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Baroness Crawley: Before the noble Baroness sits down, can she tell the Committee where is the evidence of the greater cost that she talks of when we are talking about firms that already hold the information that we seek?

Baroness Noakes: I shall try to help. If one is an organisation, say a bank or an insurance company, and there is a great deal of operational data, the actual process of responding to an information request creates an administrative burden, possibly a systems burden and certainly a paper burden. People would be needed to carry out these requests. Therein lies the nature of the extra administrative costs involved. We are talking about very large numbers of inquiries--390,000 for banks and insurance companies and

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95,000 for utility companies. We are not talking about one per year per bank, but about potentially large numbers. That adds up to a great deal. Therefore, the nature of responding to individual requests is a large part of the costs. With bulk information, the costs are more likely to be in software amendments and the associated labour costs in processing them.

Lord Goodhart: My noble friend Lord Russell put his name to Amendments Nos. 61 and 62. I, therefore, rise to support the noble Baroness, Lady Noakes.

I should be interested to know the logic behind the differentiation in the organisations that qualify for repayment of their expenses. For example, why can utility or credit reference agencies be repaid, but no repayments be made to banks, insurance companies or organisations which provide consumer credit? In either case the question is: should the burden of complying with these regulations lie on the customers of the organisations--no doubt the costs will be included in the charges made to customers generally--or should the burden lie on the taxpayer? There is a strong case for saying that in all these cases the burden should rest on general public funds. It is somewhat different from, say, the financial burden of complying with the considerable PAYE regulations where companies do not get a refund; it is an inherent and unavoidable part of their business to employ people. This is a different matter where it would be wholly appropriate for the costs of any business which was called upon to provide information to be refunded as far as is reasonable out of the general taxpayers' funds. Amendment No. 61 would simplify the legislation by requiring costs incurred to be repaid without having to set out a long list of those entitled to repayments and adding a delegated power to add more.

Baroness Fookes: May I press the Minister about the details of what might happen if the Secretary of State brings in regulations? At the moment the legislation is so vaguely couched that one concedes that no regulations or arrangements might be brought in at all. But if the Government intend to do something along these lines, can we have some idea of the way they would approach the problem of reimbursing costs? Like others before me, I am blessed if I can understand the distinctions made between those who fall on the right side of the line and might be paid and those who do not. Also, if arrangements are not made, or do not cover everyone, should the costs be passed on to the ordinary customers of the various institutions? That seems to me to be grossly unfair.

Baroness Hollis of Heigham: I shall do my best to answer the questions raised. Amendments Nos. 60, 61 and 62 relate to payment for information. Amendment No. 60 seeks to impose a duty on the Secretary of State to ensure that arrangements are in force for requiring payments to be made to cover costs to persons on the list in Clause 3(1) in respect of information obtained under these new powers.

Amendment No. 61 seeks to impose a duty on the Secretary of State to ensure that arrangements are in force, as he thinks appropriate, for requiring payments

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to be made to persons on the list in new Section 109B(2A) in respect of information obtained under these new powers. He could decide not to make any arrangements at all. However, his decision could be judicially reviewed and he would need reasons for choosing to make arrangements to pay some organisations and not others.

Amendment No. 62 seeks to require the Secretary of State to pay information providers an amount equivalent to the costs they have reasonably incurred. Let me address the concern made by a number of Members of the Committee about whether organisations are on--as the noble Baroness, Lady Fookes, said--the right or the wrong side of the line. I shall first explain why we have listed the organisations we have at Clause 3(1). Our starting point is that where organisations are required by law to provide information to government, we do not pay for it. That is a well established principle.

Companies have to provide extensive information to the Inland Revenue, Companies House and so on, but are not reimbursed; rather, they suffer penalties if they fail to comply. The Inland Revenue, for example, does not pay for such information. Citizens must pay and bear the costs of complying with laws passed by Parliament for the common good. As noble Lords have said, the only exception is under RIPA, the Regulation of Investigatory Powers Act 2000, which provides powers for a wider cross-section of the public sector to obtain information about telecommunications.

The Bill follows the principle that governs when the Inland Revenue pays for information. Like any other organisation, the Inland Revenue purchases relevant commercially available information where the provider is under no statutory obligation to provide it. The Data Protection Commissioner, now the Information Commissioner, requires organisations to complete detailed registrations of their data holdings, purposes, suppliers and recipients, but she does not pay them for this information. Banks are required to report suspicions of money laundering to the National Criminal Intelligence Service; businesses in general are required to make VAT returns to Customs and Excise; the utilities are required to provide information to the regulator to enable him to carry out his statutory duties; and so on.

Since the 1940s, the DSS has had power to require information from employers about their employees. Again, that is not paid for. However, although the general principle is that government do not pay for information that they are authorised by law to collect, when we were considering bringing forward these new powers we were persuaded that there were special reasons for making an exception to these general principles in the cases outlined in Clause 3(1). We think that it is reasonable to pay those organisations that make their living from supplying information in return for payment. That is why we brought forward a power to pay credit reference agencies. We also think that it is reasonable to pay the utilities for extracting data on consumption--the bulk data--as outlined at new Section (2D) in Clause 1(2). That is because they

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are the only organisations included in the Bill which will be asked to provide information for the purposes of electronic matching. That approach is in line with the department's approach to the Royal Mail, which we also pay for providing electronic data for matching.

We included telecommunications companies because they have invested in special technology to help to meet government inquiries. Members of the Committee will note that these powers do not allow us to require organisations to alter their procedures or to invest in special technology, and so on. That is why telecommunications suppliers are in a special position.

Clause 3, as currently drafted, requires the Secretary of State to make such payment as he considers appropriate, whereas the amendment states that payments should cover costs. If the Secretary of State exercises his powers unreasonably, his decision is subject to judicial review and would be set aside if it were found that he had acted unreasonably.

The amendments risk plunging the department into complex negotiations and renegotiations with each supplier of information about what they consider to be the reasonable costs of providing each and every piece of information. Needless to say, the view of a business as to what is reasonable will be guided by considerations different from ours. Companies have a legal duty, quite correctly, to protect the interests of their shareholders and their customers. Clearly, that means providing the best return on investment. The better way, as already provided in the Bill, is for the Secretary of State to be able to meet what costs he considers appropriate and to have that power curtailed or curbed where necessary by judicial review. The alternative, as proposed by this amendment, is the power for some businesses to delay the use of these powers by haggling over the cost of providing information needed to fight benefit fraud.

The amendments would also have the effect of restricting what we could pay those organisations which make their living from selling information--that is, the credit reference agencies. Currently, we propose to pay them the market rate for their services, but if this amendment were to succeed we would be able to pay them only their costs.

I can give the assurance that we will enter into early negotiations with businesses eligible for payment to establish a fair price. Officials are holding regular meetings with business to agree the terms of a code of practice. That will cover arrangements for payment. We have already told credit reference agencies that we will pay them the going rate for access to their data. This is fair and proper. It is in everyone's interest to fight fraud. Companies pay taxes as well as individuals. It is this tax revenue which funds the social security system, and which is being stolen. Businesses operating in the informal economy which do not pay their dues in tax and national insurance, and which employ people who are committing benefit frauds, compete unfairly with businesses which are responsible corporate citizens. Our demands will not

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be unreasonable. We will seek to make our inquiries in a way which minimises the cost. But business has a duty to help government to fight crime.

Nor do I accept the proposition that businesses cannot afford to help us to fight crime. We have estimated in the regulatory impact assessment that the cost of compliance to information providers will be between 2.5 million and 7.5 million. Taking the higher amount, some 3 million of this would fall to banks and building societies. Divided among the top seven, this would be a cost of under 500,000, which is significantly less than the remuneration which any one of them paid their top executive in 1999, according to their annual reports. We are talking about cost to them of perhaps 400,00 or 450,000. One such company paid its top man 3.25 million a year in salary. The pleadings of poverty from the business sectors from which we would seek information simply do not stand up to close scrutiny. If I were to be pressed on this point, I should be happy to read into the record top salaries and profits before tax of the major companies--2.5 billion for Barclays Bank and so on--from the 1999 annual reports. I am happy to take up the Committee's time in reading this information into the record, but I hope it is felt that I have made my point. In the light of my explanation, I hope that the noble Lord will feel able to withdraw the amendment.

4.30 p.m.

Lord Astor of Hever: Before I respond, will the noble Baroness clatify two points? First, do the Government have an estimate of the cost to these outside bodies that have fallen on the wrong side of my noble friend's line? Secondly, did I hear the Minister correctly when she said that she was going to enter into negotiations with the commercial credit reference agencies? I assume that they will be paid commercial rates.

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