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Baroness Hollis of Heigham: The Minister's answer to my noble friend's question on self-assessment has added to our worries. The vagueness, if I may put it that way, of the Minister's response on the matter suggests that he may actually share some of our concerns. I do not understand from what the Minister said how the system will work. We are talking about something like 400 local authorities some of which, especially the big metropolitan authorities--for example, Birmingham, or some of the London boroughs--are extremely anxious to chase six, eight or 10 landlords whom they believe are fraudulently claiming on behalf of tenants. It is suspected that the income they are receiving is not reflected in the tenancies that they claim to have.
Therefore, does that mean that, each time a local authority wants to find out information about a particular landlord and the declared income in order to check it against the consistency of the direct payments of housing benefit, it will first have to ask the DSS? Such local authorities are acting almost as a surrogate police force in cases where, as the Minister accepts, confidentiality and speed may be of the essence to ensure that landlords are not tipped off and do not clean up their act in various ways before that fraud can be identified, prosecuted and the moneys recovered for the public purse.
If, say, 400, 200 or 100 of the most diligent local authorities want information, for example from the Inland Revenue, about the finances of a number of landlords and perhaps a number of tenants in their authority, and each of those requests has to be channelled via the DSS before it can proceed to the Inland Revenue, what will happen to the timescale? What extra staff will the DSS have to employ? How long does the Minister think it will take for that information to be provided to local authorities to enable them to complete their files before they can initiate prosecutions? It seems to me that the Minister is introducing considerable delays which may well subvert the possibility of local authorities putting together an effective case against fraud.
5 p.m.
Lord Mackay of Ardbrecknish: I am not entirely sure that the noble Baroness understands the distinction between data matching and exploring an individual case. The point about data matching is that all the data the Inland Revenue holds is matched against the data the Benefits Agency holds. We compare and contrast that data and inconsistencies will emerge, some of which--although not all, as we shall discuss later--will reveal fraud or suspected fraud which skilled officers will follow up. That is what data matching comprises. Given the reservations the noble Baroness had as regards her first amendment about the security of data matching and how it will be carried out, I find it odd that she thinks it would be helpful if the data matching were to be carried out by some 400 authorities and 400 data matching centres.
The housing benefit matching service, which is run by us, is the agency local authorities will look to for any information it has. That housing benefit matching service will use information from the Inland Revenue, Customs and Excise and other government departments under the proposals we have set out. Therefore, the housing benefit matching service will have that information once we have completed the data matching and pulled the information in. That is where local authorities will be able to look for that information. They would not need to approach the Inland Revenue; they would follow the track already used for other purposes, not just pursuing fraud but for checking whether someone is on income support, for example. The housing benefit matching service allows them to do that. I cannot see how that process would lead to any delay, as the noble Baroness suggests, because the information we have gleaned from the Revenue will be on our file--I am making it sound as if it is a paper system which of course it is not--and that will then be accessed by local authorities via the housing benefit matching service. They will obtain their information that way.
Baroness Turner of Camden: Before the Minister sits down, will the system he has described--a new one, so far as I can see, to be set up under this legislation--require additional staff to be employed? Or does he envisage that it can all be done on a computerised
system with fewer staff than are employed at the moment? Will the new system be more costly in terms of staff employment or less?
Lord Mackay of Ardbrecknish: I am not entirely sure that I can give the noble Baroness a detailed answer. The housing benefit matching service will have the staff it requires to run it. Of course it is a computer based system and therefore it will not require vast numbers of staff as it is not equivalent to a paper based system. However, there will be staff involved. We have budgeted for those staff. As, I believe, we shall be able to save staff in other parts of the department through our use of IT, some of those staff will be available to do this other work. We have already moved staff around to deal with fraud.
Baroness Hollis of Heigham: I suspect there is a gap of understanding between us. As I understand the Minister, it is clear that, where there are discrepancies emerging between the Inland Revenue and the DSS files, skilled and experienced officers will identify that and consider whether it suggests there is sufficient suspicion to investigate further. That is fine. What happens, however, if it is not the DSS that has that suspicion but local authorities? The local authorities then have to apply to the DSS to carry out the matching for someone whom I presume was not part of the original matching exercise. If that is what will happen when concerns are instigated by a local authority, does not that simply add considerable delay to the whole process?
Lord Mackay of Ardbrecknish: I think the noble Baroness is perhaps not completely following how the data matching will work. If that is my fault I apologise as I thought I had tried to explain it earlier. Human intervention will occur only once the data have been matched and the computer system has thrown up an inconsistency. If there is no inconsistency, nothing will happen. If there is an inconsistency, it will be thrown out, as it were, and people will have to examine it. If the inconsistency is clearly an error, that can be cleared up quite readily. However, if it seems to be a more serious problem, it will be taken up by the district in which the person lives and, if necessary, by the fraud officers there. That is how it will work.
When local authorities use the housing benefit matching service the same sort of operation will occur. They will see where inconsistencies arise. The machine will examine those inconsistencies. We are talking about data matching. The noble Baroness is talking about a situation where a local authority says, "We think this man, Joe Bloggs, is doing something wrong. What information do you have on him?" That is where the benefit matching service comes into play, and they can do that.
Baroness Hollis of Heigham: What can they do?
Lord Mackay of Ardbrecknish: They can ask the housing benefit matching service, "What do you have
on this guy?" That will, of course, have to be done electronically. That way they can obtain the information which we hold centrally--some of that information has come from the Inland Revenue and Customs and Excise--and that will allow them to continue with their specific investigations. In those cases we believe that on balance it is right that we hold that information because otherwise every local authority in the country would have to set up data matching services which would be expensive. The noble Baroness, Lady Turner, was worried about that.In the limited number of cases where local authorities need specific tax information with regard to a specific investigation they can see what information we have. We have to guard against what I think are called in legal terms "fishing expeditions". The noble Baroness would rightly castigate me if I was seen to be allowing fishing expeditions. Data matching is quite different from the kind of case which the noble Baroness is suggesting to me where a local authority has a suspicion. Data matching may throw up cases where a local authority has had no suspicion at all. That is its great strength.
Baroness Hollis of Heigham: I do not dissent from much of the intent of what the Government are saying. From what the Minister is saying there is not a problem if a discrepancy emerges between the files of, say, the Inland Revenue or Customs and Excise and the DSS files. There may be no discrepancy there and therefore there may be no problem perceived by the DSS and therefore no interrogation is taking place. I have tried to suggest--perhaps the Minister can help us with a worked example--that a problem arises where a local authority has a suspicion of fraud which may be based to some degree on data matching but can only be proven or abandoned once the exercise of data matching has been completed.
In other words, the transaction between, say, the Inland Revenue and the DSS throws up no discrepancies. Therefore that box, so to speak, is tidy as there are no discrepancies there. Starting at the other end, however, a local authority, which is at the cutting edge and is doing the door to door stuff checking with the electoral register and the like, has information which seems to suggest that a landlord is claiming for more housing benefit and more properties than he may hold. Therefore, it seems that there may be some fraudulent laundering of income associated with that. That may not have been thrown up through any relationship between the Inland Revenue and the DSS but the local authority has a well founded suspicion. It therefore wants to obtain information from the Inland Revenue. To do so it must first go to the DSS, knock on the door and ask the DSS to interrogate the Inland Revenue to see whether the well founded suspicion of the local authority is validated by the information the Revenue may hold.
That is the dilemma that I put to the Minister. I entirely understand his anxieties about confidentiality. I am concerned that in the process we are building in a
period of delay as a result of which the local authority may lose its ability to hold someone accountable for fraud.
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