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Baroness Hollis of Heigham: I was going to press the noble Lord on this issue. It may be that 350 cases a year suffer that benefit penalty. Let us suppose that, compared with another control group, the difference was one death. How would the noble Lord be able to attribute that? It would not be statistically significant. There would be the healthy population consideration, age for age; educational standards or the lack of them. How would one do it? If one were dealing with the minimum statistical sample of 303, one would have to have figures of the order of 20 plus for it to begin to be statistically significant to the degree that the noble Lord suggests. The information could not be arrived at in this way. That is not to say that the department would not be tracking and monitoring what happens,
which is different. But with the sample size given, a research-based project would not permit robust findings.
Lord Goodhart: I do not believe that 300 plus is statistically a very small sample. A great deal of such work is done on much smaller samples. I accept that if the difference is one death, that is not significant and no further research would be carried out. But if one finds there are, say, 20 deaths, that would be an astonishingly high figure. Even if the figure were 10, I believe that one should investigate what is happening in more detail.
There is no point in carrying on the argument further at this time of the evening. I beg leave to withdraw the amendment
Amendment, by leave, withdrawn.
Clause 12 [Interpretation of sections 6 to 11]:
Clause 14 [Colluding employers]:
[Amendments Nos. 83 to 85 not moved.]
Baroness Noakes moved Amendment No.86:
- Page 18, line 20, after ("conduct") insert--
The noble Baroness said: In moving this amendment I shall also speak to Amendment No. 87. Amendment No. 86 also stands in the name of the noble Earl, Lord Russell. I tried to explain at Second Reading that my underlying concern was to ensure that the scales are not tipped too far against employers, recognising that the provisions of Clause 14 will bear most heavily on the small business sector.
I am emphatically not against the main thrust of the clause, which offers penalties as a cost-effective solution to warning off real offenders. I am certainly not against dealing properly with any offenders. As I said when we were discussing Amendments Nos. 53 and 64, the concern is that what appears to be clear-cut to an official may not appear so to others. We can point to examples in other parts of government administration where that is the case. I cited the Inland Revenue and Customs and Excise.
The concern is that without some kind of oversight of procedures small employers may be made the offer of a penalty, which amounts to little more than "Pay-up or else". The "or else" is that if one does not pay one goes to court, which is expensive and time-consuming. As regards small businesses, it takes the eye off the ball in running such businesses.
Amendment No. 86 seeks to add another requirement to the notice procedure set out in Clause 14 to give the allegedly colluding employer, in addition to the details of the alleged conduct and penalty offer,
Amendment No. 87 provides that the Secretary of State shall consider those amendments and either withdraw the provision or re-issue it. It is no more onerous than that. There is 30 days for the alleged colluding employer to state his case, but the other 30-day period does not run from that. The provision includes a safety valve against the possibility of genuine mistake or excessive zeal by officials. I put this amendment forward as one possible solution to the problem which I outlined previously in the hope that the Minister will provide some thoughts on how there can be some additional protection in particular as regards the code of practice about which she spoke earlier and Clauses 1 and 2 and not as regards Clause 14. There are no other sources to which we can turn to see what protection might be offered to those affected by what is proposed in Clause 14. I beg to move.
Lord Goodhart: It is right that someone who receives a notice of this kind should have the opportunity to reply to it and explain why it does not apply and should not be expected to pay a penalty in lieu of prosecution. I await with interest what the Minister has to say about the intended safeguard to ensure that someone who receives such a notice is entitled to challenge it.
Lord Higgins: I support my noble friend Lady Noakes. A safeguard of this kind seems appropriate. We are in a rather strange situation where people may pay up rather than go to court, even though they have a reasonable basis on which to believe that they have not been justifiably accused but find it an easier way out of a situation and less time-consuming.
Baroness Hollis of Heigham: I hope that my answer addresses those concerns; if not, the Committee will wish to return to the issue. The purpose of Clause 14 is to streamline the sometimes cumbersome, and always expensive, process of prosecuting collusive employers. It would allow the department and local authorities to target limited prosecution resources at the most serious cases and deal with the less serious by administering a swift civil penalty, which has been welcomed by the relevant business organisations.
However, it is implicit in the provision that before making a penalty offer the department or local authority must first decide that there is a case to be answered in the courts. They could not form such a view without first properly investigating the case and interviewing the person under caution. These procedures comply with the PACE regulations which are in place to protect alleged offenders by ensuring that investigations are conducted appropriately and that the case is based on admissible evidence. Any mitigating factors which would make it inappropriate to consider a penalty would already have been taken into account; for example, where the employer suffered ill health and the threat of a penalty might worsen that condition.
No matter how well intentioned, these amendments would have the effect of adding an extra layer of bureaucracy to the scheme and could conceivably prevent cases going to court. The amendment gives the employer the right to a 30-day period during which he could ask to have the validity of evidence rechecked. If that was exercised and evidence was still deemed suitable the department would have to go through the process of offering him a penalty for the second time. The employer would get a second written notice stating that he might be offered a penalty. If he agreed to the penalty, he would have a 28-day cooling-off period (which is already built into the system), at the end of which he could still refuse the penalty and opt to go to court.
That process would give a collusive employer a very extended right to delay proceedings and prevent the case going to court at all. At worst, taking account of the time taken to recheck evidence and administer an administrative penalty for the second time, including associated notifications and interviews, there might be a delay of about three months before a case could be brought to court. Such a delay might activate a time bar, which could put a case beyond the period for which a summary prosecution could be brought.
The Social Security Administration Act 1992 provides that proceedings for an offence under that legislation must start within three months of the completion of evidence gathering, or within 12 months of the commission of the offence, whichever period last expired. In those circumstances, the employer could be prosecuted for only a more serious offence which allowed a longer period before a prosecution had to be brought. Such prosecutions would potentially carry a higher penalty.
Cases of collusion in benefit fraud are complex and, consequently, very labour intensive. Collusive employers often use the power that derives from their position in an organisation to distance themselves from the fraud. This kind of offence is, therefore, difficult to prove and takes up a large amount of staff time. The amendment could unnecessarily add to the amount of time already spent on an individual case, as there is a high risk that some employers would use it simply as a delaying tactic and come out of time altogether.
The substantive point on which I seek to give reassurance, particularly to the noble Baroness, Lady Noakes, is that we already have sufficient arrangements in place to safeguard employers. The existing penalty in respect of claimants provides a precedent and many details about how safeguards would work in practice are already established. There is a 28-day cooling-off period. An employer who feels that he has been "bullied" into accepting a penalty, or that it is based on insubstantial evidence, but none the less believes that it is the easier option, would be able to use the 28-day period to put his grievance to the fraud investigator's manager as senior DSS officer to reconsider the case. If, for example, an employer felt that he had made a statement under duress, or that evidence had been fabricated, it would be open to him
Moreover, the department and local authorities are bound by Crown Prosecution Service guidance. This already places a constant duty to review evidence and ensure that it is in the public interest to prosecute. Even if the employer did not put grievances to the department until the 28th day of the cooling-off period, existing procedures would ensure that the case was checked before a penalty was administered or the case was brought to court. It is worth remembering that the employers concerned would know whether they had acted fraudulently and they should accept a penalty; they would have that choice.
We intend that decisions on whether it is appropriate to offer a penalty should be taken not by the fraud investigator but by someone higher in the chain of command--the noble Baroness expressed concern about that on the previous occasion--following detailed and explicit guidance. The guidance would make clear that the penalty should be offered only as an alternative to instigating criminal proceedings. During the implementation period the chief investigating officer and the department's lawyers will institute a system to check a random sample of cases in which a penalty is to be offered. I hope that that mechanism provides an assurance that administrative penalties are offered in appropriate circumstances according to policy guidance. In light of that fairly full explanation, I hope that the noble Baroness is able to withdraw the amendment.
Baroness Noakes: Perhaps I may ask one question about the procedure explained by the Minister. I believe that the noble Baroness said that during the 28-day cooling-off period the person to whom the penalty had been offered could approach a grievance manager. Would that procedure be drawn to the individual's attention at the time the notice was issued? Would the person concerned be aware of it?
("(ca) stating that he may within 30 days of the date of the written notice make representations to the Secretary of State or authority as to why he believes that the provisions of subsection (1) or (2) are not met;").
6.45 p.m.
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