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Lord Higgins: My Lords, the measure is introduced under the Social Security Fraud Act 2001, which your Lordships laboured long and hard to improve. As a result of that labour, it became much better legislation than it was when it arrived here from another place.

As the regulations are made within six months of the main legislation, my understanding is that they do not go to the Social Security Advisory Committee, under a provision in the Social Security Administration Act 1992. I was not involved in that Act, but I wonder whether that is a good idea. On a number of such regulations it is arguable that we would benefit from the committee's advice. On a separate point, no doubt the Minister can confirm that the regulations are consistent with the human rights legislation.

When I first saw the regulations I was a little worried because, as the House will recall, we had long debates on the XWindlesham amendment", which would have imposed sanctions by withdrawal of social security benefits for crimes and misdemeanours that took place outside the social security system. I understand that the regulations operate purely within the social security system. The sanction will be enforced only as a result of fraudulent action within the social security system. To that extent we can reasonably welcome them. To use a shorthand form for this evening's rather esoteric audience, it is a XGrabiner point" rather than a XWindlesham point", arising from the Xtwo strikes and you're out" proposals from the noble Lord, Lord Grabiner.

I should like the Minister to update some of the figures and clarify one or two points about the regulations. As I understand it, the Government propose to withdraw or reduce benefits for people convicted twice of a benefit offence within three years. The sanction will be for a fixed period of 13 weeks and will begin after conviction for a second offence if benefit is in payment. So far, so good. However, if benefit is not in payment, the sanction will begin when the entitlement first arises in the three-year period following the second conviction. The noble Baroness

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nods, but I do not understand how that will work in practice. She tried to cover the point in her opening remarks, but it is not dealt with in the explanatory memorandum. Perhaps she could explain how the provision will work in practice.

Various estimates have been made of the size of the problem of benefit fraud. It was estimated in December 1999 that #2 billion a year was definitely lost, while #3 billion was suspected as being lost and there were suspicions about a further #2 billion a year. I am not at all clear about how those figures were arrived at, particularly how we know definitely that #2 billion a year is lost. Perhaps the Minister could clarify that.

The Government have rightly set targets for the reduction of benefit fraud. I was surprised at the Minister's opening remarks. My understanding was that the target was a 30 per cent reduction by March 2007 and a minimum 10 per cent reduction by March 2002, but the noble Baroness seemed to refer to 25 per cent by 2004 and 50 per cent by 2006. I am not sure whether that is an updated target.

There is also some confusion because the Minister in another place went on to say that the 10 per cent target was not only on track, but 18 months ahead of target. Working out the arithmetic, he ought simply to have said that the Government are ahead of their objectives. Perhaps the Minister could clarify the position on the various targets so that we can judge the Government's performance against them.

The other point that emerges clearly is that the situation is not necessarily improving. An article in the Sunday Times said that an internal departmental report showed that the proportion of housing benefit fraud cases won by local authorities had gone down significantly. The record of local authorities on that is worrying. Only a very limited number of local authorities are successful in pursuing housing benefit prosecutions. The latest figures that I was able to find show that 40 per cent of local authorities did not successfully prosecute a single person for housing benefit fraud and 20 per cent had no data on whether they were prosecuting people for that.

We are talking about imposing sanctions on the people engaged in fraud, but there should be a corresponding sanction on local authorities that are not dealing with the problem. Perhaps the Minister could tell us whether the situation has improved on that which I have just described.

The Government are also engaged in a heavy advertising campaign. The posters are so apparent that I happen to have noticed them. Do we have any cost-benefit analysis of the advertising campaign? What further reduction do the Government expect as a result of it, and what is it costing?

Finally, I come to the question of hardship, on which the noble Earl, Lord Russell, spent a lot of time at earlier stages. We were all concerned about the possible effects of hardship. There was particular concern about whether someone who lost their

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housing benefit might then find that they were homeless because they were unable to make the payments on their home.

If I understood the noble Baroness correctly, she announced a change in policy on that. I thought that she said that the position of the people in the home would be protected if the head of the household had acted fraudulently. That is important and has implications for local authority funding.

I should like the Minister to bring us up to date on those matters. The Act was very important. Perhaps she could give us some indication of the extent to which the action taken under the regulations is expected to contribute towards the achievement of the Government's targets. I hope that she can clarify more precisely what those targets now are.

9 p.m.

Earl Russell: My Lords, several times during this afternoon's perambulations I have been reminded of the exam candidate who said that Sir Robert Walpole was extremely unpopular because of his exercise scheme. I must confess that, because of this unaccustomed exercise throughout the afternoon, my preparation for this debate has been a little less thorough than it might have been.

Lord Higgins: My Lords, I think that that was because Walpole let his sleeping dogs lie and did not take them for a walk.

Earl Russell: My Lords, yes he did indeed. It is pity that Ministers do not follow the same policy a little more often. Anyway, I offer my apologies to the House.

There is nothing new about fraud. One of my pupils once discovered a case of someone found begging outside St Margaret's Westminster in 1614, who was found to have in his pocket the sum of #30. That was between two and three years' wages for an ordinary labourer. He was to be dismissed on paying #5 to the Poor Box. He bargained it down to #4 and got off. He was clearly a seasoned felon.

Fraud is always with us; hostility to fraud is always with us. But one wants to try to make the punishment fit the crime. One of the curious things about the measure we are discussing is that, as it appears to me, it bites more heavily on the less serious than on the more serious offenders because it can bite only on those who actually have a benefit entitlement. If you have no benefit entitlement, you have nothing to forfeit under these provisions. Take, for example, the case in today's Times, headed,

    XFA Cup hero faces jail over benefit fraud".

The person in question is the holder of a Cup winner's medal and a former Manchester United player. The article states:

    XDuring one 25-week period, Martin, 33, worked on television, 40 times, earning #11,300, while claiming jobseeker's allowance and council tax benefit".

That sum is well above benefit levels.

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If that person is deprived of his benefit entitlement, in Gibbon's words, he loses the superfluous treasure. He loses something which he does not have, so he is in effect not punished, whereas the equally fraudulent person whose income is nevertheless below benefit levels does suffer a punishment which his richer fellow offender does not. I do not follow the justice in that and I never have done.

The Minister also said that the regulations do not bring anyone into serious destitution. I should be very grateful when she replies if the Minister could tell us how she knows that and on what research evidence that is based. It was an extremely confident statement. If there is a source behind it, I should like to know it.

More generally, I should like to know what she believes is the effect on the adequacy of living standards of a 40 per cent reduction in benefit and what kind of sacrifices that involves. If she does not know that, will she at some time put herself in the way of finding out?

The same questions apply in relation to hardship. It is something of a perplexity to me why levels of hardship payments have been fixed at the point where they are. Is there any academic study which underlies the choice of that particular level of hardship payments? Why is it thought that hardship does not occur if there is a 20 per cent reduction whereas it will occur if there is a 40 per cent reduction? Does that rest on any empirical evidence, or is it simply a guess?

I take the Minister's point about Regulation 18; namely, that the dependants are freed from the effect of a reduction in housing benefit. One must welcome that. However, the Minister did not mention Regulation 17 which would impose on someone who does not have dependants a 40 per cent cut in housing benefit. Has the Minister considered the effect of that on a landlord who, of course, may be an equally guilty party but is not necessarily such and need not be assumed to be? Far too many landlords do not accept people who are on housing benefit. That makes housing people who are on benefit more difficult than it should be. Is it an incentive to a landlord to subject him to the potential for loss of income when he has not done anything at all that he should not? Has that angle been taken into account?

I also want to ask the Minister about one rather unexpected provision which is in Regulation 5(1)(d)(i) dealing with polygamous marriages where it is provided that there shall be hardship payments if one member of the polygamous marriage is pregnant. There is no provision made for two, or, indeed, I suppose, the hypothetical possibility that more than two members of the polygamous marriage may be pregnant. That, I should have thought, would have created even more hardship. One hopes that it will be taken care of some way or other.

Finally, I want to raise what I hope is simply a question of ambiguity. I refer to the final regulation, Regulation 27, which I shall try to quote exactly as I do not want to cause any misunderstanding. It arises from Regulation 21, but Regulation 27 is, I think, a numeration interpolated in another set of regulations.

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Regulation 27 provides that,

    XA decision of the Secretary of State that a sanctionable benefit . . . is not payable",

cannot be a matter of appeal,

    Xwhere the only ground of appeal is that any of the convictions was erroneous".

That could mean two things. It could mean that you cannot use an appeal against the certification to argue about the justice of the penalty, or it could mean that the fact that one of the convictions is actually erroneous does not remove the penalty. If it means the second—I think that I can take it from the Minister's body language that it does not—that would concern me. However, I should be glad if she could confirm that.

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