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Earl Russell: My Lords, these amendments cover similar ground to Amendments Nos. 17 to 19 tabled in my name and that of my noble friend Lord Goodhart.
The underlying issue here is that of privilege; under what circumstances privilege may justify the withholding of information and under what circumstances, without any government recognition that it so justifies, it may nevertheless be allowed quietly to do so.
People need professional advice of many kinds. That is not always recognised in law. For example, there is, I believe, no legal privilege attaching to confession to a Roman Catholic confessor. Yet I cannot in all my political experience recall a case of a confessor being subpoenaed to give evidence on the confessions of his penitent. Were such a case ever to arise, I might be found here standing shoulder to shoulder with Cardinal Winning in defence of the liberties of the Church. While that may be of great entertainment to the House, I doubt it would be quite so entertaining to the Minister. So if the Minister could indicate whether or not there are some cases where a government may be prepared to hold its hand--such indication of the most imprecise kind, as is the nature of the case--it may assist us.
However, the question arises whether, as one is entitled to take advice from a lawyer with privilege, one may be entitled to take advice under some circumstances from a financial expert with perhaps some qualified form of privilege. The way the financial services industry is developing now, the boundary between those two categories is not quite as definite as it used to be. Where exactly the boundary comes between a tax lawyer and a tax adviser is something on which I do not believe there is any clear legal ruling. People even of the greatest innocence--in fact, most often people of the greatest innocence--may wish to ask their financial adviser, "Am I legally entitled to do this or will I be accidentally evading some obligation to which I am subject?"
I am sure very few of us are aware of all the obligations to which we are subject. We try, but success is not particularly common. So were we to discourage people from taking expert advice, we might, as with being faced with litigants in person in court, be letting ourselves in for a great deal of extra work.
A problem certainly exists. I do not pretend to see my way through it to a solution, but were we by any miracle able to bring to it the same sort of constructive thought we brought to the last group of amendments, we might possibly do some good.
4.15 p.m.
Baroness Hollis of Heigham: My Lords, Amendments Nos. 5A, 17, 18, 19 and 20A, all seek to place restrictions on the types and sources of information available to authorised officers. They seek to prevent us adding people that provide advice or professional assistance to the list of organisations that could be required to provide information.
I turn to Amendments Nos. 17 and 19 first. The noble Earl, Lord Russell, accepts that the broader amendment--I shall come to the narrower one in relation to legal privilege in a moment--contains a grey area of difficulty. Advice and professional assistance are rather wide terms. Their use in this amendment would restrict our power to add new organisations to the list at new subsection (2A). I shall not seek to provide examples because we do not intend to add anything further to the list; in any case, such additions would have to come before your Lordships' House. However, I can give the House examples of why that might be difficult.
As drafted, the amendment would cover the information given in order to receive advice from a building society in response to a mortgage application. Information given in respect of mortgage applications could include details of income and capital. It could also include information on properties already held and, of course, the property for which the mortgage was requested. A frequent source of social security fraud is that people claim housing benefit as though they were renting, whilst actually owning the property, and they mislead about their income and capital. I am sure the House can see therefore that information
given to a building society in order to receive mortgage advice would be extremely pertinent to that area of crime.As I say, there are grey areas. The term "advice" could also include advice that a bank might provide on investing income or transferring it overseas. We would similarly want to be able to obtain details of the information that somebody had supplied to receive that advice as that information might include details of money stolen from the benefit system, or income that was being hidden from the benefit system.
So following the amendment of the noble Earl, Lord Russell, if banks and building societies were not already on the list, they could not be added to it because, under certain circumstances, those organisations could be in the position of giving advice, even though the bulk of their activity relates to the giving of straightforward information.
Those are hypothetical examples. My point is that organisations which give advice to their customers may also have information which could assist us to detect fraud. But I share some of the noble Earl's concerns. There is a difference between asking an adviser what to do to avoid tax and asking a lawyer what is legally acceptable. I shall come to that in a moment.
I have already given an assurance in Committee; I am happy to give it again. We will not add organisations such as the CAB or lawyers to the list of those from whom we may require information. Should we seek to add any other organisations to that list, we shall of course bring them back before the House in any case and the House can decide whether or not it is appropriate to proceed.
I return to the core of the amendments. Since Committee I have been wondering whether we could do anything further to meet the concerns expressed, particularly those in relation to legal privilege, which is perhaps the one that really matters. Information subject to legal privilege can be argued to be a special case. We have made clear in paragraph 2.9 of the code that no information will be requested that is the subject of legal privilege. However, I am willing to consider tabling a government amendment at Third Reading specifically to exclude information subject to legal privilege from that which can be obtained under these powers because I accept that it is a particular case. I hope that that meets the issue.
Amendment No. 18 seeks to limit the organisations that we can add to the list of those required to provide information to those organisations that collect and store only financial information. The Bill does not restrict itself to only financial information. If we did that, again we would be unreasonably narrowing our ability to combat fraud. Much of the information that we seek is financial, but not all. The composition of a household is not financial information. The noble Earl, Lord Russell, will know that above all we need to have that information. The details of where the claimant lives is not financial information. The details of any employment may not be wholly financial
information. The information provided to substantiate a person's identity is not financial. Whether or not someone is in education is relevant to benefit but it is not financial information. We need all that information and more in order to combat fraud.With that explanation, I hope that the noble Lord will feel able not to pursue his amendment. I hope that my response to Amendments Nos. 17 and 19 addresses the point raised by the noble Lord, Lord Astor, on legal privilege embodied in Amendment No. 5A. In the expectation that I shall table an amendment at Third Reading to meet a concern which I accept may need more belt and braces than just the code of guidance, I hope that the noble Earl, Lord Russell, and the noble Lord, Lord Astor, will feel able to withdraw their amendment.
Earl Russell: My Lords, before the Minister sits down, I take the point she makes about Amendment No. 18 and give a limited but warm welcome to her comments on the forthcoming government amendment. She knows that it does not meet the whole problem. I suspect that it is all any of us could do in her shoes and I shall welcome it.
Lord Astor of Hever: My Lords, we on these Benches are grateful for the positive way in which the Minister reacted to this group of amendments and specifically to Amendment No. 5A. We feel that the issue of legal privilege is a special case. We look forward to seeing the amendment that she proposes to table at Third Reading. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins moved Amendment No. 6:
- Page 2, line 29, at end insert--
The noble Lord said: My Lords, in moving Amendment No. 6 it may be helpful if I speak also to Amendments Nos. 46 and 49 which, in effect, seek to impose penalties for those who have an invalid or fraudulent national insurance number. This is an important area of the Bill, which we have not previously debated in Committee. The figures for national insurance numbers are, indeed, remarkable. I understand from a Written Answer on 13th March 2000 to a Question asked by my right honourable friend Mr Willetts in another place, that the number of national insurance numbers currently in issue is over 81 million, whereas the population is around 60 million.
There is a huge surplus of national insurance numbers floating round the system. Part of the reason for that is the fact that the number which are withdrawn as a result of death is relatively small. Clearly, there must be an initial assumption that if someone is using a false national insurance number, that in itself is a matter for concern and should be
The amendment suggests, therefore, that the first step should be to check whether the national insurance number held by an individual is genuine. We think that that would be an efficient way to do it because at present the return which the department gets from carrying out investigations into fraud is far in excess of the cost. The Government have not pushed to the point where the cut in fraud is equal to the cost of ensuring that fraud does not take place. This would seem, therefore, to be an easy way to begin the search. Long before one gets to all the other questions of taking information from the whole list of bodies set out in Clause 1, the first step should be to check on the national insurance number.
Part of the situation is shrouded in mystery. It would be helpful if the Minister could clarify a number of points. I understand that information is held on two different computers, NIRS2 and the DSS computer, but no doubt she can clarify where the information is held. None the less, I assume that somewhere in government--she will no doubt tell us where--there is a list of national insurance numbers and against that list the name of the person to whom they were issued.
There seems to be some doubt as to the stage at which a national insurance number comes into existence. The noble Lord, Lord Grabiner, in his report, to which I shall shortly refer in detail, thought that it happened at the age of 16. Others say that it happens at birth. No doubt the noble Baroness can help, but I believe that the child benefit number is converted into a national insurance number at a later stage. However, at all events the number should have a clear relationship to a specific name. That should give us a lead.
The overall situation is rather confused, but all one must ask is whether the national insurance number which a given individual has is one which is related to the name. It may well be that there is extensive organised fraud in this area where people can have tailor-made national insurance numbers which fit their name precisely. However, I suspect that some such transactions in themselves may be somewhat fraudulent and perhaps the fit is not as good, as reference to the Government's records would immediately reveal. That is the first point that we need to clarify.
The noble Lord, Lord Grabiner, states in his summary of recommendations at (ii) that to combat identity fraud, which is the way he conveniently describes it, the procedures for issuing national insurance numbers should be tightened up in line with the regime already piloted by the Benefits Agency. He does not concern himself with tightening up those existing numbers. He is concerned in that summary with the issuance of new numbers.
The previous Conservative government introduced a series of measures to cut down on the prevalence of national insurance records, the most important of which was the data cleaning project, which was
The noble Lord, Lord Grabiner, in his normal thorough way, goes into these matters of national insurance fraud in rather more detail. Indeed, he refers to the pilot study carried out in Balham--nothing to do with the late Tony Hancock who is, alas, no longer with us--and I believe an extremely high percentage of false national insurance numbers are located in the greater London area. At all events, the Balham study would seem to help in dealing with this. Again, before we get to Clause 1 of this Bill and from the point of view of rights and data protection measures, these measures would seem to be a better way, in the first instance, of dealing with the problem. That is what this amendment seeks to do.
The noble Lord, Lord Grabiner, goes into more elaborate matters. For instance, The Day of the Jackal fraud system is perpetrated by means of false birth certificates of people who have died, and so on. This needs to be cleaned up. Outsiders can go and look at people's birth certificates, but it is not at all clear whether the person recorded on the certificate as having been born is also recorded as having died. Here again we think, as the noble Lord recommended, that there should be stricter control over the issue of birth certificates as a proof of identity. This is a problem that needs to be tackled.
Overall, it seems to us clear that to write into the Bill the first part of our proposal, namely, Amendment No. 6, would be an efficient and probably more cost-effective way of checking up on national insurance numbers. It would be helpful if the noble Baroness would clarify for us the factual situation and comment on Amendments Nos. 46 and 49, which seek to impose an immediate penalty on someone with fraudulent intent who is in possession of a false national insurance number. I beg to move.
Earl Russell: My Lords, I think we have here a serious problem to which the noble Lord, Lord Higgins, is right to call our attention. Also, of course, we have a need for balance. On the one hand, we must try to track down and pursue the fraudulent use of national insurance numbers. On the other hand, perfectly genuine law-abiding people--many of them the victims of theft, as of credit cards--continue to have legitimate needs and a legitimate right to build up a pension entitlement. The two things need to be kept in balance somehow.
Will the noble Baroness confirm, as I am sure she will, that so long as people have surviving dependants there may be an interest in maintaining national insurance numbers of people who are now dead? Secondly, can she tell us of the procedure which is
("( ) No investigation or inquiry under this section shall be made until the validity of the National Insurance number held by the individual concerned has been checked.").
4.30 p.m.
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