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Earl Russell: My Lords, perhaps I may narrow an area of difference. I did not hear any noble Lord today suggest that no such powers should exist. The argument concerned whether the powers are defined correctly.
Baroness Hollis of Heigham: My Lords, I suspect that I may have a slightly different reading of this matter. I was being pressed as to whether the Data Protection Commissioner believed that the powers were compatible with Articles 8 and 14 of the Human Rights Act. That is what I was seeking to address.
I was going on to say that, together with the Secretary of State, I shall be meeting the Data Protection Commissioner shortly to explain why in our judgment and following our legal advice we believe that the powers comply with the European Convention on Human Rights and to discuss her concerns. However, I
can assure the House that my understanding is that the powers meet the convention's tests of being precise and accessible because we would not use them until a detailed code of practice had been published. The Data Protection Commissioner would be consulted on the draft code of practice and claimants would also be informed that their information may be checked with third parties.
Lord Higgins: My Lords, I apologise for intervening again and am grateful to the noble Baroness. Will she give us an indication about timing so far as concerns the code of practice; that is, will this House have an opportunity to examine the code before the Bill makes much further progress?
Baroness Hollis of Heigham: No, my Lords. We have already started to hold negotiations and discussions with bodies about the draft code. However, I understand that the draft code will be published well before any of this Bill comes into effect.
Perhaps I may now move to the final substantive point raised by several noble Lords in relation to burdens on business. The noble Baroness, Lady Noakes, said that it was unreasonable that the Bill should place a burden on employers. It is intended that such a burden should be placed where employers have colluded with their employees to commit benefit fraud; for example, by paying lower wages, as in the example described by my noble friend Lord Grabiner, thereby giving themselves an unfair competitive advantage over lawful employers. In those cases, we mean precisely for the Bill to be burdensome.
Business organisations support our view and not that of the noble Baroness, Lady Noakes. The Federation of Small Businesses, for example, told us that it supports Clause 14 because it will help it to deter the collusive employer and thus give greater protection to the lawful employer. The notion that the DSS is intending to run a protection racket by extracting £1,000 fines as an alternative to taking a case to court because it wants to increase its coffers seems to me to suggest a degree of fancy that one would not expect from a noble Baroness who commands such high esteem in her profession of accountancy.
I was asked whether the estimated costs to businesses in the regulatory impact assessment were net or gross. They are gross. I am sorry that that information is not on the website. The RIA should be included by the end of this month.
In relation to payments, the noble Baroness, Lady Fookes, asked me in particular whether the legislation would affect disproportionately small businesses and whether that would be unfair. We expect the measures to impinge primarily upon larger businesses. The only small businesses--as opposed to collusive employers, who, I agree, are likely to run smaller businesses--which we believe will be affected in terms of the costs of provision of information are, I suspect, cheque cashing shops. The Cheque Cashiers' Association supported our proposals in its response to our consultative document.
Having dealt with the big points--that is, the use of the powers, the safeguards, the human rights issues and the burdens on business--I should like to spend one or two minutes running through some of the more specific and detailed points, which are no less important but perhaps less thematic.
First, the noble Lord, Lord Higgins, asked what response we had received to the Scampion report. We have taken on board the report's general recommendations by setting up the national benefit intelligence unit, headed by a former deputy director of MI5. We have strengthened the organised benefit fraud investigation service, now headed by the former head of investigations at Customs & Excise. The two units will work well together in an intelligence-led approach to tackling fraud. We are setting up a joint working group with local authorities and, as a result, are replacing the weekly benefit savings scheme for them.
I move to a totally different point. As I said, this is "shopping list" time; therefore, I hope that your Lordships will forgive me. The noble Earl, Lord Russell, asked why we needed the words "or likely to" in new Section (2C) in relation to obtaining information. He was worried that that indicated a fishing trip and wondered whether we were assuming guilt before having reasonable grounds to do so. The reason why we require powers to investigate is that, for example, a person may well not have committed an offence but may have two national insurance numbers. We would want to know why. Another example is that a person may be found with a large number of order books which he is about to encash but has not yet done so. It is that type of example--
Earl Russell: My Lords, I am most grateful to the Minister. I take her point about those cases. However, would they not be covered by the words "reasonable grounds to suspect fraud" without invoking the words "are likely to"?
Baroness Hollis of Heigham: My Lords, I shall certainly look at the legislation to discover whether the word "reasonable" is preferable to the words "likely to". However, at present where we have reasonable grounds and believe that the action may occur reasonably precipitously, that is the basis on which we have statutory authority for our actions. However, I shall see whether the wording should be clarified or, indeed, whether any guidance would make it clear.
The noble Lord, Lord Higgins, also asked about CIFAS--the central service for financial organisations--and how information swapping was progressing. Department officials will meet CIFAS and the finance organisations next week. They will discuss what information we hold which may be made available to banks and insurance companies.
However, clearly we must also be careful about what information we give them because information accessed through credit reference agencies is sometimes less secure than is information held by the DSS. The noble Lord may be somewhat surprised at the
information which flashes up on the screen each time he pays for his petrol bill with a credit card. We must take care that certain information is not passed on which then goes to the local small garage which is processing the card. We want to be constructive and reasonable but we also have a duty of care, as the noble Lord will understand, particularly when one is dealing with sensitive questions about, for example, family relationships and so on.Both the noble Earl, Lord Russell, and the noble Baroness, Lady Noakes, asked whether the power to add to the list of organisations that can be required to provide information gave us carte blanche powers by regulation. First, this is an affirmative order. I know that the noble Earl, Lord Russell, will be delighted about that. We could deal with such a power only by returning to this House for authority. Its main purpose concerns the fact that types of organisation change. We need to be able to have access to those organisations because they have changed without having to come back for primary legislation. However, that would be carried out by affirmative order and therefore proper parliamentary scrutiny would take place.
I turn to a point which I take most seriously. The noble Earl, Lord Russell, asked whether we would guarantee that information that we hold about asylum seekers would not be given to their--I was about to say "host"--enemy government, if I may express it in that manner. I give a categorical assurance that that would absolutely not be the case.
The noble Baroness, Lady Fookes, asked about identity cards. She was absolutely right--that is beyond the scope of the Bill, and not, I may say, for entirely accidental reasons. Other countries that have identity cards have found that such cards can be forged. When there is a single gateway--the identity card--that is forged, a whole array of services opens up. Oddly, our rather more bumbling approach, which has several different gateways, may in those cases serve to act as some protection against fraud. However, that is not a simple issue, and having an identity card would not necessarily hugely increase our security arrangements, although it would alter the way in which we approached the issue.
The noble Baroness, Lady Fookes, also asked about joint bank accounts. I take her point, especially in relation to women. In my experience, joint bank accounts are normally held between family members. One of the major areas of fraud tends to affect family members. For example, one family member may be working and the other claiming benefit. If she has other worries about that matter which do not involve family members, perhaps she would let me know and I shall seek to address her concerns. I shall give my response about Scotland in a letter.
The noble Lord, Lord Higgins, asked about funding local authority investigations. An authority will receive a subsidy for the fraud that it detects and should see financial benefit from the outcome.
Finally, I turn to the last substantive item; that is, war pensioners. It was raised by several noble Lords, including my noble friend Lady Strange--I persist in calling her my noble friend although she sits on the Cross Benches. It was also raised by the noble Baroness, Lady Fookes, and the noble Lord, Lord Astor. I emphasise the fact that war pensioners seldom, if ever, commit fraud. So far as I am aware, we have detected only six frauds during the past six months involving war pensions. That rate is far lower than for mainstream benefits. The areas in which fraud is likely to occur are not necessarily because the war pensioner is fraudulent--someone else may be making false claims on his behalf. Occasionally, with regard to treatment allowance, there are false claims about attendance for treatment. There can also be a failure to declare an increase in earnings or to declare employment. Previously--I am delighted to say that, as a result of the activity of my noble friend Lady Strange, this is now almost unheard of--there had also been a failure to declare that people were living as husband and wife. That is now no longer an issue, because one may retain the benefit.
We have not brought a prosecution for war pensions fraud, although that has been considered in some cases. There has to be a good reason for excluding that from the shopping list that we are looking at. What are we saying? That for someone to lose his benefit, he had to commit a fraudulent offence knowingly, willingly and maliciously, as certified by the courts, not once but twice. Does any noble Lord really suggest that a war pensioner who knowingly, willingly and maliciously committed a fraud--I agree that it is extremely unlikely--and if he lied and cheated and was found guilty not once but twice by the courts, should continue to enjoy a high level of benefit? I do not think so. It is inconceivable that that would happen, but, nonetheless, in the very rare case that it does, I do not think that the noble Lord, Lord Astor, would want the benefit to continue. That would bring into disrepute war pensions that were honourably and properly earned, deserved, held and cashed by other war pensioners. I hope that no noble Lord believes that there is an issue in this context; there is not. I cannot conceive of any reason why the case should be excluded.
I shall close on that last point. I have used enough of your Lordships' time. I shall write to noble Lords about any points that I have not dealt with. I thank noble Lords for our well-informed, courteous and interesting debate, and I seek their co-operation in trying to improve the Bill. What matters at the end of the day is that we eradicate fraud not just to save money for the taxpayer but to re-build confidence in the welfare system, especially for pensioners, who are often reluctant to claim. I shall seek the help of noble Lords in so doing. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
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