placed into a group with certain characteristics, decisions can be made automatically, that is without the intervention of human judgment. The rights of individuals to check the accuracy of the information held is therefore severely restricted".

Yet, despite that clear and important warning, as the Bill stands, the claimant has no right to be informed of the investigation and no clear automatic right of access to the file in order to check the accuracy of the record. Worst of all, there is no complaints procedure for people who may be wrongly accused of dishonesty and wrongly deprived of essential state benefits, through no fault of their own, because of data errors. That is a serious penalty, especially for an impecunious sole parent or pensioner innocent of any wrongdoing. No doubt the Government's intention is that the highest standards of practice will be observed; but what matters is that there are real and effective safeguards and remedies in situations where those standards are not in fact observed.

The Secretary of State, Mr. Peter Lilley, assured the other place that the principles of the Data Protection Act will be adhered to. There is no duty imposed by the Bill to comply with those principles. But, presumably, public authorities will have to register as data users under the Act. The Data Protection Act 1984 was framed long before the recent technological developments in data matching, and the general principles under the Act are too general on their own to provide adequate safeguards to keep pace with the new technology.

Perhaps I may give your Lordships some examples. The first data protection principle in Schedule 1 to the Data Protection Act says:

    "The information to be contained in personal data shall be obtained and personal data shall be processed fairly and lawfully".

That principle has been interpreted to mean that, as a general rule, the individual should be informed of the purpose for which the information is held, and if personal data given for one purpose is to be used for another purpose or passed to a third person. But such a general statement gives no clear guidance on what

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information is necessary in this situation. Why, as I believe the noble Viscount, Lord Chelmsford, asked, should citizens not be informed that the personal data supplied by them to the Home Office, for example, may be made available to the DSS, or the converse?

According to Recommendation R(86)1 of the Council of Europe, made in the light of the European Convention on Data Protection 1981 and which gave rise to our 1984 Act,

    "Personal data should not be communicated outside the framework of social security for other than social security purposes except with the informed consent of the person concerned or in accordance with other guarantees laid down by domestic law".

The Bill as it stands does not provide for what that recommendation describes as,

    "guarantees laid down by domestic law".

I submit that it should contain such legally binding guarantees.

There may be breaches of the first data protection principle if automated systems are put in place which make decisions with little or no human intervention, but the Bill is not specific on that point. Article 15 of Directive 95/46/EC on the protection of individuals with the regard to the processing of personal data expressly forbids decisions based solely on automated data processing. The directive has to be given effect in UK law by 1998. I see no good reason why this Bill should not now secure compliance of our law with that directive.

After the data matching activity is complete, should the matched information from another source be destroyed or can it be retained on a central register for later use? This is another grey area.

The sixth data protection principle provides that personal data should not be kept longer than is necessary; but, again, it is unclear how the principle might apply where the main purpose is the detection of fraud. One government department might hold sensitive information about an individual's family history while another might hold a detailed financial history. How much information should be available for this cross-matching activity?

The fourth data protection principle provides that personal data held for one purpose or purposes should be adequate, relevant and not excessive. But in a widespread data-matching exercise how can that be effectively policed unless the registrar is required to be given detailed information about the exercise, and perhaps enforcement powers to overcome the existing statutory immunity for government departments?

The processing of personal data held by government as well as by private contractors will increase rather than decrease over time. Safeguards need to keep pace with rapid developments in computerised technology. Surely we must develop ways to benefit from and control this development. With the Government's declared commitment to use computerised information for the public good, as set out in the Green Paper,, surely, as other noble Lords have

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stressed, they and Parliament need to put in place adequate safeguards as well as promoting public awareness of the new technology.

As the noble Baroness, Lady Hollis of Heigham, and the noble Viscount, Lord Chelmsford, observed, the Data Protection Registrar has expressed concern about the Bill and called for a code of practice with statutory force. Moreover, Justice has recommended--and I agree with this--that there should be a statutory requirement that benefits should not be withheld exclusively as a result of data matching procedure, and a requirement that those authorised to use data matching procedures must allow every individual who has been identified as being the subject of a discrepancy of information to make representations before action is taken against him or her as a result of the information discrepancy. There is also a need for a power of investigation and audit by the registrar and a monitoring power over data-matching exercises similar to that provided by the Australian guidelines.

Other countries--Canada, Germany, Australia--have preceded us with legislation specifically directed at data matching. After the Privacy Act 1988 the Australian Federal Parliament enacted the Data Matching Programme (Assistance and Tax) Act 1990, and comprehensive guidelines have been issued by the Australian Privacy Commissioner. These are not binding but constitute best practice. Among the guidelines are strict rules for notifying the public before a data matching project commences; requirements to give detailed information and explanations of the project and technical accounts to the Privacy Commissioner; clear strict rules for limiting the details that can be kept on a register and for destruction of the matched records at the end of the exercise; and provisions giving the Privacy Commissioner the power to regulate and monitor data matching activities. There is no good reason that I can see why British safeguards should be weaker than safeguards in Australia and in other democracies.

It is in the detail--that is why I make no apology for detaining the House as long as I have--that the safeguards of individual freedom will be found. A code of practice with statutory force, such as that proposed by the Data Protection Registrar, is essential. Such a code is also necessary to give effect to Article 8 of the European Convention on Human Rights. That is a matter so clearly explained in a powerful opinion given by my learned friends Richard Drabble QC and Dinah Rose that I can deal with it quite shortly.

Article 8 guarantees the individual's right to personal privacy except where necessary and in accordance with the principles of legal certainty and proportionality. As my noble friend Lord Russell has said, a law which permits data matching must be formulated with sufficient precision and it must not confer excessive powers. As it stands, the Bill is too vague and it sweeps too broadly with inadequate safeguards.

Happily, we have not reached the cold day, at the beginning of George Orwell's 1984, in which the clocks are striking 13. But we need to be vigilant as we scrutinise the Bill.

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