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Lord Higgins: We shall consider carefully the points mentioned by the Minister. I believe there has been confusion about the wording of the amendment. As I pointed out, it does not refer to a court but to convincing a magistrate that it is appropriate that such an investigation should go forward. There appeared to be a little confusion in one respect; namely, whether in going to the court the investigating officer had the
information necessary to gain further information. Perhaps if the noble Lord, Lord Grabiner, looks at Hansard tomorrow he will find--
Baroness Hollis of Heigham: How would an official persuade a magistrate that he had reasonable grounds unless he already had some of the information he was seeking?
Lord Higgins: We shall come to the question of why he had information which justified investigating a particular individual. Clearly, if an official is going to a magistrate to obtain permission to do so, he will need to have some substantive information. However, if he does not need to go to a magistrate, he may go ahead without a justifiable case. For that reason, we argue that it is appropriate for him to go to a magistrate--not necessarily a magistrates' court because we do not want them to foul up their general procedure.
The Minister added up the number of visits which might be necessary but I was not clear why, if an investigating officer had a reasonable basis for going ahead with inquiries about a particular individual--and she gave the example of the student--he needs to return to the magistrate time and time again. Presumably, he could obtain permission to approach all the various sources--
Baroness Hollis of Heigham: No, not until the investigation had started would he know the knock-on consequences of that investigation and the levels of possible deception involved. When he first went to the magistrate, he merely thought that someone had moved to a university town and might well be a student, even though that person was claiming benefit to which he was not entitled. In obtaining the magistrate's permission to investigate that, in the course of his inquiries he uncovered the fact that there was a home in another town. In order to investigate whether the person was an owner/occupier, he needs a second permission from the magistrate. Then he discovers that the person is subletting and he needs to investigate that.
All that information would be gathered over a period of time. However, under the amendment as posited, the investigating officer would need continually to return to the magistrate to obtain further consent to seek information from a new body because a fresh possibility of fraud had occurred.
Lord Higgins: I am trying to envisage the circumstances which the noble Baroness outlined. It seems to me--I may be wrong--that the investigating official begins by saying, "I want to obtain information from a particular source". The noble
Baroness is saying that obtaining that information will direct that he should go to someone else along the line--
Baroness Hollis of Heigham: No.
Lord Higgins: That is not what she is saying. I thought that it was.
Baroness Hollis of Heigham: I am sorry to labour the point. The example I gave was of someone who moves to a university town but is claiming housing benefit. As a result, the investigating officer wishes to discover whether that person is a student. In order to do so, he has to go to UCAS or to the university authorities and under the amendment he receives the authorisation to do so. In the process of searching for that information, the official discovers a home address different from the university town address. That means that he must return to the magistrate to obtain information about that home address. In the process of doing that, he discovers that the person is claiming housing benefit and there may be a suggestion from some source that the person may own the property. In that case, he has to return to the magistrate to discover whether the person owns the house and is therefore illicitly claiming housing benefit. So we go on.
The point is that each of these steps could not have been predicted. The information thrown up at the previous stage set up the next step. One is putting together a jigsaw and does not know what the final shape of the picture will be. One has reasonable grounds for believing in the original offence but, under this amendment, when a simple case of fraud crops up one would have to revisit the magistrate to obtain permission to investigate.
The result is that something which could have been sorted in a couple of days might take a month or more. By that time, the investigating official might have lost the person he was seeking to pin down in terms of fraudulent behaviour. It would be extremely difficult--extremely difficult--ever to pin down someone who was at all adept at manipulating the system.
5.15 p.m.
Lord Higgins: It is difficult to debate the matter in this way. None of the large number of representations we have received has dealt with it. There are two points to be made. First, it might be reasonable to suppose that the highly trained officials would foresee most of the consequences of the case which the Minister mentioned. Alternatively, if they originally had a prima facie case for obtaining approval to go to any of the sources of information specified in Clause 1--
Baroness Hollis of Heigham: Is the noble Lord saying that all they need is reasonable grounds for access to a source, that they then do not need to go back to the magistrate and that they can have a lucky-dip at the rest? If so, he is conceding our argument.
Lord Higgins: No, I do not believe that I am conceding the argument. Perhaps I may think about what the noble Baroness said in that context.
This has been a helpful debate in a number of respects. We shall need to consider carefully the extent to which arguments about delay are justified. We must also consider the Minister's argument about the extent to which such information is already obtained by government departments without the safeguard we are suggesting would be appropriate in this case. I should be surprised if the Inland Revenue could simply ask a bank for the information it required without any form of judicial authority whatever. But perhaps I may check up on that.
I am grateful to the Minister for her reply. No doubt we shall need to consider whether it is appropriate to return to the matter at the Report stage.
Lord Grabiner: Before the noble Lord sits down, perhaps I may clarify one point relating to the exchange which took place between us. It is probably better to have it in Hansard tomorrow rather than not at all. The exchange stemmed out of a point put to me by the noble Earl, Lord Russell. The example given was that of a dishonest investigating officer colluding with a newspaper and selling the information on. The point I was trying to make was that a sufficiently determined dishonest investigating officer would be able to obtain the necessary information without the need to go through the magistrates' court procedure, and effect his dishonest behaviour. I did not, and do not, believe that the proposed amendment could stop such behaviour.
All one can say is that such behaviour is criminal under the existing legal rules and will be dealt with accordingly. However, the positing of that as an example of a case to provide a justification for the amendment is not right and I do not agree with it. I hope that I have sufficiently clarified the position.
Lord Higgins: With great respect, I do not know that it is a particularly helpful example. Be that as it may, if we do not carry the amendment, the corrupt official will not have to go through the magistrates' court.
We shall need to consider the Minister's remarks carefully before the Report stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins moved Amendment No. 2:
- Page 1, leave out line 12.
The noble Lord said: Amendment No. 2 relates to particular people from whom the department may request information. Amendments Nos. 2 and 3 relate to banks and other similar financial organisations. It is unrelated to our recent broader debate but particular aspects are important as regards the banking industry. Indeed, the banks have made strong representations and expressed concern about the Government's proposals. They point out that they are in a different position from many of the other bodies described in Section 109B(2A) because banking transactions are subject to a duty of confidentiality which does not apply to, say, electricity suppliers. At the other end of the spectrum, lawyers, doctors and so on are subject to
a duty of confidentiality. My understanding is that, in the context of the report of the Joint Committee on Statutory Instruments, the Government do not propose that the provisions of the Bill should breach confidentiality as far as concern such professionals.It may be that in a sense banks fall in the middle of the spectrum between the electricity industry, which, as far as one can see, has no great duty of confidentiality, and lawyers. As I understand the position in law, the leading authority on the subject is Tournier v National Provincial and Union Bank of England [1924] 1 KB 461. That case establishes that a banker is under a contractual duty to keep confidential information gained from a customer's account. There are exceptions to that: where there is a disclosure under compulsion of law, which would clearly arise if we passed the Bill as it stands; where there is a duty to the public to disclose; where it is in the interests of the bank to require disclosure, although that appears to be rather strange; or where the disclosure is made with the express or implied consent of the customer.
Therefore, at present the legal position of the bank is clear cut. If we adopt the Government's present proposals in the Bill without the amendment debated a few moments ago, bank customers will suspect that their information may be disclosed to the department, whether or not there is any wrongdoing on their part.
As I understand it, at present where the police seek information to aid an investigation they must turn to a magistrate under the Police and Criminal Evidence Act 1984 and to a judge in a case involving drug trafficking. I do not quote all the individual citations. They must go to court or to a judge if they are to investigate bank books and so on. In a case of suspected fraud they must go to a judge or general commissioner of the Inland Revenue who is independent of the staff who carry out the investigation. That raises a problem in the context of the earlier remarks of the noble Baroness. The Minister said that the Inland Revenue could obtain bank accounts. Without any judicial authority, my understanding from the banks is that that is not the case. Perhaps the noble Baroness can explain the authority to the Committee.
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