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Baroness Hollis of Heigham: At the end of his first reply the Minister said that he hoped that he had answered our questions. It would be fairer to say that he had addressed them rather than answered them. I accept that the amendment as drafted is defective, and so I am sure that the Minister will be delighted to know that it is not one that I intend to press.

The sustained point is I believe that the Government have developed a flawed method of supporting the administration of benefits and a deformed method of financing the eradication of fraud. The Government have constructed a system some of whose consequences are quite perverse. Some of them have been mentioned. I recall a couple of months ago bringing to this place one of the rural authorities. I cannot remember now whether it was Mendip or Chilterns. It complained that it had been complimented by the Audit Commission, and the like, on its efforts to eradicate fraud. In consequence therefore it faced a benefit penalty, because there was not the fraud there for it to uncover, as it had already set in place exemplary methods of preventing it from occurring.

Another perverse effect which has been touched on by the Minister--again local authority associations are worried about this in terms of the integrity of the public ethic--is that local authorities now have an active incentive to turn error into fraud both to meet their targets and to avoid repayment, and instead to claim subsidy. If something is an error, local authorities do not receive compensation for it. If they can turn that error into fraud by making it culpable, they do. Those are unhealthy pressures on hard-pressed local government officials where it is often the word of one person-- "I did put my form in on such-and-such a date. I did so honestly"--against the word of an official. In good local

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authorities those issues go to members to resolve, but there will now be a perverse incentive to short-cut them. That is worrying.

As to the wider point regarding the position of a potential Labour government, I say nothing about the potential head space offered by recovering more fraud savings than the Government have so far identified. Think what one could do with the £1 billion to which the Minister repeatedly referred.

The whole method of financing this form of activity has to be reconstructed. Within the same spend figure, it could be made to deliver more effective and less perverse results than the Government have so far achieved. I am confident that that is what we shall seek to do. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 p.m.

Baroness Turner of Camden moved Amendment No. 66:

Page 18, line 15, at end insert ("or
(c) success in meeting such performance targets for clearance and accuracy in the administration of benefits as may be prescribed.").

The noble Baroness said: The Minister to some extent pre-empted this amendment by replying to it in addressing previous amendments--but not entirely. The purpose of the amendment is to allow regulations to provide for an extra subsidy for better administrative performance. I emphasise that that does not mean just the detection of fraud.

The housing benefit and council tax benefit regulations state that benefit should be processed within 14 days wherever possible. We have discussed the 14-day period in relation to other amendments. Regulations or amendments to the subsidy order could be made to allow additional subsidy to be paid where authorities meet that target over a consistent period and could also include a target for accuracy.

The amendment could act as a carrot to good administration. That is its intention. It would minimise the opportunity for fraud and at the same time reward authorities that are proceeding with a very good administration in the area of benefits generally. I beg to move.

Lord Mackay of Ardbrecknish: As I explained, this clause makes changes to Section 140B of the Social Security Administration Act 1992, under which the Secretary of State pays subsidies to local authorities in respect of their expenditure on housing benefit and council tax benefit.

Subsections (4)(a) and (4A) inserted into that section by Clause 10 re-enact the Secretary of State's power to pay additional subsidy to local authorities in circumstances that are to be specified in the subsidy order. Subsection (4A) gives two examples of what that additional subsidy could be paid for; namely, the costs of administering the relevant benefit, and in respect of success in preventing or detecting fraud.

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The proposed amendment seeks to add a further example of circumstances in which additional subsidy may be paid--that is, for success in meeting performance targets for clearance and accuracy in administration of the benefits.

It is not necessary to include these further examples as local authorities can, and do, receive additional subsidy in these circumstances, and that will continue. The amendment would not permit any payment to local authorities by the Secretary of State that cannot be made under existing powers.

In addition, my department is currently conducting research and carrying out tests with local authorities on the feasibility of introducing a framework of minimum standards for verification, accuracy and clearance times. When we receive those research and test results we shall consider what adjustments might be needed to the current funding arrangements to take account of the introduction of such a framework. Any extra subsidy that might be payable as a result of authorities meeting the standards could be paid under the provisions of this Bill or provisions that already exist without the further assistance of the noble Baroness's amendment. In short, the amendment is not necessary. With the assurance that what she wants is capable of being done already, I hope that the noble Baroness might withdraw her amendment.

Baroness Turner of Camden: I thank the Minister for that explanation and also for the assurance that what I seek in the amendment can already be done. I shall read his earlier remarks carefully in Hansard tomorrow. But in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 67 and 68 not moved.]

Clause 10 agreed to.

Lord Whitty moved Amendment No. 69:

Before Clause 11, insert the following new clause--

Refusal of payment of housing benefit to landlord

(".--(1) In any case where--
(a) a person has claimed housing benefit and requested or consented to payment of housing benefit to another person; or
(b) a person is in receipt of a payment of housing benefit on behalf of another person,
an authority administering housing benefit may refuse to make such a payment or continue to make such a payment, as the case may be, in the circumstances mentioned in subsection (2) below.
(2) The circumstances referred to in subsection (1) above in which an authority may refuse to make a payment of housing benefit or to continue to make such a payment are--
(a) in the case of paragraph (a) of that subsection, where it is satisfied that--
(i) the person to whom the payment is to be made is not the landlord under the tenancy in respect of which the request was made or consent given; or
(ii) such a tenancy does not exist; or
(iii) that the person to whom the payment is to be made is or has at any time been in receipt of housing benefit as a result of fraud; and

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(b) in the case of paragraph (b) of that subsection, where it is satisfied that the person in receipt of the payment is in receipt of a payment of housing benefit as a result of fraud.").

The noble Lord said: The proposed new clause and the amendment that follows bring us to one of the central areas where we feel that the legislation has a serious deficiency. It is in dealing with the widespread problem of landlord fraud.

The amendment paves the way to recognition of a specific offence, but it does not depend on such an offence being created. The next clause deals with that. This clause could apply with the offences already existing and those created by the Bill. Therefore, I shall move the amendments separately.

Amendment No. 68 recognises that, in a large number of cases identified as the main location for housing benefit fraud by the Select Committee of another place, it is not an individual claimant but a third party--a landlord, a hotelier, an accommodation agent--who creates the fraud. In some cases that is done with the connivance of the individual claimant, in other cases it is done completely without such connivance and in ignorance on the part of the alleged claimant. It can be a deception involving just one single case or it can be a multiple and criminally organised fraud of substantial proportions.

In the discussion on the Bill in another place, there was at least some grudging recognition by Ministers of the importance of landlord fraud and the need for special measures to deal with it. Clause 11 was introduced at a rather late stage in the Commons proceedings in response, I should like to think, to the eloquent arguments of my colleagues there. But it is the only explicit recognition that there is a separate and different problem of landlord fraud.

However, Clause 11 is not sufficient to deal with it. It deals only--though importantly--with the information that may be required of landlords receiving direct payment of housing benefit. It does not deal with powers against their involvement and engagement in fraudulent activities. It still seems somehow to be assumed, despite all the evidence in the Select Committee report in another place and elsewhere, that the other powers in the Bill which are directed primarily at individual claimants are sufficient to be used against landlord fraud. But they are not sufficient. The amendment deals with the circumstances: situations where the alleged landlord is not the landlord; situations where the alleged tenancy does not exist; situations where the recipient of direct payment has previously been found to be in receipt of fraudulently claimed benefits. It allows the authorities to stop and suspend payment in such cases. Such an authority which, on receipt of information, refuses or ceases to make direct payments to the landlord, may still be required to pay to the individual claimant, if the application is genuine and valid.

The wording of the new clause is similar to that in the London Local Authorities Bill, which I understand received its Second Reading in this House last night. I regret that I could not be present for the debate. That Bill envisages a comprehensive package of reforms to

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tackle the whole problem of landlord fraud. It would give local authorities the power to require landlords who ask for housing benefit to be paid direct to supply them with details of other properties that they control. It would be a stronger power than the permissive power in Clause 11. It would require them to maintain a register of landlords and also provide what the proposed new clause would demand: an ability to refuse payment to landlords because authorities believe that they are involved in fraudulent claims. That is a more robust and effective approach than is reflected in this Bill. It would also, in my view, protect legitimate and decent landlords from association with some of the practices that have grown up in this area.

I submit that this amendment goes some way in that direction. It is true that the Minister's colleagues in another place conceded some of the principles underlying the approach. Ministers there argued that primary legislation was not necessary. However, they undertook to come forward with changes in the regulations that govern the making of direct payments to landlords and in the guidance that is given to local authorities in the circumstances where direct payment can be made. It would be interesting for the Committee to hear what progress has been made on revising those regulations. But I have to say that, unless and until the Minister can promise watertight regulations to deal with the issues and provide for such powers, I remain unconvinced that the problem has been dealt with without the heavier primary legislation provided for in the amendment. I beg to move Amendment No. 69.

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