§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]9.35 am
§ The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt)
I am pleased to introduce this debate. My first task is to give the apology of the Liberal Democrat spokesman on social security, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who told me last night that he would be unable to attend this morning. As we know, we arrange our business only a few days in advance, whereas sometimes business for other parties is arranged much further in advance, and that is why the hon. Gentleman cannot be here this morning. I know of his interest in this subject, so I thought it best to record his apology. He has also taken the trouble to speak to the hon. Member for Manchester, Withington (Mr. Bradley).
§ Mr. Patrick Nicholls (Teignbridge)
In the context of that apology, perhaps my hon. Friend could place on record the Liberal Democrats who have attended today in their leader's absence?
§ Mr. Burt
During the morning, we shall see whether any Liberal Democrats attend. My hon. Friend makes a valid point and during the day we will see whether any hon. Members travel the Liberal Democrat Benches.
It is a year almost to the day since the House had an opportunity to debate the important subject of social security fraud. On that occasion, at a considerably less civilised time of the day, my hon. Friend the Member for Welwyn Hatfield (Mr. Evans) secured an Adjournment debate to which my hon. Friend who is now the Under-Secretary of State for Employment responded.
My hon. Friend the Under-Secretary asks and receives no quarter. She brings a vim and vigour to the Dispatch Box which she displayed to the full in those debates. Indeed, a debate between her and my hon. Friend the Member for Welwyn Hatfield on the subject of fraud and social security abuse could sell more tickets than a gala night for "Jurassic Park". She takes that spirit to her new Department, and all her colleagues in the Department of Social Security wish her well in her new appointment.
Since the previous debate, the subject of social security has rarely been out of the public eye. Many facets of the benefit system are currently being subjected to scrutiny and welcomed public discussion. My right hon. Friend the Secretary of State for Social Security has made it one of our priorities to bear down on fraud and abuse in social security, as every penny misappropriated means less for those in real need.
Today, the House has an opportunity to hear about the prevention, detection and deterrence measures that we are taking to tackle fraud and abuse in the system, and I propose to make that the focus of my remarks today.
The sheer scale of spending on social security means that it is in everyone's interest to maintain and preserve the integrity of the system. This year, spending on social security will be in the region of £80 billion—a massive amount by any standards, amounting to nearly a third of general Government expenditure and over 12 per cent. of the country's gross domestic product. To the taxpayer, that represents an enormous financial commitment—about £13 for each working person every working day.
1247 Without doubt, the vast majority of people claiming benefits are fully entitled to them. Social security exists to help those who genuinely need it, which is why we spend over £15 million a year on publicity to ensure that people have the information they need to enable them to claim what they are entitled to.
Regrettably, however, there are some people whose behaviour and actions bring the social security system into disrepute. They are cheats, pure and simple, whose exploitation of the system is costing the taxpayer dear; cheats because they effectively deprive the needy and vulnerable by claiming money from the public purse to which they are not entitled; and cheats are disliked by all fair-minded people in society.
Let us be quite clear about it; social security fraud is a crime—and a very selfish one at that, since every pound claimed fraudulently is a pound less available to people who are genuinely in need. It has been estimated that social security fraud could amount to more than £1 billion a year—in other words, the fraudsters are costing at least £1 a week for every working person in this country.
When people go down to the pub tonight, or visit the supermarket at the weekend, they should look at the prices and think about the extra pound that they could have had in their pocket. That pound has been taken from them by someone who has cheated.
No responsible Government can ignore fraud and abuse on such a scale. That is why my right hon. Friend the Secretary of State has placed his commitment to bear down on fraud and abuse alongside our other priorities of making sure that help is focused on those genuinely in need. I stress that that commitment on fraud and abuse is made alongside our other priorities on behalf of the needy and the vulnerable in the system.
We have taken a number of measures to ensure that benefits are more effectively focused on people in need. For example, the Employment Service, which administers benefits paid to unemployed people, has in place procedures to test that those signing as unemployed are available for work and, moreover, are actively seeking it. Only this week, we have tightened up the income support rules that apply to people who come into this country from non-European Community member states so that they no longer have entitlement to benefit.
Our intention is to make sure that those people who are entitled to help get what they are entitled to—no more, no less. My essential message for the House is this: those who deal with us honestly and who are in genuine need have nothing to fear; but those who try to cheat the system will be caught, made to repay and could end up in court and earn a criminal record for themselves.
I recognise, of course, that the battle against fraud must be tackled on a number of fronts. On the one hand, there are claims that are fraudulent—either from the outset, or arising from a failure to disclose a material change in circumstances. Some people deliberately set out to defraud the system in this way; there is a worrying element in the criminal fraternity that has developed rackets involving multiple claims and false identities.
Others, however, seemingly drift into fraud—perhaps even unwittingly at first—for example, by simply forgetting to report a change in circumstances. But later, when they reflect on the cost of rectifying what started as 1248 a small lie, they turn a blind eye and perpetuate the falsehood, and, before they know it, a substantial overpayment has arisen. The boundary between forgetfulness and fraud has then been crossed.
Another area of fraudulent activity relates to the misuse of order books. To put this in context, in 1991–92 some £230 million worth of social security order books were recorded as lost or stolen, and 35 per cent. of those, worth approximately £85 million, were shown to be fraudulently encashed. A further £16 million was lost through fraudulent encashment of girocheques. Against that backdrop, it must therefore be right for the Government to take measures, first, to prevent fraud occurring, secondly, to detect fraudulent activity and thirdly, to deter would-be fraudsters from committing fraud.
In short, we are minimising the opportunities for fraud; we root out fraud when it occurs, we stop it from continuing and we recover amounts overpaid and prosecute offenders when appropriate.
Prevention is therefore at the heart of our anti-fraud effort. The social security system has always incorporated internal security and management checks—they are essential to prevent both internal and external abuse—but we owe it to the taxpayer to keep a tight system of validation and verification checks in operation to prevent abuse. We are constantly looking at ways in which to make those more effective through comprehensive assurance checks and an audit trail analysis to help us identify inconsistent or dubious pieces of information.
In this respect, technology plays a crucial role. The DSS and its agencies have been developing comprehensive and ambitious plans for fraud-resistant computer systems. We have already installed new computers to help fraud managers to identify patterns of crime, monitor performance and deploy resources in the most effective manner.
We are not only tightening up systems within the DSS. In recent months, significant progress has been made in combating order book and girocheque fraud through close co-operation and joint working with the Post Office—yet more proof, if it were needed, of the importance of the Post Office to the DSS.
A whole variety of improvements are now beginning to emerge, including, first, new, clearer guidance to Post Office counter clerks to help them spot various types of fraud which can occur—for example, bogus payees or manipulated and counterfeited payments. Secondly, an illustrated anti-fraud handbook has been produced for counter clerks called "Foil Fraud", which has been reinforced by a series of articles in Post Office Counters' internal magazine. Thirdly, the DSS and the Post Office have ensured more secure delivery of order books, safer storage and tighter control of order books once delivered. Fourthly, methods have been introduced to prevent encashment of order books reported missing.
That last intitiative is known to us as the ALERT project. It is particularly exciting, since it involves the use of new technology and the reading of bar codes printed on order books. Trials in the London area have already shown some impressive results, and an extension of the project is planned for the autumn.
The House will also know that we have been encouraging people to opt for automated credit transfer, ACT, because it is a safer, more cost-effective means of making benefit payments, and is far less prone to fraud and abuse than order books or girocheques. Hon.
1249 Members on both sides of the House have recently made clear the importance they attach to preserving choice in the method of payment, and we have reaffirmed our commitment, as I did today, to maintaining a network of post offices. But the fact remains that ACT is less susceptible to fraud, and our policy will continue to be to encourage people to opt for it.
§ Mr. Keith Bradley (Manchester, Withington)
When we debated ACT, there was some confusion about the financial implications for the Post Office of a large-scale move to that method of payment. Can the Minister give a further guarantee that, should that happen, no post office will be financially disadvantaged to the point where the savings the Government may make on ACT will mean that the post office network is no longer financially viable? Can he guarantee that the financial consequences of that policy change will not lead to the closure of post offices?
§ Mr. Burt
I am quite assured that the DSS's encouragement of people to opt for ACT is not a threat to post offices. As the hon. Gentleman will be aware, the financing of post offices is a complex matter, involving contracts with other Departments. We need a network of post offices, because they help us in so many ways to deliver benefits. We therefore believe that ACT, on its own, will not harm the post offices. I assure the hon. Gentleman that that is not the intention of the DSS.
§ Mr. John Sykes (Scarborough)
Does my hon. Friend accept that Opposition Members—there is only one here—are aware that people who want to opt for ACT can do so of their own accord? No Government on earth can force them to do so. The Opposition have whipped up a campaign of hysteria.
§ Mr. Burt
My hon. Friend is right. It is a great shame that, all too often, policy ideas with many good intentions behind them can be unhappily distorted for purely party political ends by the Opposition. As a result, people are genuinely scared about matters that pose no threat to them. It is essential that we put our commitment on record. My hon. Friend is right that it is a great shame when those who should be more responsible fail to act in that manner.
As my hon. Friend has said, people will still have the option to receive payment at the post office and, for those who choose to be paid by order book, we are introducing this month a new design of order book, which contains a number of new security features. It will make illicit copying more difficult, with more secure watermarking and a variety of other complex design features aimed at decreasing the incidence of fraud and abuse.
The old order book had remained unchanged for many years. With new, modern printing technology, it is now easier for us to produce an order book. In addition to security arrangements, the new order book will combine a more user-friendly, easier-to-read format, which represents a significant step forward in our commitment to the customer, as well as illustrating our determination to prevent abuse and keep ahead of the fraudster. We shall continue to make the best use of design and print technology, introducing—without warning—new, subtle design changes from time to time to frustrate the efforts of criminals.
Our determination to root out fraud and abuse is perhaps best demonstrated by the sheer scale of the 1250 resources that we have dedicated to tackling fraud, the significant savings that they achieve, and examples of the kind of cases that have been identified in recent months.
This year, the Secretary of State has set a target of savings amounting to some £1 billion to be saved through the intervention of fraud teams working in the Benefits Agency and local authority housing benefit and council tax departments.
The Benefits Agency alone employs just over 3,000 highly effective and professional fraud staff. Most are employed in the 168 fraud sector teams, and 250 specialist staff based in London and other major cities are dedicated to the investigation of organised fraud, including cases involving stolen, altered or false proof of identity to make multiple claims; counterfeiting order books and girocheques; bulk or systematic theft and the buying or selling of instruments of payment; and pledging order books to moneylenders in exchange for cash loans.
In 1992–93, the organised fraud unit alone made 1,400 arrests and secured £42 million worth of savings.
The House should be under no illusion about the kind of determined fraudster we are up against today. Some are sophisticated, while others are plain brazen. The House will have seen or heard of the results of the operation in south-east London yesterday morning. I am assured by the team involved that it was not staged with a view to helping us out on this debate, but the publicity that it has usefully generated this morning has brought to the public's mind, first, the skill and determination of our fraud teams, to which I pay due tribute, and, secondly, the scale of the problems involved.
I shall give a couple of examples to colour in some of our people's activities. Some investigations start with a tip-off delivered on a scrap of paper. After nine months' investigation, Operation Rolling Stone led to the arrest and conviction of five men who had defrauded the benefit system of more than £500,000. In that case, the suspects were also being investigated by Customs and Excise for their part in a multi-million pound VAT fraud.
The gang used complex anti-surveillance techniques to evade the investigators, frequently changing journey patterns en route to the benefit office. After much painstaking work, our investigators could construct the pattern of the journey and gather crucial evidence of the criminal activities.
Our investigators must sometimes go to great lengths to pursue their quarry. In that case, they had to spend six hours in a seedy pub in a most undesirable area, with just a pint of shandy between them, and even had to join in the dancing. A final irony came when one of the team, sitting observing outside, found two of the offenders coming out of the pub. Unaware of the presence of the investigator's van, they kindly leaned against the vehicle and had a long chat about the identities that they had just used and where they were going next. Walls have ears, and so do vans.
Another case involved following a man who had claimed income support using different identities. His routine was relatively tedious: café for breakfast; benefit office; and finally the pub, where he would fall asleep. On one occasion, he varied the routine to visit the local cinema, where the film "Basic Instinct" was being shown. To maintain surveillance on that occasion turned out to be less onerous for one of our investigators. The fraudster in that case was convicted, and sentenced to four years' imprisonment.
1251 Another case in south London resulted in 50 minicab drivers being found to be claiming benefit. That operation saved £165,000. One individual was found to be using false documents and identities and an empty property was being used for income support claimants, with a driver travelling more than 200 miles from his home area to work. I sometimes think that if people put as much time and energy into an honest day's work as they do into fraud, they would be pretty effective.
It is not uncommon for our investigators to locate a number of counterfeit order books in premises. A recent case, Operation Hammer, unearthed 90 order books, 450 counterfeit books, credit cards, cash cards, and blank birth certificates. Some £2.4 million was saved in that operation.
Naturally, work extends to co-operation with local authorities over housing benefit fraud. In one case, a claimant and a landlord were found guilty of conspiring to defraud the DSS and a local authority. The prosecution arose as a result of a regular cheque delivery exercise conducted by the local authority's benefits investigations team. From the authority's visit to deliver the benefit cheque, it appeared that the claimant did not live at the address for which he was claiming benefit.
Further investigations by the police showed that the gentleman had a variety of different identities, for which he had housing benefit claims at two different addresses. The police also found a letter from the landlord to the claimant, warning him that local authority staff were hand-delivering girocheques, and that therefore the landlord would be preparing a room for the claimant to show that he had lived at that accommodation. For that conspiracy, the claimant received a sentence of four years and the landlord a sentence of two years.
§ Mr. Nigel Evans (Ribble Valley)
Is my hon. Friend aware that the crackdown on fraud is happening nationwide? Only this week, 70 police officers were involved in swooping into properties in the Fishergate area of Preston, where more than 34 people were investigated and many were caught defrauding not only the DSS but housing benefit.
§ Mr. Burt
My hon. Friend makes a good point. All over the country, officers are working in close co-operation with other enforcement agencies like the police and local authorities, to find those who are defrauding the system. I am sure that my hon. Friend would like me to pay tribute to the officers involved in that operation, and to thank them for the savings that they have made on behalf of everyone else.
While discussing detection, I should stress the importance that we place on liaison with both the Employment Service—with whom we have entered into a joint agreement to improve liaison and conducted 200 fraud drives last year—and with local authorities.
That brings me to the much-improved arrangements for local authorities to help them step up their efforts against housing benefit and council tax benefit fraud. My Department already provides, free of charge, fraud training for local authority investigators. From April this year, we have provided fresh financial incentives for authorities to investigate benefit fraud.
Without the intervention of local authority fraud staff, housing benefit and council tax benefit fraud would remain 1252 undetected, and payments would continue to be made week after week to people who were not entitled to them. More anti-fraud efforts by authorities will therefore result in significant savings to the public purse, in which local authorities can now share. In addition to housing benefit and council tax benefit savings, authorities will also share in any associated savings in income support which they discover and which result from a successful investigation.
As a further incentive for authorities, full-rate subsidy is now payable on overpayments of benefit which result from fraudulent claims. Authorities will still be able to retain any overpaid amounts they recover. That presents an opportunity for authorities, as well as taxpayers, to benefit from increased efforts against fraud. Authorities stand only to gain. Once they achieve their baselines, there is no limit to the amount of financial benefit that authorities can receive from central Government under those arrangements; the more they save the taxpayer, the more they receive in additional subsidy.
We are also considering further measures that authorities can employ to prevent benefit fraud. For example, my Department has commissioned a study into setting up a central register of housing benefit claimants. The register's purpose is to prevent individual claimants and unscrupulous landlords from making multiple claims to benefit in one or more local authority.
The Government have put in place a package of incentives that has been widely welcomed. I have been much reassured by the spirit of co-operation that prevailed throughout lengthy consultations with the local authority associations on these issues, and I pay tribute to them. We now look to local authority and Benefits Agency fraud staff to work together, making the best use of their resources, to ensure that benefit is paid only to those with a genuine entitlement.
Finally, I should say a few words about what we can do to deter fraud. I have an important message for the fraudster, "Whatever sort of benefit fraud you are engaged in, not only will you get caught, but we shall require you to repay the money, and you could well find yourself in court facing a criminal record."
No one who commits benefit fraud can be sure of getting off without criminal prosecution. Our policy is to select the most appropriate cases for court action, and we have an almost 100 per cent. success rate. More than 5,000 people were prosecuted last year alone.
Increasingly, social security fraud cases attract high-profile publicity, such as we have seen this morning in some of the national newspapers. People are rightly disgusted when they see what cheats get up to, and the sense of moral outrage is understandable, particularly when every pound lost by fraud means a pound less to spend on the needy and vulnerable.
It is right that people should be outraged by social security fraud, so I also have a message for people who know someone else who is committing fraud: "If you know someone who is abusing the system, you are having to foot the bill, not the Chancellor—not me, not my right hon. Friend the Secretary of State and not the Government, but you, the ordinary law-abiding citizen of this country." I believe that publicity can act as a powerful deterrent, and I can assure the House that social security cheats will increasingly find themselves under the spotlight.
I thank those national newspapers that take the trouble to expose fraud and which cover—not just the incidents, 1253 but the convictions and sentences. In London, the Evening Standard has been running a campaign against housing benefit fraud, and a variety of national newspapers are also doing their best to help in the fight.
Ultimately, the Department of Social Security intends to ensure that, where there is no other means of support, the most vulnerable are protected. To do so, we need the support of the public and the taxpayer for what we do. We owe them a duty to ensure that the provision for others is spent not only wisely and fairly, but honestly. Those who seek to cheat on that support rob not just the Government, but every man and woman in this country—and up with that we will not put.
§ 10.3 am
§ Mr. Keith Bradley (Manchester, Withington)
I welcome the Minister's opening speech, and the moderate and generally factual way in which he presented it. As the debate unfolds, I hope that the Jurassic tendency does not creep in, and that we can keep to the facts.
I wish to place on record immediately that the Labour party is as committed as any other party or the Government to rooting out fraud. We certainly support the measures that the Government have announced to ensure that the fraud crackdown continues.
We must place the issue in context, and I can do no better than quote the Secretary of State for Social Security, when he said that most social security claimants wereas honest as the day is long".—[Official Report, 18 January 1993; Vol. 217, c. 9.]That does not mean that we must not root out fraud. I agree with the Minister that every £1 of fruad means El less to spend on genuine claimants in genuine need. We must be sure that all social security money is used for the right purpose.
The Minister briefly outlined some of the measures taken to combat fraud. They include financial incentives to encourage local authorities to fight housing benefit and council tax fraud, the allocation of additional resources to allow the Benefits Agencies to employ more specifically trained investigators and make greater use of information technology to identify fraudulent claimants, and the allocation of additional resources to fight fraud.
This morning, the hon. Gentleman has also outlined some new measures, partly based on the Comptroller and Auditor General's report, on the Government's investigation into combating organised fraud. I am pleased that the Minister has given more details on that measure.
I have a copy of the CAG's report. I found that the first recommendation involved the effective allocation of resources to meet the known fraud risk. The second consisted of four stars, as did the next. The following recommendation involved changing forms and the order books—an issue which the Minister dealt with this morning.
When I looked to see what four stars signified, I found that the information was not available on grounds of confidentiality. We are meant to be enjoying the spirit of open government, but it is fairly difficult for the Opposition to comment on some of the Government's measures, because we do not know what they are. I understand the reason for the confidentiality at one level—clearly, some of the actions must be confidential—but it is difficult to comment on all the work undertaken if some of it is kept secret.
1254 I shall comment on the some of the work already under way and then widen the debate to include the general issues of fraud and the other side of the coin: ensuring that claimants receive the benefits to which they are legitimately entitled. Much work has been undertaken in recent months, particularly by the Benefits Agency working in conjunction with local authorities. It must be stressed that local authorities have been as keen as the Government to crack down on fraud, particularly in respect of housing benefit and council tax.
Example after example throughout the country has shown that local authorities of whichever political persuasion are attempting to crack down on organised fraud. That fraud is often organised by unscrupulous landlords, who make bogus multiple cliams for housing benefit on behalf of individual tenants who do not exist.
We must praise the Association of London Authorities, which has worked with the London treasurers in establishing a London fraud unit in local government. That fraud team will ensure the sharing of information on fraud across boroughs and assist in preventing and tracking down large-scale fraud operations across London.
The team's activities have obtained some publicity, and I hope that this morning's debate will generate further publicity for its excellent work. I have read the detailed proposals of the work to be carried out by the Association of London Authorities in conjunction with other agencies. I commend its attempts to crack down on fraud across London.
My local authority in Manchester pays £130 million in housing benefit each year. An inquiry in 1991 showed that there was a high level of fraud among local landlords. Now, two fraud investigation teams have been appointed in the audit department specifically to deal with organised fraud involving housing benefit and individual fraud to ensure that loopholes are closed as quickly as possible. I commend local authorities throughout the country for the way in which they are seriously tackling the issue to good effect. Rooting out such fraud is in the best interests of genuine claimants.
There has been a change in the way in which local authority subsidy is arranged. The fact that local authorities received only 25 per cent. of the total cost of the money that they recovered through investigating fraud was unsatisfactory, and we welcome the fact that those authorities are now able to receive all the money obtained. An immense amount of work has been undertaken in recent months on the subject, but there is a feeling that many of the changes are being introduced too fast, without proper guidelines to ensure that the officers are fully briefed on the actions they should take.
The National Association of Citizens Advice Bureaux questioned the adequacy of training given to fraud officers who, it said,often appear to be ignorant of the law and of claimant's rights and appear to be responsible to no one".There seems to be a lack of accountability in some of the systems set up to undertake interdepartmental agency work. I hope that the Minister will look at some of the guidelines to ensure that adequate training is provided.
There is a feeling that the recovery targets set for local authorities are unrealistically high. I know that there is a lower level and a higher level, but my investigations across the country convince me that many local authorities find it extremely difficult to hit even the lower targets—not 1255 because of a lack of will to undertake the work, but from a feeling that the Government have set the targets unrealistically high. They should be reconsidered, to ensure that local authorities are given a realistic incentive to investigate fraud.
I make this point because local authorities have to allocate dedicated staff to undertake the investigations. Because of the tight budgets under which they operate, they want to be sure that the training and transfer of staff for fraud work will be cost effective. They must therefore be given, as promised, proper incentives by the Government to hit their targets by investing money in such work and getting it back when they actually hit the targets.
The fact that the Government, I understand, are looking again at the shape of the incentives regime is being viewed with some cynicism. I hope that the Minister will confirm today that there will be no negative change, and that local authorities will not be penalised for pursuing fraud. Local authorities must be able to gain benefits from investigations of this nature.
The Minister commented on the targets for fraud savings that the Government are setting in the social security budget. The Secretary of State has clearly said that he hopes to save £1 billion in the financial year by cracking down on social security fraud. The Employment Service has a separate target: 63,000 claims withdrawn following investigation.
That is a great hike compared with savings from previous years. In 1986–87, the target was £144 million, in 1990–91, it was £332 million, and in 1991–92, it was £433.7 million. So the target has been doubled in one year. We should continually bear in mind the fact that, in the context of the overall budget, even £1 billion is not a large amount. The overwhelming majority of claimants are honest and receive their just entitlement to benefit, as I have already said. In terms of overall expenditure on benefits, £1 billion is barely more than I per cent.—a tiny figure.
Clearly, every pound has to be used effectively—we do not deviate from that position—but let us always remember the context so that we do not get things out of proportion. In any case, Government targets do not always have to do with real money. Rule changes in 1989 expanded the number of items that can be counted as fraud savings.
In particular, the new rules included irregularities, not necessarily proven fraud, and they provided for notional savings from cases where an investigation might have found an irregularity without recouping any cash. Moreover, the figures are arrived at by multiplying recorded fraudulent claims savings, real or notional, by a factor of 32, based on the belief that, if a fraud had not been discovered, it would have taken at least 32 weeks before it was later discovered.
Thus, many target figures are only notional, not hard cash savings. They are extrapolations which the Government use to arrive at their £1 billion-worth of savings.
There is some danger of overstating the amount of fraud in the system. The Benefits Agency admits that it has no way of determining the true level of fraud:There is no fraud targeting of specific groups of people whether by race, region or national origin or by social status.The agency emphasises: 1256We do not keep statistics on benefit fraud broken down by nationality or by immigration status, including asylum seekers.It therefore seemed a little strange that the Secretary of State should say in Brighton last year:We have tightened up on bogus asylum seekers. Already nearly 20,000 have evaporated into thin air.We are not arguing that bogus asylum seekers or people claiming social security benefits illegally should not be clamped down on; but I hope that, when the Government give statements to the press or the House, they will talk about actual figures and cases, and not make generalised statements that can be misconstrued. The problem, after all, is small.
I hope that we will remain cautious and not use emotive language when dealing with cases of fraud. Quite a number of welfare rights groups have expressed their concern about the treatment of certain groups who appear to be subject to special scrutiny and unreasonable testing, in the form of DSS identity checks in local offices.
I want absolute assurances from the Minister that fraud will be dealt with case by case, not by lumping together groups of people and making assumptions about whether they are more likely than others to put in fraudulent claims. We must ensure that investigations are done sensitively by well trained officers—and case by case, not judging by people's circumstances or status, be they homeless, young or any other type that the Government may want to pursue.
§ Mr. Nicholls
Does the hon. Gentleman agree that welfare rights organisations themselves should perhaps come out and make the point that it is no part of their remit to make light of fraud? Given the consensus between us on this occasion, it might considerably help the public debate if they made the point clearly that fraud is unacceptable, and if they urged their members and those whom they look after to co-operate as fully as they can in stamping it out.
§ Mr. Bradley
I am not aware of any welfare rights organisation that has publicly condoned fraud or that has not undertaken its duties with the highest professional competence. These organisations ensure that they do not assist bogus claims, and they carry out crucial work to make certain that everyone entitled to benefit receives the benefit for which he has sought assistance. These organisations also ensure that all the benefits to which people may be entitled are properly administered on their behalf.
As I have said, we must be careful not to be emotive or to generalise. I hope that we will not fall into the trap to which the Minister alluded—in previous debates some of those who have spoken have done no credit to themselves. They did not further the cause of ensuring that the debate is taken seriously.
The Secretary of State's speech at last year's Tory party conference had more to do with rallying his supporters and perhaps strengthening his position in the Cabinet than addressing the issue of fraud. [Interruption.] I shall take that as a sedentary comment. Would the Government Whip like to intervene?
§ Mr. Burt
The hon. Gentleman spoke about conduct in debates. My hon. Friends can speak for themselves, but I 1257 can say that no Minister has ever done anything less than full credit to himself in fraud debates. It is the Government's duty to make it plain to the House and the country how we feel about fraud. It is entirely right for us to express our views on fraud in strong terms.
§ Mr. Bradley
I shall leave others to judge the intemperate nature of those debates by reading them.
§ Mr. Jeremy Corbyn (Islington, North)
Fraud is obviously wrong, but does my hon. Friend agree that it would be useful to have in Government time a debate on tax evasion in the City of London, and major fraud by major companies?
§ Mr. Bradley
My hon. Friend anticipates the next part of my speech. It is important to adopt an even-handed approach to fraud, and to examine it from all sides. To get a proper perspective, we must examine some high-profile fraud cases, expecially those involving tax evasion.
The Minister waved today's editions of the papers. By chance, I looked at yesterday's Evening Standard which states:Whitehall caterers cooked the books in £1 million fiddle.We cannot look at social security or local government fraud without looking at fraud in Government, industry and private enterprise. High-profile trials have included Guinness, Blue Arrow and Maxwell. Those and many others have cost taxpayers billions of pounds.
§ Madam Deputy Speaker
Order. I remind the hon. Gentleman and other hon. Members that, although it is perfectly in order to make a passing reference to issues that may appear to be germane, the debate must centre on social security fraud.
§ Mr. Bradley
I accept your ruling, Madam Deputy Speaker.
I wonder how many people who have been convicted of tax evasion and fraud are now on social security. According to the Government's estimate, tax evasion costs the taxpayer up to £4 billion a year. That places in context the Government's £1 billion target for social security fraud. That is a passing reference, and I shall say no more on the matter.
§ Mr. Corbyn
Is my hon. Friend aware that in many cases involving tax fraud and companies going bankrupt in rather, shall we say, curious circumstances, there is often a great loss to the national insurance fund? That hits people who contribute to that fund, and it is important that that aspect of company and City fraud should be followed up as assiduously as any other kind.
§ Mr. Bradley
My hon. Friend is right. We are debating the loss of taxpayers' money that could be used for other purposes, and especially to help those in the greatest need. Any loss of revenue disadvantages the country generally. We should clamp down on tax fraud and general fraud wherever it appears.
§ Mr. Nicholls
Crime is indivisible, and should be punished. Why does the hon. Gentleman seek to distinguish between the two types of fraud? Is he afraid of the tendencies of his hon. Friend the Member for Islington, North (Mr. Corbyn)?
§ Mr. Bradley
The hon. Gentleman was clearly not listening. I have made quite the opposite point—that the issues are not separate, and that we should look at the total 1258 loss of revenue. We should be even-handed in stamping out social security fraud or fraud in any other aspect of public or private life.
The debate has concentrated on organised fraud, which is the cause of most of the abuse. As the Minister rightly said, individual abuses often occur because of ignorance or mistakes in filling out forms. Only a small part of the saving of £433.7 million was due to the recovery of payments made as a result of error rather than overpayment as a result of fraud. I appreciate that when a claimant realises that he has made an error, it has to be rectified immediately. However, social security officers have a duty to give claimants the maximum help to ensure that they claim correctly.
Some valuable work has been undertaken to simplify claims forms, but more needs to be done, because, for many people, the forms are complex. Staff training, and officers who are sensitive in their dealings with claimants, will help to ensure that claimants do not encounter difficulties in filling in the forms.
I am sure that many hon. Members have taken up cases on behalf of constituents and, on making representations to social security officers, have found that mistakes in administering the forms have caused the difficulties. Money is repaid to the claimants, but we must ensure that claimants' errors that can be built into fraud statistics are balanced by statistics on administrative errors. That will ensure that benefits are properly calculated, and that people receive them when they need them rather than at some later stage.
The other side of the clampdown on fraud is an assurance that people will receive the benefits to which they are entitled. A high take-up is essential to ensure that the poorest in our society receive the meagre income to which they are entitled through the benefits system. In the wider context of the public expenditure debates, it is worrying that, in the Financial Times this week, the Chancellor of the Exchequer is quoted as saying:The reason why public spending is rising remorselessly is … partly the increasing take-up of benefits. The latter factor was a desirable thing but had to be re-examined in the light of public borrowing".I should like an assurance from the Minister that there is no intention to "re-examine" the take-up of benefits, or to limit take-up by people legitimately entitled to them. It would be scandalous if it were to be looked at in that context. His words may have been truncated, but what he said was clear. We have to ensure that everyone receives their just entitlement from the benefits system.
The latest Government figures show that, in 1988–89, some £1.6 billion of benefit money went unclaimed. Figures compiled by the DSS and International Social Service for the main means-tested benefit show that a quarter of people entitled to income support do not claim that entitlement.
Over 30 per cent. of people entitled to housing benefit do not claim it, and approximately 50 per cent. of those entitled to family credit do not claim it. Take-up of family credit is now higher, at 64 per cent., as shown by a report from the Policy Studies Institute for 1991. Even so, many families are not claiming the benefit that the Government see as the crucial one to protect and support families in work.
§ Mr. Nigel Evans
While I accept that those who are entitled to benefit ought to receive it, the counter-argument is obviously true: those who are not entitled to 1259 benefit should not get it. That is the main thrust of our debate. Is not the hon. Gentleman's problem with the debate the comments of the hon. Member for Sheffield, Brightside (Mr. Blunkett) last year in the Daily Express? He said:Labour has been linked to freeloaders for too long. I was brought up on a council estate and know ordinary folk expect rewards for hard work. They have no time for people who lie in bed when they are fit and able to get a job.What is the hon. Gentleman's view of that?
§ Mr. Bradley
I have made the Labour party's position clear, and it does the hon. Gentleman no credit to undervalue the need to ensure that people who are justly entitled to benefits receive them. The figures that I have quoted clearly show that there is a vast amount of under-claiming of benefits.
§ Mr. Bradley
No, I will not give way at the moment, as I must continue with my speech. I hope that the Government—
§ Mr. Bradley
I am sure that my hon. Friend the hon. Member for Islington, North (Mr. Corbyn) will be able to make some salient points later. I am representing a vast number of Members of Parliament here this morning, and my hon. Friend will be helping me considerably.
I seek from the Minister an assurance that the publicity campaign to ensure that people receive their entitlements is not undermined by the need to reduce public expenditure. As my hon. Friend the Member for Islington, North has already mentioned them, perhaps now is the time to pay tribute to the work that welfare rights officers undertake throughout the country, not only with individual claimants but in taking up campaigns on benefits to ensure that all those in their locality are receiving the benefits to which they are entitled.
I am anxious that, through the multi-agency approach adopted with the clampdown on fraud, more work should be undertaken to ensure that there can be a one-stop method of claiming benefits. More resources must be put into computerisation of benefit records so that, when claimants arrive at one agency to claim a certain benefit, there is an automatic link-up with records from other departments and other agencies to ensure that they are quickly alerted to the fact that they may be entitled to other benefits.
The link between local authorities and the DSS is important in that process, but I know that local authorities would like more resources to develop internal computer systems—so that, for example, when individuals claim housing benefit, they are immediately alerted through the computer link-up to other local authority benefits to which they may be entitled, such as free school meals. That ensures that claimants do not have to trawl around different departments in the local authority to make different assessments and different claims to ensure that they are getting their entitlements.
More work needs to be done on such systems, and I hope that the Government will look at that with a view to putting additional resources into that aspect of local authority and other agency work, so as to simplify the 1260 system and ensure that people do not lose out on their benefits. The take-up of benefits is not satisfactory, and we must ensure that people receive their just benefits.
Another benefit that is not being properly considered by the Government is the social fund. The annual report of the social fund came out only last week, and it is a great sadness to millions that the Government have refused to reform it, despite many reports, such as that in March by the Social Security Advisory Committee describing it as "an appalling lottery".
Because of cash limits, even if a cause is judged deserving, a person may be refused help if the budget has been spent. The problem with the social fund has always been that the time of year when one walked through the door influenced whether one received help from it.
Many cases involve two people in identical circumstances, one of whom makes a claim from the social fund on 1 April, at the beginning of the year, and the other who claims later in the year, say in January or February. Because of the cash-limited nature of the social fund, the latter claimant does not receive money from the fund, because all the money has been spent. It is unfortunate, to say the least, that the Government have not recognised the vast amount of research and work on the social fund that shows the faults in it, and that they have refused to accept those criticisms.
Richard Berthoud of the PSI calculates that the social fund distributes half as much—
§ Madam Deputy Speaker
Order. Before the hon. Gentleman continues—perhaps he knows what I am about to say—I should say that it seems to me that the point that he is making is the reverse of fraud. The burden of his argument is that entitlements are not being dealt with. I hope that he will not pursue that any longer, because it is not strictly germane to the debate.
§ Mr. Bradley
I understand whay you are saying, Madam Deputy Speaker. I can only say that many of my constituents who have been to see me over lack of access to the social fund have said that they feel that it is fraudulent that they have not been able to receive help from the social fund. Within that broad context of fraud, I am discussing the inadequacies of the social fund. The Secretary of State said in the annual report on the fund that, in 1992–93, 45,491 people were refused a loan to buy essentials or were too poor or in debt to repay the loan. That does not bolster confidence in the social security review.
I accept that that may be slightly wide of the mark of the debate, but I hope that the Minister will urge the Secretary of State to look again at the organisation and administration of the social fund. It is a sad commentary that people are too poor to receive the help they so desperately need from the one source of money that may be available to them. Although they have to pay that money back, it is the only way that many people with short-term problems can gain access to funds over and above the meagre level of income support.
On top of that, the other sector where claimants feel that they may have been fraudulently dealt with is within the stiffer targets that have been introduced this year to reduce the number of people getting unemployment benefit.
The Department of Employment said that 9 per cent. of initial claims should not be pursued by civil servants—
§ Lady Olga Maitland: (Sutton and Cheam)
On a point of order, Madam Deputy Speaker. Is not the hon. Gentleman's speech far wide of the subject of social security fraud? Should we not now return to the main point?
§ Mr. Bradley
Thank you, Madam Deputy Speaker. I shall be brief on that point.
We must ensure that, in the pressure to root out fraud, we do not also root out genuine claims, whether for unemployment benefit, social fund payments or any other benefit.
One worrying aspect of the changes in working practices within the social security benefit offices is the move to market testing. The social security fraud division of the Benefits Agency is a candidate for privatisation next year under the Government's market testing programme. During the feasibility studies, staff of the Benefits Agency expressed the fear that without direct accountability within the agency, there could be blackmail and abuse.
One study actually stated:The scope for abuse of this type of information is enormous and must be regarded as a very high risk area in the context of market testing.I put that on the record so that the Minister can respond to it this morning and assure us about the way in which market testing and privatisation of the benefits system will be organised, especially in the most sensitive area of a crackdown on fraud.
I have made absolutely clear—and put clearly on the record—the Labour party's commitment vigorously to pursue fraud, not only in the social security system but wherever it may occur, and especially tax evasion. At all times, we must deal with the other side of the coin and be equally committed to ensuring that everyone receives his just entitlement under the benefits system. The system is complicated and complex, and a minefield for many individuals seeking help.
We must ensure—through the resources that we put into the system, the training of staff, the way that claim forms are considered and efficient administration—that each claim is dealt with carefully. The purpose of the staff must always be, as I am sure it is, that each individual receives the benefit to which he is entitled.
It is a worrying time to read in the public expenditure review the statement that I have already mentioned. We must not place the burden of that statement on the poor who are desperately trying to make ends meet through an inadequate system.
I repeat that the Labour party's commitment is to stamp our fraud, but it is also to ensure that each individual receives the entitlement that he so justly deserves.
§ Mr. Vivian Bendall (Ilford, North)
I want to discuss two aspects of social security fraud—first, in the minicab sector and, secondly, in housing benefit. I must first declare an interest as I represent the Licensed Taxi Drivers Association. That interest is recorded in the Register of Members' Interests.
A great deal of information has been collated by the association. It wrote to the Employment Service inspectorate setting out evidence given to the Public 1262 Accounts Committee. I want to draw the attention of the House to some of the facts and figures of cases analysed by the association. The first case, code name Operation Met 999 Special, occurred in 1991. Officers from the Metropolitan police and inspectors from the social security fraud squad interviewed 159 minicab drivers at Heathrow airport, of whom 62 were found to be claiming unemployment benefit. The result of that investigation was a benefit saving of £73,018.
The second case, Operation Icarus, also involved Heathrow. In July 1992, 150 minicab drivers were questioned, of whom 107 were found to be fraudulently claiming income support. There was a resultant benefit saving of £161,357. In April 1993, Operation Achilles—again at Heathrow—was run over three days. Of the 150 minicab drivers questioned, 50 were found to be claiming unemployment benefit. There was a saving of £45,000. More recently, on 25 June and 1 July, during an operation in London's west end, 89 minicab drivers were questioned of whom 26–30 per cent.—were found to be claiming unemployment benefit.
The Government estimate that there are 38,000 to 40,000 minicabs in the London area. Taking the first three cases, a total of 459 drivers—1/87th of the London total—were questioned, with a total benefit saving of £279,000. If the figures are representative of fraud within the minicab sector, £24 million in benefit payments could be saved. That is not an inconsiderable sum. Of course, fraud does not stop at London—it is occurring in many cities, such as Glasgow, Cardiff and Leeds. It does not need much imagination to realise that an enormous amount of money is being fraudulently claimed by minicab drivers.
I have been carrying out some investigations with the help of the chief executive of the Benefits Agency. Although it has not been stated, it appears to me that not enough money is being made available for the number of investigations required. Strangely enough, at this very moment a major operation is under way at Heathrow involving the Metropolitan police and social security fraud inspectors. However, the operation is time constrained because of financial restrictions.
My plea to my hon. Friend the Minister is that where it is clear that fraud is occurring—as investigations have proved a great deal of fraud is being perpetrated in the minicab sector in London and throughout the country—the appropriate action must be taken to stop that disgraceful practice. Not only are ordinary taxpayers footing the bill for that fraud, but minicab drivers are collecting fares and tips on which they are not paying tax. Enormous losses are therefore occurring across the board. I ask my hon. Friend the Minister to make more finances available to combat that.
I crave your indulgence, Madam Deputy Speaker, in deviating from the main issue to emphasise that enormous problems confronting the legitimate cab trade because of illegal touting—most of it by minicabs. If they were put off the road and prevented from operating, that would also stop fraudulent benefit claims.
If one wants to receive housing benefit, it is the easiest thing in the world to acquire from any letting agent the details of a property and then to receive housing benefit. Letting agents are becoming a little cute, and a letting agent may have the benefit paid direct to the landlord or to himself. I declare an interest, as a partner in an estate agency—so I know what happens.
1263 If a landlord or letting agent is not cute enough to have the occupier's housing benefit paid direct, more often than not—after the deposit and first month's rent has been paid—that is the last that either will see of rent on the property. Arrears rapidly accrue and, because of assured tenancy legislation, the occupier cannot be taken to court for two months. Even then, another two months may elapse because the courts are so busy. It may be five months at the earliest before the property can be repossessed, at a cost to the landlord of £3,000 or £4,000.
Of greater concern is the fact that an occupier may have pocketed the money he or she received as housing benefit and not passed it on to the landlord or agent. Just as the bailiffs are about to go in, the occupant may do a moonlight—and then move on to another London local authority. Because no check is made, that individual can then proceed to do exactly the same.
That happens time and again. The property world knows very well what happens to housing benefit, but how can that problem be stopped?
§ Mr. Roger Knapman (Stroud)
Is my hon. Friend aware of another problem that particularly affects popular holiday areas where there is a need for affordable rented accommodation? I know from personal experience that if one has a capital gains tax problem, one can roll it over into holiday accommodation but not into rented accommodation for social purposes. The agency that handles my property has 6,000 properties, mainly in the west country, that are let out for holidays—often for that purpose. Does my hon. Friend, with all his professional experience, agree that, instead of making such a distinction, it would be better if more properties could be let at reasonable rents, preferably to local people? It all boils down to supply and demand.
§ Mr. Bendall
I cannot see any reason for that distinction. It would be advantageous to free such properties for permanent rather than holiday lets. The more property that is available for letting, the more likely it is that rents would be set at a sensible level, because the public would have a greater choice. I certainly agree with my hon. Friend in that respect.
For far too long, claimants have been arriving in one London borough from another, or from another part of the country, expecting to be rehoused. In the 1980s, when there was high employment in London and the south-east, such a policy might have worked to the benefit of people moving from the north, north-west or north-east, but now that unemployment is highest in London and the south-west, encouraging people to move from other parts of the country to London only makes the situation worse and produces inflated rents.
If more rented housing were made available in those other areas, at lower rents than in London, the rents in London would also be more sensible. The time has come for the Minister responsible—and that is not my hon. Friend the Member for Bury, North (Mr. Burt)—seriously to examine that possible means of solving the problem of social security benefit fraud. A spin-off would be an easing of pressure on school and hospital places and on other social services.
As to stopping fraudulent claimants moving from one authority to another, no housing benefit should be paid to 1264 tenants; it should be paid only to landlords or their agents, and the landlord should be registered with the local authority. If a tenant left and the landlord failed to declare that change, the local authority would know where to find the landlord and there could be no nonsense.
Substantial savings can be made just by ending fraud in housing benefit and among minicab drivers, and hon. Members on both sides of the House have said, rightly, that those savings could be used to benefit genuine, less fortunate claimants. A good start would be to help pensioners and those in the poverty trap, just above income support level, who will be hurt most by the imposition of value added tax on fuel. Much benefit can flow from the right action against fraud. Ways can be found of dealing with that fraud and it can be stopped if there is the will.
§ Mr. Harold Elletson (Blackpool, North)
I begin by telling the House about Jack O'Nory. I refer not to the well-known children's television programme but to the individual of that name, who submitted a claim for unemployment benefit last year—along with Count Dracula, Donald Duck and Gary Lineker. Their discovery contributed to the Department of Employment saving the taxpayer £34 million.
The Department of Social Security has a much larger problem combating fraud, and my hon. Friend the Secretary of State has announced that he intends to deal with it this year, to make savings of £1 billion. In view of money that would make available to the DSS to spend on other benefits, it is surprising that no Liberal Democrat Members are present for this debate. I assume that they are all in Christchurch, telling pensioners there how much Liberal Democrats care about social security issues. Those of us who are present for this debate will not fail to remind our constituents of the absence of Liberal Democrat Members and of their apparent complete lack of concern about social security fraud.
Blackpool and the whole Fylde coast region is an important area for the Department of Social Security. It is, after all, the centre of the administration of the Benefits Agency. It is also, unfortunately, a national centre for social security fraud and benefits abuse. Blackpool is by no means unique. It has a number of problems in common with other tourist resorts and it seems to act as a magnet for such activities for two reasons.
First, there is a thriving black economy in the town. There is much seasonal work available and that seems to attract one type of social security fraud. Secondly, by far the most important reason is the many hotels, guest houses, hostels and houses in multiple occupation which encourage large-scale housing benefit fraud. Blackpool, after all, has more bed space than Portugal and 2,000 properties that are what is commonly described locally as DSS hostels. That is extremely damaging for Blackpool's reputation as a tourist resort.
Blackpool seems to act as a magnet for fraudsters from all over the north of England and, unfortunately, fraud is conducted on a grand scale. As my hon. Friend the Member for Ilford, North (Mr. Bendall) said, that often results in landlords—or, in my case, mostly landladies—being defrauded. What is most disgraceful is that there is sometimes connivance by the landlords and by some employers at the two types of social security fraud.
1265 Those who make money at the expense of the town's genuine tourist trade by providing cheap, unregulated and below-standard accommodation for DSS customers are often prepared to turn a blind eye to housing benefit fraud. I hope that the Minister will accept that tightening up on fraud, especially in tourist areas and especially on housing benefit, has been and will be widely welcomed by all good, law-abiding citizens of towns such as Blackpool. They recognise that it is genuinely good for tourism, for business and ultimately for employment in those towns. It stops the drift into tattiness and seediness which is becoming a problem in so many of our leading tourist resorts.
I am delighted that the Benefits Agency especially is taking fraud in Blackpool seriously. In the year ending 31 March 1993,the Blackpool fraud sector, which covers the whole area from Lytham St. Anne's up to Knott End-on-Sea, carried out 2,158 investigations of which 914 cases resulted in a weekly benefits saving. Some 304 cases produced an instrument of payment saving and overpayment was detected in a further 304 cases. It is estimated that, because of that, there were gross savings last year of £2.5 million.
During the past couple of months, the Benefits Agency and the Department of Social Security investigations squad have launched Operation Sea Breeze. As part of that, the fraud support team investigated 1,600 claimants. Some 20 per cent. of them were found to be making false claims for housing benefit and income support. During the past few weeks, the squad conducted a dawn raid on four DSS hostels in my constituency. It found that of 70 claimants at those premises, more than half did not live there or had moved on. That is a shocking statistic. People locally were shocked by the sheer scale of fraud and it brought home to them what the scale of the problem is.
§ Mr. Sykes
Like my hon. Friend, I represent two tourist resorts, Scarborough and Whitby. We, too, have a growing problem with DSS hostels. Does my hon. Friend agree that they are the centres of crime and fraud? Does he also agree that the Department of the Environment could play its part in solving the problem by changing the use class orders so that local councils could make decisions about where the DSS hostels should be?
§ Mr. Elletson
I agree with my hon. Friend. I have no doubt that the overwhelming number of people who, unfortunately, are claiming DSS benefits and living in temporary accommodation are genuine people with genuine problems. However, there are many who are not genuine. In tourist resorts such as mine and the one that my hon. Friend represents, there are now so many of these places that they are having an extremely damaging effect on the tourist trade. As I said, there are 2,000 such places in my constituency and I am sure that my hon. Friend has similar numbers in his.
I have to say that various Departments seem to be passing the buck. The buck must stop at the Department of the Environment, which must take the issue seriously. I hope that my hon. Friend the Minister will pass our serious concern about the matter to the Department of the Environment and that he will ensure that it does something about the problem.
§ Mr. David Nicholson (Taunton)
My hon. Friend has chosen an important and worrying subject to raise in this debate. I am sure that he is aware that this phenomenon occurs not only in Blackpool or Scarborough. I fear that 1266 all over the country, claimants who go to boarding houses usually have no connection with the area in which they are temporarily residing. They come from other parts of the country and they cause crime not only in the immediate vicinity, but in the hinterland, as has happened in the south-west. There is considerable fear in the south-west that some of the crimes there are committed by people from such areas.
§ Madam Deputy Speaker
Order. The hon. Gentleman knows that he cannot intervene from a sedentary position. There is a proper way in which he can do so
§ Mr. Elletson
I fully agree with my hon. Friend the Member for Taunton (Mr. Nicholson). There is plenty of evidence which the police will, I am sure, be delighted to provide to the hon. Member for Islington, North (Mr. Corbyn). My conversations with the police in my constituency suggest that they are deeply aware of the problem. That is why they have done so much recently to investigate it.
I especially agree with my hon. Friend the Member for Taunton about the number of people coming from other areas into towns such as Taunton, Blackpool and Scarborough, often because local hoteliers advertise in places such as Scotland and Liverpool for people to come to collect their DSS benefits, to register and to live in sunny Scarborough or sunny Blackpool. That cannot be good for them or those towns because we do not have the employment infrastructure to support them. It is a serious problem and I urge my hon. Friend the Minister to take it seriously and to pass on our concern to the Department of the Environment.
I also urge my hon. Friend to continue the clampdown that he has launched, which has been so successful in Blackpool and in other areas. My hon. Friend the Member for Ribble Valley (Mr. Evans) mentioned the recent clampdown in the Fishergate area of Preston. Those activities are having a seriously good effect in such towns, as Operation Sea Breeze has had in Blackpool, and I hope that they will continue. I congratulate my hon. Friend the Minister and all those involved in them.
§ Mr. Knapman
Will my hon. Friend take the point made by our hon. Friend the Member for Taunton a little further? Genuine people with genuine claims would receive prompt service from Government agencies if there were fewer fraudulent claims.
§ Mr. Elletson
I agree absolutely. I cannot begin to estimate the time and finance involved in dealing with fraud. That must have extremely damaging consequences for those who have genuine problems. That is the whole point.
The scale of the problem nationally is alarming. In 1992–93, DSS investigators discovered that almost 250,000 people were cheating the system. The Department reckons to have saved about £500 million by stopping fraudulent claims last year. However, the Exchequer is losing about £2 billion a year through social security fraud. This year, we aim to save £1 billion through anti-fraud activities. It is vital that we concentrate on that. As my hon. Friend the Minister said, every pound lost means less for those who are in real need.
Earlier this year my right hon. Friend the Secretary of State for Social Security said that the increase in benefits 1267 that he was able to announce in extremely difficult economic circumstances was made possible largely because of the savings that had been achieved through cleaning up fraud. It is vital, therefore, that we should continue to do so.
I shall elaborate on a few of the points that have already been made about what else could be done. My hon. Friend the Member for Ilford, North suggested that we should pay more attention to minicab fraud. He was absolutely right to make that point. As he said, it is not a problem which affects London alone. It is prevalent throughout the country, certainly in my constituency and others like it. The Secretary of State and the Minister of State are absolutely right to say that we should make fraud a priority. Earlier today, the Under-Secretary suggested that the priorities should be to prevent, to detect and to deter fraud. I hope that he will look at other specific areas where I believe we could make great inroads.
First, I urge the Under-Secretary to target tourist resorts for major clampdowns. That is bound to yield real savings for him. Secondly, and in line with that, he should consider the establishment of some form of telephone hotline, particularly in tourist resorts. If he did that and reached out to the public, I think that he would find a genuine and grateful response that would provide much information and enable him to deal with the problem in tourist resorts.
That is part of a wider point about better publicity. We must convince people who are tempted to defraud the system—both tenants, when it comes to housing benefit, Landlords and employers, who may connive at this sort of fraud—that they cannot get away with it and, more importantly, that they are likely to be caught. The Department of Social Security has a good record in clearing up fraud. It has a very good story to tell, particularly in constituencies such as mine where it is cracking down hard on fraud. We must make it clearer, perhaps at the point of requests for assistance with social security, that fraudulent claims will be dealt with and are likely to end up in some form of prosecution.
§ Mr. Nigel Evans
Is my hon. Friend aware of the fraud that asylum seekers coming into this country are committing and that, as from next month, all of them will be fingerprinted, a measure which was resisted strongly by Opposition Members?
§ Mr. Elletson
I agree entirely with my hon. Friend. The scale of the problem and the amount of money that appears to be going out in fraudulent payments to those people is absolutely disgraceful and must clearly be regarded as another priority.
§ Mr. Elletson
Yes, I shall certainly give way to the hon. Gentleman. I think that we have all been looking forward to hearing from him.
§ Mr. Corbyn
Just so that the record can be put straight, Labour members on the Standing Committee that considered the Asylum and Immigration Appeals Bill opposed the fingerprinting of all potential refugees, including children—which Conservative Members supported—because there is already a perfectly adequate system for identifying asylum seekers by the issuing of a 1268 letter, stamped and embossed, which also includes a photograph. We believe that the use of fingerprinting is an attempt to criminalise people who seek asylum in this country. That is why we opposed that provision and that is why a large number of libertarian and legal sources also opposed it.
§ Mr. Elletson
I am sure that my hon. Friends and the whole House will take note of the hon. Gentleman's reminder that the Opposition opposed that provision, but I think that they will be suitably sceptical about the excuses which the hon. Gentleman gave.
§ Mr. Elletson
I suggest also that the Under-Secretary of State should toughen up on landlords and employers who are prepared to connive at social security fraud. There is a substantial amount of evidence that fraud is taking place. I do not think that landlords, in particular, should be allowed to get away with it. I know that there have been prosecutions, but stamping out fraud needs to be a major priority.
It is also important that we should work on the type of system that delivers results in combating social security fraud and ensure better co-ordination between local authorities, the DSS, the Benefits Agency and the Employment Service. It has been the key to success in a number of recent operations, particularly in Blackpool, Manchester and Westminster. The Government have introduced a programme of incentives for councils to clear up housing benefit and council tax fraud. They can attract a 100 per cent. subsidy for benefits that have been overpaid. Councils will also share in any increase in benefits that these savings achieve. That must be good news.
§ Mr. Bendall
Is my hon. Friend aware that in London, where one local authority can rehouse people in another borough, those people are supposed to register when that happens but that, more often than not, they do not, which is why councils often cannot catch up with people?
§ Mr. Elletson
Absolutely. That problem is to be found all over the country. I hope that the Minister will take note of that point, too, and will pass on the message to the Department of the Environment.
The introduction of new technology will be important in combating social security fraud. The new computer system that is to be put into operation in the 160 or so fraud areas will have a major impact.
The Under-Secretary should not hold back in dealing with the problem. I am sure that he will not. In a climate of rising public expenditure, we cannot afford to waste money. Nobody would expect us to waste £2 billion a year on fraud. The Under-Secretary was right to say that the people of this country are outraged by fraud and they expect him to become the hammer of the fraudsters. I hope that he will take the gloves off and deal with this matter with an iron fist.
§ Mr. A. Cecil Walker (Belfast, North)
We in Northern Ireland have many problems—of identity, security, lack of parliamentary democracy. There are also problems over the way in which Northern Ireland legislation is handled in this House. There is also the problem of the Anglo-Irish Agreement and the Irish Government sticking their nose in 1269 our affairs. All these problems contribute to the unrest. That unrest and instability lead to the problems that we share with the rest of the United Kingdom: serious fraud and the abuse of the social security system.
One problem that concerns us very much centres on the legislation regarding homelessness and the fraud to which it has given rise. The Housing Executive was set up by the Government to look after and administer public sector housing, and its policy of housing homeless single people has led to great problems. Single homeless people use their houses only for the receipt of their social security cheques—well known as giro drops. They do not live in their houses. Many of them still live in the family home, but they use the social security system to get their cheques delivered to the houses that they have obtained through the Housing Executive.
The Housing Executive does not care too much about that, because it gets its housing benefit money through the Social Security Agency. It is one of the biggest problems we face, but it could be overcome if the Government would grasp the nettle and make the Housing Executive much more aware of its responsibilities. We have a large waiting list for houses. The people on that waiting list are legitimate family people who have been waiting for houses for years. While this system continues, they will never be rehoused.
Another serious problem concerns the building industry in Northern Ireland. I am sure that many hon. Members are aware of the serious scam perpetrated by the IRA a few years ago, when it defrauded the Government of literally millions of pounds through false tax exemption certificates.
The Government have recently produced a consultative document to regulate the building industry in Northern Ireland. I welcome it, but it does not get to the nub of the problem, because most fraud still involves social security and the 714 tax exemption system. Much could be done under existing legislation if the present law were applied with some force and vigour.
An example of the problems in the building industry is the way in which labour is brought on to building sites throughout the Province. Casual labour is bussed in to build houses and other buildings under Government programmes. The people involved are drawing the dole, but are prepared to work for cheap rates, which causes great problems for the wages system. In many cases, the labour even comes from the Irish Republic, and the people are allowed to go there one day a week to draw their dole.
One can imagine the problems caused for the building industry and for those who wish to get legitimate work in it, but are unfortunately unable to do so. When the Government try to investigate such problems, a paramilitary influence is unfortunately often brought to bear, and can stop investigations because of fear and intimidation.
There are also problems in the private sector, such as office cleaning businesses, where people are being employed "on the double" to clean offices and other public buildings. They, too, work for cheap rates. Even in the private security sector, some people work for as little as £60 a week, which causes great consternation and is certainly not helping our economy or people who wish to work legitimately. They are the great difficulties we experience in Northern Ireland, especially when some of 1270 the people involved are also drawing unemployment benefit, thus causing problems for the whole social security system.
As hon. Members will know, many chain stores are setting up in business in Northern Ireland, and some are doing well—some would say, much better than on the mainland. The reason is that we have a lucrative black market, which invariably distorts the unemployment figures and other statistics.
My purpose is to make the Government aware of our problems and to ask them to consult the various agencies more actively to combat this scourge in our community.
§ Mr. Patrick Nicholls (Teignbridge)
I have been a Member of Parliament for 10 years. Before that, such are my curious tastes, I was an assiduous reader of Hansard. I was never aware of a major debate in which a major political party—or one which claims to be so—was content to field no spokesman.
I thought that my hon. Friend the Minister accepted the apology of the person who apparently speaks for social security matters on behalf of the Liberal Democratic party with his customary courtesy and friendliness. The Dispatch Box imposes that discipline on Ministers from time to time; luckily, those of us who are not charged with the responsibilities of office can take a more robust view.
It is extraordinary to hear the excuse that it is not possible for an hon. Member to speak to the House because the business was arranged only the week before. There have been times when I have been unable to speak in a regional debate affecting the west country for precisely that reason, but members of my party were here to speak on behalf of the people we all represent.
Clearly, one sometimes cannot tell what the business will be for the following Friday and cannot be sure that one will be here, but the idea that a political party cannot get anyone to turn up is extraordinary. Representatives of the Ulster Unionist party are here; I am sure that they find it extremely inconvenient to be here on Friday, but their party has arranged for representation.
We should remember that today the Liberal Democratic party is doubtless out on the streets of Christchurch telling the pensioners of Christchurch, whose pensions are paid from the social security budget, that they would like those pensions greatly enhanced. Liberal Democrat Members of Parliament will be telling them how outrageous it is that the Government have imposed value added tax on domestic energy, but they will not mention the fact that the idea was taken directly from the Liberal Democrats' manifesto. They will also not be telling the people of Christchurch that they were not present at a debate on social security fraud—the type of fraud which directly restricts the money avaialable to help pensioners and people who will be unduly affected by the imposition of VAT on domestic fuel.
Instead of posturing on the streets of Christchurch, the Liberal Democrats could have done something and made a contribution. They could have represented the causes and concerns of those they purport to represent, but they are conspicuous by their absence. It is quite contemptible.
Until recently, I was the Conservative majority leader on the Social Security Select Committee, an experience which I greatly valued. The Committee is chaired by the hon. Member for Birkenhead (Mr. Field), who is an 1271 extraordinary performer. He has a knowledge of social security matters which is, I think, without equal. He has a fearless way of putting over ideas which are sometimes controversial, even within his own party. He plays a major role, and anyone who has an interest in social security, or anyone who is dependent on social security, could look to the hon. Gentleman as a model of how things should be done.
What I found impressive during my time on the Select Committee was the fact that one would never hear the hon. Member for Birkenhead suggest that fraud was anything other than wrong, wicked and criminal, and should be pursued accordingly. That was always his position, and he stated it fearlessly. Sometimes, I felt that, in an attempt to achieve an intellectual consensus, other members of the Committee found not the concept but the language in which it can be expressed rather troubling. For all I know, we may in due course hear something that reflects that position. In any event, it is important that we remember that that was the tone of the Select Committee when I was a member from 1990.
It is interesting that we have today heard precisely the same attitude from Labour's spokesman. I do not say that in any carping sense. I thoroughly enjoyed the contribution speech of the hon. Member for Manchester, Withington (Mr. Bradley), and I hope that he will have gathered as much from the manner of my interventions.
Not only did I enjoy the content: I had to admire the style of delivery. The hon. Member's speech lasted 35 minutes, but I make no complaint about that. It was such a marvellous balancing act that I wondered how he would get to the end without being savaged by some of his colleagues. In the end, I detected that he was going to be savaged, but he managed to defer a mauling by what he said later in his speech. His speech was refreshing and, although it reflects the way in which these matters are dealth with in Select Committee, it is perhaps unusual to hear such a speech from the Labour Front Bench. It was welcome.
We began to see some internal tensions in the hon. Gentleman's presentation, but I realised that it would not have been appropriate to say quietly, as it were, from a sedentary position, "Cross the Floor, because I cannot tell the difference between us," because one or two things that he said finally made me feel that I could detect more of a difference between us than was readily apparent at first.
I have never understood—I say this with all the insincerity at my command—why the Labour party feels it necessary in debates on social security fraud to say at once, "What about crime in the big City?" I do not understand that—I say that with a straight face because I have been in the House for about 10 years—because it seems that crime is simply indivisible. Crime is wicked; wickedness should be punished, and criminals should be pursued and brought before the courts. That strikes me as so obvious that normally it should not need to be said.
If we were to have a debate on crime in the City—I would welcome such a debate and would take part—I cannot imagine making a contribution, either in a speech or from a sedentary position, let alone from the Dispatch Box, saying, "Yes, but what about social security fraud?" Although I do not understand it, I can speculate for a moment about what is going on.
1272 We have the revisionist tendency at the Dispatch Box—trying to square circles and make some sense of why traditional supporters have not been representing them for about a decade. On the other hand, they have their natural consitituencies represented by the serried ranks behind them which take a different view. That different view is much more primitive and goes a bit like this: crime in the City is committed by upper-class toffs who are absolutely dripping in money, whereas fraud in social security matters is committed by poor people who must defraud the system to live. That is the underlying animus which drives the hon. Member for Islington, North (Mr. Corbyn). The fact that that constituency must be dealt with by the Labour Front Bench means that we must pay lip service to that concept today.
One can have a bit of merriment at the difficulty of Labour Front-Bench spokesmen when they try to square the circle, but there is a much more serious point to be made. I accept at once that it is not intended, but we should consider for a moment how profoundly insulting it is to people who depend on social security benefits—we hope that it is for a relatively short period, but perhaps it is for their whole lives—to hear fraud talked about in these terms: "It is committed by people at the lower end of the market because they are so poor that they have no choice."
We will not find that from the sort of socialists represented by the Hampstead and Islington loveys. But what we will find among the working poor, or even sometimes the non-working poor, is that they are every bit as hard on crime and in favour of criminals being punished as those of us who earn vastly more. If we talked to those who represent not the flash showbiz end of support for the Labour party but the traditional bedrock working-class adherence, we would hear a line that is so stern that it makes me appear liberal and, frankly, that is remarkable. The idea that we must simply plant the idea that upper-class crime is reprehensible and lower-class crime is in some ways justifiable is not only wrong, daft and outdated but profoundly insulting to those for whose benefit that statement is apparently made.
When we talk about the effects of fraud and the money that is forgone by social security fraud, we are not talking about someone who made a mistake in filling out a form or who perhaps, because of the pressures he or she was under, made a false declaration on an isolated occasion; we are talking about large-scale sophisticated wickedness. That is what my hon. Friend the Under-Secretary of State was talking about when he referred to the latest fraud investigation.
We are talking about people of real talent who will divert their considerable energies to set up structures and complexities, which must require a lot of work. We are talking about systematically defrauding the system on a grand scale. We are not talking about an individual claimant who may be under a degree of pressure. We are talking about systematic, organised crime that needs to be stamped on—it can never be stamped out, but it certainly needs to be stamped on. Anyone who has any doubt that fraud is taking place on a grand scale is looking in an entirely different direction from that in which the rest of the world is looking.
If we look at the evidence produced by my hon. Friend the Under-Secretary and some of the press campaigns and investigative journalism that have taken place, to which I shall refer in a moment, or think about the anecdotes that we hear—what our friends and constituents tell us—two 1273 things are clear: first, fraud happens on a grand scale and, secondly, it is unquantifiable and one cannot begin to tell what the savings might be. The hon. Member for Withington, who led with a skilful balancing act—of course, he expressed complete support for everything that the Government are doing—did not say "but"; there were "howevers", "furthermores" and swallowed phrases. I said "but", but the hon. Gentleman would not do it, which was rather unsporting. He said everything else but "but". To "put it in context"—a lovely phrase—he decided to slip in the statement that the amounts are relatively tiny. I do not know—a billion here and a billion there these days and we are beginning to talk about a week or two of the public sector deficit, so every little billion helps.
There is a slightly more serious point at stake. There must be something profoundly disillusioning for working people who are paying tax on a low income—although the rate has gone down greatly under the Government, it still represents a fair chunk of their income—and it goes against the grain when they know that in the house, the bedsit or the street next door there are people who do not get up in the morning who could and who are netting not that much less than they are. That is profoundly disillusioning and corrosive.
There is nothing worse socially than making people feel humiliated by working hard to earn a low wage when they know that there are more dishonest ways of earning about the same amount. Even if the amounts are small—even much smaller than I suspect they are—we owe it to the working people and, indeed, working poor people to ensure that, as far as we can in an imperfect world, every penny that is spent on social security is spent as intended.
Under the traditional demonology that usually characterises debates such as this—I accept that it has not done so today except in an undercurrent—the feeling has often been that we should face the fact that it is the rich who pay the taxes and they can afford to pay a bit. It is incredible that, in the past, such debates have taken place almost as though the way in which we judge a social security system is by measuring not the amount that reaches the people that it was meant to reach but the amount that was spent, squandered or raised. There are simply not sufficient rich people to provide in any abundance the money to fund something as vast as a social security system.
About 89 per cent. of the revenue raised in income tax is paid by basic rate taxpayers. There are simply not enough rich people, even if we confiscated all their money, to make more than a drop in the ocean compared with the total tax take. The fact is that social security payments are paid for by basic rate taxpayers.
In this debate, there has been a feeling among Labour Members that in some way the issue is all about the Government and how much money they give to people on social security. Perhaps it needs to be said, even in these revisionist times and subject to a speech that I am looking forward to hearing in a moment—
§ Mr. Nicholls
I am grateful to my hon. Friend for saying that I am staying only to hear the hon. Member for Islington, North. I take that personally—I am upset about it.
1274 There is a serious point to be made. There simply is not sufficient money among the rich to be able to fund the social security budget, so we need to ensure that we target effectively.
There has not been much talk today about the sorts of benefits that can be subject to specific examples of fraud, but a point that constituents have raised in letters to me needs to be made: some people on invalidity benefit are worried that in some way the debate about invalidity benefit is directed at them. Obviously, it is not, but the figures tell a particular story. Apparently, the number of invalids has increased from 700,000 to almost 1.5 million over 10 years; that figure is incredible. If so many people are sick, that would be such an important matter that even the Labour party would not have missed the opportunity to exploit it. Those figures cannot be right.
§ Mr. Bendall
Does my hon. Friend agree that those figures are totally contrary to all the health reports which state that people's health is improving?
§ Mr. Nicholls
That is right.
Some other factor is involved, which we cannot measure without further information, because it is obvious that some of those in receipt of benefit are not those for whom it was designed.
My hon. Friend the Minister has already spoken about the planned reform of the benefit system, but I hope that when he replies to the debate he will emphasise that we are not talking about chasing those people who should, rightly, claim benefit; we are trying to ensure that only those who are entitled should claim. I have received several letters from constituents who are worried that we are talking about an arbitary cut in benefits. We are not. We are trying to direct payments towards those who should receive them.
I thought that we should have heard more today, and perhaps we will, about new age travellers. I applaud the steps that the Government have taken in recent years to deal with the menace of supporting alternative life styles on the social security system when the system was not designed for that purpose. If a person is claiming income support in normal circumstances, he should be available for work. That is, of course, a passive test and we now know that it is relatively easy to avoid it. That person should also be actively seeking work. Obviously, one should do both. Two years ago, many of my constituents were outraged at the idea of bus loads of social security clerks being sent out to camp sites to facilitate the payment of benefits to people who, by any stretch of the imagination, did not satisfy those two tests.
Such abuse no longer takes place, but many of my constituents wonder how it is possible that people who have no intention of doing anything approaching a day's work are able to support their life style. They believe that there is still too much laxity in some quarters in ensuring that social security payments are applied properly. I hope that my hon. Friend the Minister will say something about that later.
The fundamental point is that the welfare state was not designed as a mechanism for supporting those who regard themselves as being entirely outside society. The welfare state is a mechanism for supporting people in society who have fallen on hard times. Society can be broad and encompass a huge range of political ideas. It encompasses comfortably the position that I adopt in the political 1275 firmament and that adopted by the hon. Member for Islington, North, to whose contribution we look forward. Some new age travellers whom I have met, however, are so far removed from the sense of community and from those who are entitled to rely on the welfare state that they are unable to tell the difference, politically, between the hon. Gentleman and me. That is distressing for both of us.
In no sense can the social security system and the welfare state be considered suitable mechanisms for supporting people whose life styles are so vastly removed from what society as a whole judges to be acceptable.
There is nothing wrong in adopting an alternative life style. There is nothing wrong in people saying that the apparatus of the civilised society, demoracy, the Westminster model and the rest is not for them. What is not acceptable, however, in any circumstances, is for people who have made that decision to expect that their activities should be funded by those whom they hold in complete contempt.
It has been said by Ministers and by Conservative Back Benchers that the key is to ensure that the funds get through to those who are entitled to them. The speech by the hon. Member for Withington was interesting and of a different tone from that adopted by many in the Labour party. I suspect, however, that there are still many in the Labour movement who would suggest that the aims and intentions of the social security review are not what they seem. It is worth while emphasising again what my right hon. Friend the Secretary of State said in a recent debate:What we want is a better system which ensures that the most vulnerable people in society are protected and that all of us have the means to cope with the needs and variations of life. But to do that we must make sure that the benefits system is affordable. It cannot indefinitely outstrip the economic means that the country has to pay for it. If it did so, it would become unsustainable.My right hon. Friend's conclusion sums up the whole debate, because he said:That would be the greatest betrayal of those in need and damage the economy."—[Official Report, 7 June 1993; Vol. 226, c. 6.]There is no Government who can pay out the money to those on benefit, just the taxpayer. We must do our duty by the taxpayer and those who need to be maintained by the system. We must therefore take the social security review seriously.
We must ponder on the fact that the Liberals could not even be bothered to turn up for the debate. We must hope—I do not have a great deal of it—that what we have heard from the Opposition spokesman, the hon. Member for Withington, in his new-model, revisionist speech, represents the views of the serried ranks on the Opposition Benches. But we shall see.
§ Mr. Jeremy Corbyn (Islington, North)
I have heard many speeches from the hon. Member for Teignbridge (Mr. Nicholls), but his performance today must rank as one of his greatest and most idiotic.
The hon. Gentleman set up a huge Aunt Sally and spent 20 minutes trying to knock it down. At the end of the speech, he let the cat out of the bag, however, when he revealed that the proposed reform is what we all know it 1276 to be about: it is a huge smokescreen to divert attention from the real intentions of the Conservative party to weaken, if not destroy, the social security system.
The hon. Gentleman tried to foster the idea that everyone on the Opposition Benches, and certainly Labour Members—the Liberals are not here, so we do not know their views—supports and condones fraud. He knows perfectly well that no Opposition Member does that. He also knows perfectly well that the major scandals of housing benefit fraud that have been uncovered in London in the past few weeks have been uncovered, yes, by Lambeth and Lewisham councils' internal investigations. The pressure from Lambeth, Lewisham, Croydon and Waltham Forest—not all Labour authorities—has led to the establishment of a London-wide investigation team headed by the treasurers of all the London boroughs, irrespective of party. They are determined to get to the bottom of the massive abuse of housing benefit fraud by landlords, claimants and all sorts of people.
The hon. Gentleman should remember that, in the early 1980s, many people expressed concern when his Government proposed the transfer of payment of housing benefit to local authorities. At that time, the Minister and I were members of the London borough of Haringey. I do not know what view the Minister took of that decision, but Haringey said that it was not a good idea for local authorities to take over the administration of that benefit. Haringey could envisage the precise problem that would arise without a unified system of benefit payment. As a result of the change, London had 32 different systems of administration of housing benefit. That was a perfect opening for the fraudulent abuse of the housing benefit system. That is precisely what happened.
The hon. Gentleman should at least recognise that London Labour authorities have attempted to get to the bottom of the abominable housing benefit fraud perpetrated by landlords. To pick up on what the hon. Member for Ilford, North (Mr. Bendall) said earlier, I also believe that that fraud has been encouraged by the deregulation of rents. That has meant that private sector rents have sky-rocketed and that, as a result, the amount paid out in housing benefit has increased.
I favour a return to a system of rent regulation. I do not see why millions should be paid into the pockets of private sector landlords, bed-and-breakfast millionaires, who have made a fortune out of the Government's refusal to invest in a housing building programme and an affordable rents programme. It is the Government who have lined the pockets of private sector landlords.
I am not in favour of fraud. The hon. Member for Teignbridge and I both sat on the Social Security Select Committee. He has tried to create illusions about what some Labour Members are supposed to have said, but he knows that his suggestions resemble nothing that we said.
En passant—as they say—I find it a bit rich that Conservative Members talk about fraud and dishonesty when all of them, except the Minister, has at least one paid job, if not 20, as well as being a Member of Parliament. That is immoral. People are elected to the House to be full-time Members of Parliament, not to take secondary incomes on behalf of private companies.
§ Mr. Nicholls
Will the hon. Gentleman look around him for a moment and speculate about where all his hon. Friends are?
§ Mr. Corbyn
I have honestly not the slightest idea where my hon. Friends are. I imagine that the majority are in their constituencies dealing with the problems occasioned partly by the poverty that many people suffer since the Conservative party came to office.
§ Mr. Richard Spring (Bury St. Edmunds)
The hon. Gentleman referred to rent controls. In New York, the middle class—the tax base—has been driven out, leaving only a limited number of rich people supporting a considerable number of people living in subsidised housing. That has resulted in the diminution of living standards for everyone concerned, distortion in the housing market and a housing policy that no one would sensibly wish to emulate.
§ Mr. Corbyn
It is a measure of how far the Conservative party has been driven to the right that Conservative Members now quote New York as a dangerous example of a step towards socialism because of its rent control system.
I favour rent controls because rents charged, particularly in London, are astronomical. Private sector tenants come to my advice surgery and tell me that they pay £150 a week for one or two-bedroomed flats, which are often in bad condition, and they cannot get them repaired. Many pay far higher rents. Is it right that landlords should make so much money from rent? The Government lifted rent controls and said that housing benefit levels should be set by the market. A system of rent controls would make more affordable accommodation available and people would not have to spend such a huge proportion of their income on rent.
The Conservative party is trying to increase council and housing association rents.
§ Mr. Bendall
If we bring back rent controls in the private sector, available properties will dry up. The hon. Gentleman is right to say that it is a matter of supply and demand. As I said in my speech, if local authorities or Governments limited the amount that they paid on rents, it would bring rents down.
§ Mr. Corbyn
The cash limiting route, which the hon. Member for Ilford, North suggests, would be even worse. It would be as bad as the social fund, writ large. Under the social fund, people must be lucky enough to have their application accepted in the first 10 days of the month. They might then receive a loan, but will be unlikely to receive a grant. If they apply for a social fund payment towards the end of the month, they will have no chance and will go to the bottom of the queue for several months thereafter. Women who are victims of domestic violence must go into hostels and cannot be rehoused because the social fund cannot pay out for the basic necessities of life. That is injustice and, as my hon. Friend the Member for Manchester, Withington (Mr. Bradley) said, that is a fraud against people who have paid tax and national insurance and are looking for just one job, unlike Conservative Members who hold dozens of jobs.
§ Mr. Bendall
I was arguing that for one-bedroomed properties in a certain geographical area, the rent that one can pay should be limited. That rent could be £80 or £90 a week. A two-bedroomed flat could cost £100 a week and a three-bedroomed house could cost £120 a week. You have limits and you control them in geographical areas. Rents in parts of the north are much cheaper than in 1278 London. Landlords will still have a fair return for their money but, as you rightly say, people will not have to pay £150 a week for one bedroom.
§ Madam Deputy Speaker
Order. The hon. Gentleman inadvertently used the wrong expression. All remarks should be addressed to the Chair. Clearly, his remark was intended not for me but for the hon. Member for Islington, North (Mr. Corbyn).
§ Mr. Corbyn
No one was suggesting for a moment, Madam Deputy Speaker, that you were trying to rent out a flat for £150 a week—[Interruption.] We are not allowed to discuss that possibility, but I am sure that you are not.
Conservative Members do not agree that we should restore rent controls. They have encouraged a free market economy and created bed-and-breakfast millionaires, who are making a great deal of money from the social security system. I should prefer more money to be put into capital investment programmes so that all the out-of-work building workers could be given something useful to do, such as building houses for the homeless. That would be a sensible way to approach the issue.
No one condones fraud and I was surprised that the hon. Member for Teignbridge did not mention the serious fraud in Westminster city council. First, it sold its cemeteries for 5p and then it used £15 million of public money to buy them back. An investigation is now being carried out into the council's housing department, resulting in the office of the council's Conservative leader being raided by the chief executive to provide papers for the Director of Public Prosecutions' investigation into the administration of Westminster city council.
I hope that Conservative Members will also condemn the sale of those cemeteries and the unfortunate circumstances that followed in which Westminster residents were expected to pay £15 million to get back something that belonged to them in the first place. By the way, no one was surcharged for that.
§ Mr. Nicholls
I see no need to distinguish between crime committed by one person or another, whatever his or her political view. Real opposition to crime should be indivisible. I am grateful to the hon. Gentleman for playing into my hands because he is an honest and honourable man. Every time he finds himself forced to condemn crime among people whom he regards as socially unacceptable bed-and-breakfast millionaires, he tries to justify it by introducing a political dimension. The trouble with the hon. Gentleman is that his mind is set somewhere in Russia in 1880.
§ Mr. Corbyn
The hon. Gentleman's knowledge of Russian history is slightly awry. Peter Kropotkin had not even written "The Price of Bread" in 1880, which was long before the Bolshevik revolution of 1917. Nevertheless, this is not a debate about Russian history or the fate of the Soviet Union.
I hope that the hon. Gentleman condemns what has happened in Westminster city council. I hope that he will condemn Conservative councillors obstructing that inquiry and the shredding of documents before the investigation officers arrived at the city hall to look at documents involving that council's housing policy.
§ Mr. Nicholls
I shall pass no comment on matters of which I have no knowledge but which sound as though they are sub judice. Will the hon. Gentleman consider 1279 what impression is made on people outside when they hear him talk about crime and justify it by referring to Conservative crime? That is a ludicrous position to adopt, although it is consistent with the hon. Gentleman's approach to such matters.
Crime and the need to condemn it should be indivisible. The hon. Gentleman does neither himself nor his constituents any favours by trying to justify crime in party political terms. As he knows, 1880 was when his ludicrous ideas were being formed.
§ Mr. Corbyn
The hon. Gentleman's knowledge of history is even weaker than I had thought. Socialist ideas started long before 1880, indeed, before 1780—perhaps the hon. Gentleman will spend some time in the recess doing some reading, as it might help him—
§ Madam Deputy Speaker
Order. Would the hon. Gentleman return to the subject of the main debate on social security fraud?
§ Mr. Corbyn
I do not for a moment condemn the hon. Member for Teignbridge for being politically motivated in his comments. I am sure that nothing could be further from his mind.
The housing benefit fraud, which has gone on in London and elsewhere, is absolutely appalling. It is being dealt with by the actions of local authority councillors and officers who have got together to do so. Nobody condones such fraud, but some credit should be given to those honest local authority officials who have attempted to get to the bottom of the fraud.
As I recall, the Government came to office on a programme designed to get rid of quangos and to ensure that things were better run and there was more accountability. Many jokes used to be made about the former Prime Minister, Jim Callaghan, and his predilection for appointing people to the boards of quangos. We heard much about that in the 1979 election campaign, but there are now many more quangos and far less accountability in our society and far more money is paid directly by central Government to unaccountable organisations.
I am not suggesting that housing associations are intrinsically fraudulant or wrong, but there is much less accountability with respect to the money paid to housing associations to build than there is with respect to the money paid to local authorities to build and administer housing. The same applies to national health service trusts, which are not as accountable as direct health authorities. I could continue with more other examples.
If we are to achieve a more honest society, we must set good examples. The Conservative party and some of the gutter press must set a better example. They should pursue City fraud as assiduously as social security fraud—
§ Mr. Corbyn
The hon. Gentleman says, "Ah!", but what I am saying is relevant. We must investigate British companies that deliberately site their head offices in tax havens in order to avoid paying tax in this country. The hon. Gentleman knows what the Select Committee on Social Security, which was investigating the fraud involved in the Maxwell pension fund, has been discussing. There must be accountability in our society. One of the causes of 1280 the Maxwell pension fraud was the lack of accountability in the way in which the pension fund was run. The same is true of almost every pension fund in which there is a lack of democracy.
We live in a society in which, increasingly, many people are extremely poor and are in danger of losing their benefits. The Government—initially led by the then Prime Minister and the chair of the Conservative party in 1985—are increasingly targeting benefits. None of us condones fraud, but I believe that the Government and many Conservative Members promote such discussions when they know full well that the problem of housing benefit fraud is being addressed by local authorities. In doing so, they are motivated by the fact that such a discussion will divert attention away from their real agenda of cutting the social security bill, targeting benefits and reducing the level of payments to people in desperate need.
I spent yesterday evening visiting young people at the Centrepoint hostel for the homeless in London. Those young people are homeless for all sorts of reasons—some have run away from home, others have been thrown out of home, and many of them have been terribly abused and mistreated. They explained their problems when trying to obtain the benefits to which they are entitled. At my constituency surgery this evening in Finsbury Park, I am likely to be visited by many people who cannot obtain housing benefit, a social fund loan, income support or a pension. Those people live in desperate poverty and have to borrow off their friends and neighbours to survive until next week, which is an indictment of our society.
When the social security legislation was pushed through the House in 1986, one of the key issues was that the Department of Social Security would no longer be obliged to give advice and information to everyone about their right to claim and their eligibility for benefit. That is why many benefits are not taken up in some districts. The advice is simply not forthcoming and the voluntary agencies are so strapped for cash that they are unable to give advice; some of them have had to close down altogether. There is something deeply wrong in a society in which young people, pensioners and those living in desperate poverty who are entitled to benefit cannot obtain it. We must look at both sides of the coin. We must condemn fraud, but also condemn a system that is incapable of paying people who are desperately in need in order to alleviate their poverty.
§ 12.4 pm
§ Lady Olga Maitland (Sutton and Cheam)
We have covered a tremendous amount of ground this morning, but I am not sure that all the contributions have been meaningful, particularly those from the Opposition. I join my hon. Friends in saying that it is remarkable that, for a debate on a subject on which there is so much national concern, only two Labour Members are present and there is no one in the Chamber to represent other parties, including the Liberal party. That tells us something about the Opposition's commitment to social security fraud, about which every man and woman feels deeply offended.
I was even more depressed by the speech of the hon. Member for Islington, North (Mr. Corbyn) who seemed to be selective in his condemnation. He seemed to spend more time worrying about tax evasion and other issues that are totally unconnected with the subject of today's debate. He 1281 exploited political correctness and appeared to suggest that a good, honest, working-class man was incapable of committing fraud, whereas landlords were all villains.
§ Lady Olga Maitland
That was the clear implication of the hon. Gentleman's speech. As is said so often by Conservative Members, crime is crime, and must be condemned on that basis.
When I listened to the speech of the hon. Member for Manchester, Withington (Mr. Bradley), I found myself scratching around to find signs of his commitment to stamping out social security fraud. In his 40-minute speech, he made only scant mention of that subject. He mentioned other issues such as entitlements arid tax evasion.
I take heart from the words of the words of the hon. Member for Sheffield, Brightside (Mr. Blunkett), who seems to have a genuine commitment. He made a statement to The Guardian which was published in January:It is the Labour party that is seen as in favour of mollycoddling people. We have to be tough with ourselves and ask why that has happened. We have to convince people that we are not a tax and spend party.I congratulate him on making it clear that it is time to look at social security fraud and people who claim money which is not theirs by right.
I congratulate the Government on their genuine commitment to stamping out social security fraud, and on the many measures that they have taken to do so. The world seems to be divided into two categories: workers and shirkers. We appear to have become a nation of cheats who rob the needy. On average, every working person pays £13 every working day to support the jobless, the elderly, children, the sick and the disabled, but last year alone, a mind-boggling £500 million was creamed off—stolen by fraudsters. Some of them are petty criminals; some have a misplaced belief that one small lie does not matter. Others form themselves into well-organised gangs—as happened in the case of the counterfeit books in Brixton, described in the papers today. Those books had a face value of £35 million.
It is deeply disturbing to learn that there appears to have been an Irish nationalist connection with the case in Brixton. It is also disheartening to realise that, for every pound snatched from a needy person, someone who is desperate, frail or vulnerable loses—the money has gone to line the pockets of thieves and cheats who are greedy for easy money.
Cheating the welfare state has been considered fair game, the acceptable face of fraud. Nowadays, the friends and relatives of cheats do not seem as shocked as they used to be—until the day comes when they want to claim benefits themselves, only to discover that the money has already been stolen from them. The cost of social security theft is reckoned to be the equivalent of a penny on income tax.
The time has come to put an end to this so-called national sport. Stealing from benefits agencies is the same as stealing from one's neighbour: the money all comes from the same source. The only difference is that the seemingly anonymous state benefits agencies, funded by the taxpayer, have now had enough.
The public are fighting these shabby people now, which is why I offer my admiration for the Government's 1282 determination to stamp out this pernicious scam and for their decision to allocate an additional £10 million to allow the Benefits Agency to deploy more manpower and improved computers, with more cross-referencing. This will help the agency to target money better and to save next year about £1 billion—money which can then be given to the people who deserve it. It is important to remember the vulnerable, not to defend these cheats, a practice which the Labour party, at least by implication, seems to go in for.
It is time to make it abundantly clear that the law will be enforced. People who think that they have been getting away with fraud for years are going to find it infinitely more difficult to do so in future.
My constituency of Sutton and Cheam—agreeable, pleasant and leafy—attracted some fame the other day when I publicly drew attention to the problems of persistent juvenile crime—a problem which is reflected nationwide. In the same way, we are also vulnerable to cheats who put in fraudulent claims. I am often left speechless by the shirkers who come to my surgery and blatantly say that they cannot possibly work.
The other day, a barman told me that he was not working; he was claiming income support. When I asked why he did not find another job in a bar, he told me that he was very selective about the kind of bar in which he wanted to work, and that he was quite happy to wait and to live on a minimal amount of money. How dare he say that? He is a shirker. Perhaps we should follow the Italian example and put an end to giving such people support when they have no intention of seeking work.
I also find it irritating beyond belief when a youngster aged 21 or so tells me that he is not working. I ask him whether he has any plans to work. He says that he cannot find any. I now have an answer for such people. I produce magazines and lists of employment agencies. I offer them the Evening Standard, and I tell them not to come back to see me for at least two weeks and then to tell me how they have got on.
I know that these youngsters can find work. The trouble is that they are selective and lazy and will not do menial labour, plenty of which is available. When my son comes down from university, he picks up two jobs in one day because he is prepared to do dirty work. I do not see why the young should consider themselves above what I call, good honest toil. As far as I can see, it is theft if they claim income support.
As for those who claim sickness benefit, I find it astonishing that people who seem perfectly healthy and capable of working at least in an office, if not in a strenuous job, should tell me, as a man did recently, "My wife is going out to work and I am claiming income support." I should like to know why that man is not going to work. The time has come to be much more rigorous—
§ Mr. Bradley
Is the hon. Lady suggesting that GPs are falsely giving sick notes to sickness benefits claimants?
§ Lady Olga Maitland
I am suggesting that GPs are perhaps not careful enough when assessing people's health. Sometimes they become too sympathetic to a person's social circumstances and agree to give him a sick note. GPs need to be given clear guidelines on what is expected of them.
In my constituency, a tremendous amount of good work is being done to uncover fraudulent claims. North Surrey fraud office, covering an area from Croydon all the 1283 way to Mitcham and Morden, Wimbledon and Sutton, has saved £6.2 million that would otherwise have been stolen last year. A sub-office dealing with unemployment benefit saves about £6,000 a month by its vigilance. In Sutton, we have two full-time investigators who, last year, prevented the theft of £500,000. With a staff in north Surrey of 19, admittedly costing £500,000 a year, I reckon that the investment has been well worth it, given the size of the savings.
Sutton does not have quite the same problems as some other areas, So I should like to turn my attention to Haringey, whose fraud squad is hard at work. It caught up with nearly £1 million-worth of fraudulent claims last year.
I am reminded of the occasion two years ago when I spent a week in a hostel for the homeless. I was doing a test case for a radio programme about living on income support—
§ Lady Olga Maitland
Apart from one other person in that bed-and-breakfast accommodation, the 29 residents were all immigrants—from Turkey, Bangladesh, west Africa and the West Indies. I am not saying that they were frauds; I do say that they came to this country because they knew that we would give them the most generous income support and a life style that they could not enjoy in their own countries. We should give that some attention, too.
I congratulate the Government on encouraging and giving incentives to local authorities to investigate fraudulent claims. The scheme is working well. Sutton has three full-time officers in the field, and the benefits of that are clear. Their experiences would be laughable if it were not for the tragedy of the mockery of the system. Moonlighting is rife and is almost seen as a game of touch and get away. The cheats are almost blatant in their efforts to claim money.
Last week, I was told about a young man who drew up outside our local unemployment office in his work van which was emblazoned with the company name. He shot in, signed up and tried to shoot out. Another man on his way to work turned up in a works van with a ladder on top. More extraordinarily, a taxi driver parked his cab outside the benefits office and went in to sign on while his paying passenger waited in the back seat. In another case, although not in Sutton, a man answered a call on his mobile phone from his office while trying to claim.
Our fraud investigators have a sharp instinct for cheats, and can sense when things are not right. Is a jobless man a little bit too tidy and smart? Could he have just walked in from his office? How energetic and interested is he in seeking work? Is he available for interviews, and how many telephone calls has he made? Has he written many letters? The officers tell me that the busy man suddenly signs himself off the dole when requested to come for an interview when the appointment might conflict with his job. As for the requirement to attend a mandatory week's course, the long-term unemployed person suddenly discovers that he has found work after all.
It is also important to visit employers who take on itinerant casual labour. Such employers engage staff at unsociable hours which suit night security workers and minicab drivers, people who can still clock into the 1284 unemployment office during the day. Minicabs should be licensed in the same way as black cabs, so that their operators are exposed to the same disciplines. I congratulate my hon. Friend the Member for Ilford, North (Mr. Bendall) on graphically demonstrating the way in which they have abused the system.
Some people who try to claim support from the Benefits Agency should not do so at all. They are well funded, with money in the bank or the building society, although sometimes there is a misunderstanding about what the money is for. I was told this week that it is not unusual for someone to say, "But that is my funeral money. Surely you cannot take that away from me." It should be carefully explained to people seeking income support that we are not trying to run them out of business or deprive them of their funeral money, but there is a difference between having money for one's funeral and claiming money to which one is not entitled.
We must crack down on scroungers, and especially on those who apply in several names. My hon. Friend the Member for Blackpool, North (Mr. Elletson), who is not in the Chamber at the moment, spoke about people who use fictitious names such as Count Dracula, Jack O'Nory, Donald Duck or Gary Lineker when claiming benefit.
I congratulate my right hon. Friend the previous Secretary of State for Employment on her push to investigate alleged cheating. As a result, 50,000 people suddenly and mysteriously withdrew their claims. She uncovered a fraud in which people working abroad claimed unemployment benefit in Britain. Investigators discovered that groups of workers, mainly in construction, had been hired to work abroad and given time off every 13 weeks to return to Britain to sign on the dole and receieve unemployment benefit. I regret that that is possible if a claimant lives more than six miles from a benefit office.
It is disgraceful that employers have colluded in this way and turned a blind eye to employees who are on the dole. They have some responsibility, because they rely on the fact that people are claiming money in order to pay them lower wages. A London magazine distribution company had 1,000 false names on its books, ranging from William Shakespeare to William Caxton, Mickey Mouse and Nick Faldo. That went on for five years, but I am delighted to say that it ended with a conviction for false claims.
When I first entered Fleet street, some moons ago, there was a definite scam in the old-style printing industry. Printers clocked in using fictitious names, so that they could double-charge on social security. Fraud is rampant in the garment sweatshop industry. A series of visits recently resulted in 190 people withdrawing claims, with a saving to the Government of £330,000.
An investigation of part-time workers in the packaging, land work and perfume industries in the east midlands led to 303 people signing off the unemployment register. In the south-east, 733 people left the register, saving the state £670,000. In Scotland, more than £5 million was saved when investigations resulted in more than 7,000 people withdrawing claims.
It is appropriate that my hon. Friends, but not Opposition Members, should pay attention to new age travellers. It is offensive to see the way in which those people trample across our country and have the nerve to lay down the law according to their lights. The party is over for these hippies. From now on, they will not be able to get dole money in the free and easy way that they have 1285 obtained it in the past. They never show any intention of looking for work. The war on those dole cheats reached new heights when investigators learned that £55 million in benefits should not have been handed out in 1991. It was discovered that one in five of the 230,000 claimants was a cheat.
The challenge in dealing with cunning cheats who use a variety of well-tried and up-to-date rewarding techniques is depressing. Many claimants know the complex rules by heart, and are well versed in how to get round them. One rule that is exploited to the full is that unemployed people are entitled to seek work in their own field first, even if it is known that work is unlikely to become available. That gives the more imaginative claimant unlimited scope to come up with occupations that are disappearing or in which there are few readily available jobs.
On a broader level, I have found when talking to people who are on income support for genuine reasons that I have had to point out to them that, if they are in a certain job and the work is finished, they should look for work in another sector. There tends to be a rather blinkered approach. People must understand that, in their lifespans, they may have to change their careers two or three times. Mobility and flexibility have to be encouraged.
Housing benefit abuse has been well documented by Conservative Members. It is a scandal. In Sutton, we are exposed to the same problems of collusion between landlords and their tenants, as elsewhere. We hear of the landlord raising the rent, the tenant claiming the increased rent and the two splitting the profit. Sometimes, tenants make claims on fictitious addresses, arranging for money to be sent to other addresses before being sent on to them. I welcome the suggestion of a national cross-referencing index on multiple housing benefit claims to ensure that it is impossible for those cheats to get away with it.
To multiple addresses can be added multiple names. In the most bizzare case that I have heard of, a man had 37 different identities. That particularly happens with immigrants. It may be politically incorrect to touch on this, but I will identify their origins. They are largely west Africans, with highly complicated names. The trend in that section of the community should not be left unnoted.
Our European friends are not much better. In the 1950s and 1960s, Italian immigrants flocked to this country, eager to work, to win a better life style and to contribute, and they succeeded. The country's presentation changed with the rise in the number of Italian restaurants, pizza bars and similar establishments, of which Sutton has an excellent supply. However, the situation has now changed.
The Sunday Express ran a front page headline saying:Crackdown on Euro Spongers—Lilley moves to stop Britain being a soft touch on handouts.I congratulate my right hon. Friend on that, and I congratulate a campaigning newspaper on doing a worthwhile task. It certainly had a case to report, and that case has been taken up in other newspapers.
For instance, the Daily Mail ran a story saying:Rocco is Italian, idle and a heroin addict and you pay for him to live in comfort.Rocco is aged 22, and his story is depressing. He came to this country. He knows that we are a soft touch. He picks up £67 a fortnight, and in addition, £90 a week for a shared room in a smartly decorated King's Cross bed-and-breakfast hotel—a useful sum. I can only describe him as 1286 a permanent loafer and a scrounger, but at least he gives the British welfare system high praise because it is easy to tap into. He says:In Italy, you would never get money if you haven't worked, and you would never get a flat that's paid for.He simply cannot believe his luck. Furthermore, as a citizen from a fellow European Community member country, he is entitled to all the free medical treatment he needs, and he is a drug addict. He has access to the best possible NHS treatment, free housing, income support and the occasional crisis loans. Now, he teaches others how to milk the system.
Another Italian, Marco Redi, aged 26, has spent the past seven years sponging off our system claiming money from our social security system. He is a drug addict and has HIV and is getting the best possible treatment. He is blatant about his idleness and lack of willingness to seek work. He says:In Italy you get minimal help but here, it's very nice—I'm staying.That is ironic, given that unemployed British nationals living in Germany, France and Spain get no financial help. Their insurance-based systems do not pay out unless the claimant has been in work. In Italy, a Briton down on his luck gets only 20 per cent. of his salary, for just six months—and that is only if he can prove that he has been in work. No proof, no dole.
In short, thousands of foreigners have been coming to Britain and claiming millions of pounds of benefits. Therefore, I welcome the Government's announcement this week that they intend to close that loophole in the income support rules and bring to an end the scam from which 10,000 have benefited, to the tune of £17 million.
Another area of abuse concerns single-parent families. People seem to be nervous of identifying that social grouping. However, whether or not it is politically correct, I do not hesitate to do so, because single-parent families, like everyone else, have responsibilities to society. They are not immune from and above the law. They must abide by the rules, and should not be given a free hand to cheat and to take money that is not theirs to claim.
One example of abuse is a single mother in her housing-benefit-subsidised council flat who allows her boy friend, who may be in work, to move in with her. Technically, she is no longer single, and she should not claim the advantageous benefits available to single parents.
Often, the cheat begins unwittingly. The boy friend spends the odd night in her flat, then weekends, then he is there more often than not, and then he becomes a permanent fixture and part of the household. It is right that we should rigorously ensure that those women who are backed up by a partner are brought to book if they continue to claim benefits to which they are not entitled.
§ Mr. Bradley
Can the hon. Lady tell the House the precise number of single parents in the position that she described? Precisely how many claimants is she talking about, and what is her source for that statistic?
§ Lady Olga Maitland
I am unable, at this moment, to give the precise figures, but I shall provide the hon. Gentleman with them at a later date. The background to what I am describing has come from my local Benefits Agency office.
Another abuse of the system is fictitious desertion. A woman with children pretends that her husband or lover 1287 has deserted her, and then claims housing benefit, income support, one-parent benefit and council tax benefit. All told, that can add up to more than £100 a week free of tax. It is little wonder that some couples go to considerable lengths to pretend that their relationship is over. We must breed a new habit of honesty. Such flexible households are not above the law, and should not consider themselves free to claim money that is clearly not theirs.
Another deeply serious point, which has already been raised, is the extensive theft of benefit books. Last week, a man in Sutton was arrested for stealing cheques sent to tenants in a multiple-occupation house. Officials say that that is just one small example of a large story. They estimate that the biggest losses come from stolen and counterfeit benefit books and girocheques. In north Surrey in the first quarter of 1991, more than 62,000 social security books were recorded as lost, stolen or destroyed. The head of the Benefit Agency's organised fraud unit said:It is easier to counterfeit a benefit book or girocheque than it is to go into a bank with a shotgun. There are fewer risks and the returns are as good.In the past, a criminal having 100 stolen books could draw £8,000 a week, and might hand over only 5 per cent. of that to the accomplices who posed as claimants.
I congratulate the Government on acknowledging the seriousness of that problem, and my hon. Friend the Minister on demonstrating that much work has been done to make sure that such counterfeiting cannot occur in future. The message must go out to fraudsters and forgers that they can no longer get away with it. Benefit books will be like bank notes—forgeries will be easily detected in future, and those using them will be brought to book.
Clear guidance must be given to post offices and others who are confronted by a claimant who says, "My book has been stolen or mislaid. Can I have another?" Double encashment has been a great loophole in the system, but it is now being closed.
A rational approach must also be taken to invalidity benefit. Can it be true that the number entitled to claim it has more than doubled in the past decade, from 700,000 to 1.5 million? Have we suddenly become a deeply sickly society? I believe that doctors have unwittingly been over-generous to their patients, in helping them to claim more than that to which they were entitled—bearing in mind that invalidity benefit is higher than unemployment benefit.
More than two thirds of the general practitioners in a survey by "Monitor Weekly" admitted that they had signed benefit forms for patients whom they knew not to be sick, or whose sickness did not prevent them from working. Most newspapers argue that changes should be made. On 12 June, The Times commented:The number of claimants has more than doubled, although there is no evidence of a corresponding increase in ill health.The Daily Express asked:why should the benefit not be re-examined … a stringent medical examination would seem only fair.Although medical examinations are not as widespread as they might be, it is interesting to note that 50,000 claimants failed to report for a medical assessment last year, and consequently had their invalidity benefit stopped.
We must give GPs clear guidelines, and educate them in the fact that their job is to make a medical assessment and 1288 that they should not confuse their priorities. A GP may assess a crane driver with a history of heart attacks as unfit for work, but would that man be unfit for work behind a desk?
It is hard to understand how one GP managed to support the claims of a farmer who stole £36,000 by claiming invalidity benefit while doing three jobs. He was originally diagnosed as suffering from multiple sclerosis. I am glad that his condition was not too serious, but he managed to continue running his 30-acre farm, undertake sub-contracts and run a haulage business. His family—a wife, two sons and a daughter—and another farmer all colluded with him.
The examples are rife and rampant. One could go on for days describing cases of scamming, cheating and shirking. I congratulate the Government on their enormous determination to increase the search for more fraudulent claims. Their target of £60 million nationally on a £10 million investment in investigation resources is enormously worth while.
We must continue with our drive to encourage local authorities with incentives. There is no doubt that my Sutton council is encouraged, and that it has stretched its energies to seek our fraudulent claims, because it knows that it will get back a percentage to carry on with its work. The loopholes for abuse are still there. We must continue to modernise our information technology, and we must continue to update our cross-referencing to make it impossible for people to get away with fraud.
Above all, we must encourage a public spirit of coming forward with information about social security abuse. Information from the public already forms a major part of the basis on which investigations are made.
People should not feel guilty about giving information about their neighbours. They do not feel guilty if they report a bank robbery, and they do not feel guilty about reporting a major crime in another area. Why should they feel guilty about reporting that a neighbour is cheating? Who is more worthy of protection—the petty criminal neighbour or the needy victim who is prevented from getting the just help he needs? The money that is saved will help him even more.
The issue raises the question of identity cards. If we know who everyone is, we can immediately tap into the computer and thus make fraud far more difficulty. Some people say that identity cards are another form of Big Brother. In certain situations, such cards are worth while. We are all surrounded by Big Brothers anyway, because we are on various computers and we carry various cards.
Identity cards would give us just the means of getting information for the benefit of us all. Employers should follow the French system of logging with the Department of Social Security the names of all those whom they have laid off. That would not cover everyone, but it would make it more difficult for people to claim benefit to which they were not entitled.
I may have seemed rather hard, and to be pushing those who carry out scams and who are shirkers. They are indeed a very unpleasant part of our national life. However, I recognise that the vast majority of those who claim social security are entirely genuine, and that a far smaller number are fraudulent. People who are honest and in genuine need have nothing to fear about claiming benefits. Those who claim them fraudulently must know that we shall find them wherever they are. We will catch them. We will make them repay their debts. We will make 1289 them go to court and, if necessary, they will be heavily fined, and may even pay the ultimate price of going to prison. It is morally wrong for people to steal, to lie, to cheat and to punish the very people whom society most wants to help.
§ Mr. Richard Spring (Bury St. Edmunds)
It is a great pleasure to follow my hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland), who made a great and comprehensive speech which was thoroughly well researched. All of us in the Chamber enjoyed listening to her.
The hon. Member for Manchester, Withington (Mr. Bradley) talked about a Jurassic tendency in the Conservative party. I have not yet seen the film, but I know that the Jurassic tendency applies to dinosaurs. Dinosaurs disappeared because of evolutionary improvement. Does evolutionary improvement account for the fact that the Labour Benches are so bereft of Members today? I can offer no other rational explanation.
Apart from Jurassic tendency, what is of great interest—I hope that the ladies and gentleman of the press will pick this up—is the marshmallow tendency: appealing on the outside but no substance in the middle. I am referring, of course, to the Members of the Liberal Democrat party who are so conspicuous by their absence today. On an issue of such importance, it is disgraceful that that party, which is always so sanctimonious about social security, should not be represented here today.
I imagine that the Liberal Democrats will he in Christchurch today talking about the need to increase pensions, benefits and so on, but the fact is that pensioners, like everybody else in receipt of benefits, suffer from fraud and abuse, and their investigation is part of the whole review of social security. Therefore, it is a great disappointment, which I hope will be noticed by everybody, that no Liberal Democrat Members of Parliament are here today. As I said earlier, it is the marshmallow tendency—looking good on the outside, but having no substance in the middle.
All hon. Members are in favour of a benefits system that protects the most vulnerable in our society—the sick, the disabled, the unemployed and the elderly—and an element of Conservative thinking is that there should be a safety net through which people cannot fall. We are spending £80 billion out of nearly £250 billion on social security. About £50 billion of the £250 billion is being borrowed and the amount of interest which has to be paid on that sum is increasing. If, therefore, there is any way of reducing public expenditure by cutting the fraudulent abuse of taxpayers' money, wherever it exists, we must do it.
Our duty in terms of social security is to help people in need. Every pound that is wasted or lost to fraud means less for those who are in real need. As the Under-Secretary of State pointed out, it is instructive and important to note that anti-fraud activity will save £1 billion in 1993–94—a substantial sum of money. I very much welcome the additional resources that are being made available to the Benefits Agency so that it can use modern technology to weed out false claims. The additional £10 million a year to be provided for this purpose is welcome. The fact that the 1290 anti-fraud yield was £341 million in 1990–91 and that it has risen to nearly £500 million in the last fiscal year is, again, to be welcomed.
I refer to the problem of bogus asylum seekers, to whom the hon. Member for Islington, North (Mr. Corbyn) referred. There are millions of potential economic migrants in the world. Outside Russia, 25 million Russians are having their civil liberties, including their language rights and political rights, removed. We see in eastern Europe the potential for economic migration on a substantial scale. Because of our generosity as a nation in always taking in people who are genuine refugees, something which we have done for hundreds of years, we act as a magnet to people who are in difficulty. While we have always welcomed genuine refugees, we now have the economic migrant. That is why all of us welcome the fact that the Asylum and Immigration Appeals Bill will clamp down on bogus asylum seekers and speed up the assessment process.
Two thirds of the asylum seekers arriving at our ports do so with no valid documents and might be suspect. The hon. Member for Islington, North said that fingerprinting was wrong, but it is at least a unique record of each individual. How else are we supposed to prevent abuse? Photographs and documents can be doctored and the solution advocated by the hon. Gentleman and his colleagues is in fact no solution at all. I hope that we shall continue to deal rigorously with a serious problem which can only grow worse as the years go by in view of the political turbulence all over the world. The traditional hospitality of the British people must not be abused. In a period of high unemployment all over Europe, we must protect British people, their jobs and their employment opportunities from bogus asylum seekers and others.
My hon. Friend the Member for Sutton and Cheam graphically outlined the unparalleled generosity of the British taxpayer to other EC citizens. Newspapers and surveys by interested parties have uncovered enormous potential financial abuse. Britain is unique in that someone arriving by ferry can be given DSS leaflets in a number of European languages to tell him how to claim benefit. We are the only country to provide that service, which is almost an encouragement.
British nationals visiting Germany, Italy or France get no help at all. As my hon. Friend said, those countries have an insurance-based system under which one cannot claim benefit unless one has contributed to the insurance programme. The only two countries in which such benefit is automatic is Belgium and Ireland, and it lasts for three months. We must compare our social security set-up with that on the continent because many people involved in this area believe that our system leads to abuse as people come here with the intention of claiming benefit.
What always amuses my hon. Friends is that if the Labour party can attack this country or cite an aspect of life in another country which is better than ours it will unhesitatingly do so. I have heard the chandeliers in the Moscow underground being used as proof that Moscow had a better public transportation system, even under the old creaky communist system. Labour Members often cite France as an example of a country with a superior social security system. However, British nationals going to France receive no housing benefit. That is in contrast to newspaper reports which show clearly that in London housing benefits of up to £300 a week are being paid to EC nationals. That is an abuse of the system. British and other 1291 EC citizens going to France get absolutely nothing and information provided by the French equivalent of the DSS is provided only in French.
Germany is often supposed to have a pension system that is superior to ours, but only people who have worked and paid social security contributions for at least 12 months in the preceding three years can receive unemployment benefit. Needless to say, information is available only in German. By contrast, Denmark has a more rigorous system, and there are limits. It has a generous unemployment benefit system—people get 90 per cent. of their previous wage. Once again, EC nationals cannot qualify unless they have been living in Denmark for 12 months and have paid into the state unemployment fund. Needless to say, information about that is available only in Danish.
In Spain, there are no payments and information is available only in Spanish. In Portugal and Luxembourg, there are no benefits either. As I said, the only two countries in which there is something parallel to our system are Belgium and Ireland and payments continue for only three months.
There is substantial abuse because of the comprehensive social security benefits that are available to EC residents who come into the United Kingdom. However, I am glad that that has been tightened up and, undoubtedly, my hon. Friend the Minister will allude to that later. In the United Kingdom, proof of nationality must be provided. At the local DSS office, the interviewee must show that he or she has completed a national insurance record. That is helpful.
Another matter that must be examined is whether the rent is reasonable. If it is shown that rent is reasonable, 100 per cent. housing benefit is paid. What is the definition of "reasonable"? It is arbitrary. In central London, rent can be expensive and, therefore, costly to the taxpayer. Therefore, probably and potentially, an indeterminate amount of money is given to those individuals to the disadvantage of genuine British claimants. I am glad that that has been tightened up, but more could be done in that direction.
My hon. Friend the Minister talked about involving local authorities and sharing in the savings from fraud. I commend him on those remarks, because the new set-up announced in April gives local authorities an incentive to be involved. Local authorities keep 15 per cent. of the savings generated and, through anti-fraud efforts, that will rise above a threshold to 20 per cent. in 1993–94 and 17.5 per cent. in 1994–95. The reason for the rise is to give a boost and encouragement to effect those savings. Out of that will come a total saving of some £185 million, of which £45 million will usefully be retained by local authorities.
I turn my attention to the question of students. I have recently visited Japan and Taiwan and I was delighted with the number of students coming to the United Kingdom from those countries. Of course, they are areas of considerable economic growth. If we examine the history of Britain, students coming here have then returned to their home countries and played an important part in the lives of their nations. We should continue to welcome students for as long as we have excellent universities—and, of course, we shall continue to have them in the future.
1292 In 1991, which is the last year for which full figures are known, 200,000 students from outside the EC came to Britain. While that is excellent news for the reason that I suggested—enhancing British prestige and increasing British influence in their home countries—it is clear from newspaper reports that there is abuse. Students working part time have certainly claimed income support in the past.
My hon. Friend the Member for Sutton and Cheam referred to identity cards. I should like my hon. Friend the Minister to give an assurance on that, because, apparently, in student cities and towns—expecially in London—there is a roaring trade in bogus EC identify cards. It is difficult to determine the difference, for example, between a Colombian and a Spaniard, and other nationalities. That places considerable strains on the system and it is abused.
Another matter with regard to people arriving here is the increasing number of people who seem to appeal to the Home Office for a review of their conditions of entry to the United Kingdom to gain income support. While the Home Office is reviewing that, benefit is still paid. My understanding is that 10,000 people from abroad will not now receive income support, which involves savings of £17 million and is very welcome. However, asylum seekers will continue to receive benefit while the Home Office processes their cases under the urgent case rules. I hope that my hon. Friend the Minister will keep that process under constant review to ensure that it is not abused.
The scourge of the new age travellers, happily, has not afflicted the part of the world that I am privileged to represent, Suffolk and East Anglia. Under the actively seeking work test introduced in 1989, real attempts are now being made to address this problem. My constituents were very alarmed recently when a gipsy horse fair was held in my constituency. Happily, it passed off without major incident, but there was a considerable fear that a whole range of different individuals, including new age travellers, would arrive.
It is right that individuals who clearly have no intention of working—whom, in the past, DSS officials have bent over backwards to help—should now have to take on personal responsibilities and that their relationship to work should be more clearly defined.
The hon. Member for Islington, North made an interesting and curious speech. It is always comforting for my hon. Friends and myself to know that the Labour party has such individuals propagating a certain point of view. The whole thrust and ethos of his speech was less appropriate to a debate about social security fraud and abuse than to a national heritage debate. Such a speech, reflecting such attitudes, should be inscribed, illuminated, and put up next to a famous tomb in a cemetery not far from his constituency, where there are more specialist millionaires than the bed-and-breakfast millionaires to whom he constantly alluded.
It is clear that there is a feeling in this country that we have a comprehensive welfare system, which spreads far and wide and provides help to many people. It has been open to abuse, but there is a sentiment in my constituency and elsewhere that fraud and abuse must stop. Much of the evidence is clear and has been provided in the courts; much is anecdotal. The I-can-get-away-with-it mentality is deeply offensive to the British people, who are very fair-minded and have a liberal disposition to those who are disadvantaged for whatever reason.
1293 We do not want to become a society of sneakers and snoopers, but I endorse the sentiments of my hon. Friends that it is up to us who observe the flagrant abuse of the system to make it known. That is in the interests of genuine recipients. All of us have a part to play in this.
There is an increasing mood of revulsion in the country about social security fraud. We are in a period of high unemployment, yet there are occasions when it is difficult to obtain seasonal labour in certain parts of my constituency because the black economy has become so entrenched. Part and parcel of the Government's intention in reducing taxation at many levels was to do away with the black economy.
We should give absolutely no quarter to cheats. That is very much the sentiment in my constituency and all decent people will welcome the moves announced by the Department of Social Security. Only genuine recipients with a genuine need should receive benefits. I am comforted by my hon. Friend the Minister's earlier remark that he will do everything possible to root out fraud and abuse—root and branch.
§ 1.9 pm
§ Mr. Bradley
This has been an interesting, wide-ranging and informative debate. I intend to be brief in winding up because I want to hear the Minister comment on the many points that have been made. I hope that he will allow me to intervene in his speech, if appropriate, to clarify some of his answers.
Listening to the debate, I felt that I was in a no-win situation because I thought that I had made it absolutely clear that the Labour party was as committed as the Government to rooting out genuine fraud. I identified organised fraud as the major problem on which we need to concentrate. Many of the Government's initiatives have centred on organised fraud. Conservative Members who spoke earlier in the debate accused me of being a revisionist within the Labour party for taking that view. However, as the debate unfolded, it appeared that I had not made the position clear and that Conservative Members, especially the hon. Member for Sutton and Cheam (Lady Olga Maitland), thought that I was soft on fraud. Clearly, my words were not worth the paper on which they were written.
May I therefore reiterate, on behalf of Her Majesty's Opposition, that we are committed to rooting out genuine fraud wherever it occurs, whether it is perpetrated by individuals or organised gangs. Whether it is against the social security system—the Government have set a target of £1 billion—or involves tax evasion, totalling £4 billion, it is a loss to the public purse and the taxpayer and means that essential services such as social security are consequently underfunded. I hope that I have made that clear.
§ Mr. Bradley
I shall happily give way to the hon. Member for Sutton and Cheam so that she can confirm that she hears what I say, has watched my lips, and will now accept the Labour party's position on the matter.
§ Lady Olga Maitland
Will the hon. Gentleman clarify the importance of chasing, with all the energy that it 1294 deserves, the multiple number of petty criminals? By their sheer numbers, their scale of fraud is every bit as important as the small number of major fraudulent claimants.
§ Mr. Bradley
I could not have been clearer in stating the Labour party's position on clamping down on fraud, wherever it may be, but—I was accused earlier of not saying "but" so I shall stress it now—the hon. Lady is wrong because most fraud is organised rather than perpetrated by individual claimants. If she can quote figures to the contrary, I shall accept a further intervention, but mere supposition is not good, enough. Would she like me to give way to her on that point?
§ Mr. Bradley
I do not wish to enter a dialogue across the Chamber, because I am sure that you, Mr. Deputy Speaker, would quickly intervene, but the hon. Gentleman's figures did not undermine my basic contention that the vast amount of fraud throughout the social security system—housing benefit, council tax and social security benefits—is organised. That is what the Government have been concentrating on recently.
I have made it clear that, wherever that abuse comes from, the Labour party is determined to tackle it in the same way as the Government, and I hope that the Government will accept that position.
I have listened to the debate with interest. I shall put aside the rather insulting comment by the hon. Member for Sutton and Cheam about our GP service, but she must justify many of the points that she raised. I welcome the fact that the hon. Lady has agreed to write to me about those matters. I was surprised when she said that the evidence for the abuse that she was claiming came from her local benefits agency. If that was the case, it may have clamped down on the abuse, which may no longer exist. I look forward to receiving information from the agency on the exact numbers and extent of the abuse in the context in which the hon. Lady mentioned it.
I do not want to concentrate too much on the hon. Lady's speech, but I was pleased that she was able to tell the House that her local authority is achieving its initiative targets. The success rate is patchy throughout the country and I look forward to the Minister making further comments on that. The patchiness is not due to lack of initiative or effort on the part of local authorities, many of which are finding it difficult to reach the lower end of the target scale, let alone the upper end. Therefore, they cannot benefit from the incentive of receiving 100 per cent. of the money retrieved. That creates difficulties when transferring resources into the fraud sections of local authority departments and ensuring that those authorities receive the money for the effort that they make. I am pleased that the Sutton and Cheam authority is achieving its targets.
We have had an interesting and wide-ranging debate. We have made the Labour party's position clear—we welcome many of the initiatives already undertaken and 1295 some of the new ones mentioned by the Minister today. I stress the support that the Labour party gives to the excellent work being undertaken throughout the country through a multi-agency approach with local authorities, benefits agencies, police and other agencies working together in rooting out fraud. They have made immense strides in the short time given to them to organise and establish internal organisations and to ensure that they work as effectively as possible. I hope that, in time, resources will be made available to ensure that staff are properly trained so that matters can be dealt with sensitively and efficiently.
I repeat my concern that when the Government attempt to root out fraud, they apply the same effort and commitment to ensure that those eligible for benefits, whatever they may be, receive their just entitlements. It is particularly important that, at a time when the poor are getting poorer, and the rich richer—there is no question but that that is true, as all the statistics show—we ensure that poor people receive the meagre benefit payments to which they are entitled. I hope that the Government, through their own publicity and by supporting the excellent work of welfare rights officers and local authority social services departments, will continue the take-up campaigns to ensure that individual claims are dealt with efficiently and claimants receive the money to which they are entitled.
A number of hon. Members mentioned the clampdown on new age travellers. It is an understandable move, but it has caused great anxiety among the public. We must not confuse that subject with the view that people are not actively seeking work. All the surveys carried out, whether by Government Departments, advisory committees that advise the Government or independent research, clearly show that the overwhelming majority of unemployment benefit claimants actively seek work. It is only a tiny minority who do not—I am pleased to see the Minister nodding in agreement and I know that the Secretary of State has made the same point. The overwhelming majority of claimants are genuine and are actively seeking work.
The latest report on the subject, issued this year by the Low Pay Unit, written by Alex Bryson and John Jacobs, and entitled "Policing the Workshy"—I commend it to the hon. Member for Sutton and Cheam—clearly showed that people are actively seeking work and are prepared to revise their initial hopes of finding a certain type of job, given the limited number of opportunities available in the climate of high unemployment. These people are sometimes not well advised by the unemployment officers with whom they deal, who should explain to them more clearly that it would be in their best interests to reduce their expectations.
Perhaps one of the greatest impediments to seeking work is the fact that people have to fill in so many forms and complete a great many interview references showing that they have been going out looking for work. That time might be better spent actually looking for work. Still, the results of the research are clear: the vast majority of the unemployed are actively seeking work and the only reason why they claim unemployment benefit is that they cannot find a job of any kind.
1296 The Opposition are committed to ensuring that the social security system enables all who are entitled to them to receive the benefits that they so justly deserve. Although we need to look at fraud, we should bear in mind that there is also fraud that needs stamping out in the tax system and in public life generally, whereupon the money can be used in everyone's best interests.
In the pages of the Financial Times, the Chancellor of the Exchequer, writing about attempts to control public expenditure, implied that one reason for the massive hike in the social security budget was the success of the Government's take-up campaigns, urging people to apply for benefits. I seek an absolute assurance from the Minister that in the public expenditure review—we shall return to it in the autumn, when I am sure the Government will give us plenty of opportunities to debate their attempts to curb the social security budget—there will be no suggestion of the Government's undermining people's just entitlement to benefit. The Government must ensure that benefits that are still not the subject of 100 per cent. take-up are publicised by Government and local authorities. Only thus can we be certain that the people who deserve our support through the social security system will actually receive it.
§ Mr. Burt
This has been a most interesting and enjoyable debate, as these Friday mornings often are. We have attempted to shoot one or two stereotypes. The Government have been at pains to confirm that we pay as much attention to ensuring that those entitled to money get it as we do to curbing fraud and abuse. The Opposition spokesman has been equally determined to show that the Labour party is as rigorous about fraud and abuse as it is about ensuring that everyone gets his just deserts. Back Benchers have united to condemn Her Majesty's absent Liberals. So we have all had an enjoyable morning.
We have done some serious work along the way. I shall reply to the speeches of my hon. Friends before dealing with matters raised by the hon. Member for Manchester, Withington (Mr. Bradley). I thank all hon. Members who have taken part in the debate.
I am thankful for the help that we have received from members of the London cab drivers club and the Licensed Taxi Drivers Association. I pay tribute to them for their assistance in dealing with the matter raised by my hon. Friend the Member for Ilford, North (Mr. Bendall) of trying to uncover fraud in the taxi business. We welcome their co-operation. We work closely with them and will continue to do so. The members of those bodies work with some other Departments and the matter raised by my hon. Friend the Member for Ilford, North about the operation at Heathrow is for the Department of Employment.
My hon. Friend the Member for Ilford, North could have raised another issue, but, perhaps because of his position, he decided not to do so. I shall raise it for him. It is that those who drive taxis and register as unemployed, thus taking money to which they are not entitled, are helping to drive out of business those whom my hon. Friend seeks to help. They are taking their jobs. My hon. Friend was right to mention the efforts of the taxi drivers who, day in and day out, look after people in this place. Their honesty and integrity is impugned by those who break the rules and we welcome their efforts to assist us in trying to discover the culprits.
1297 My hon. Friend spoke about housing benefit and payments to landlords. He has been kind enough to write to me on the subject. I shall make clear the rules relating to the direct payment of landlords. Local authorities are required to make direct payment of housing benefit to landlords when direct payments for service charges and rent arrears are already being made from income support. Secondly, it is paid in cases where tenants have arrears that are equivalent to eight times or more the weekly rent, unless it is in the overriding interest of the tenant that the benefit should not be paid directly to the landlord.
Local authorities may use their discretion to make direct payments of housing benefit to landlords when the tenant consents to it or requests it. They can also be made without the tenant's consent if that is considered to be in the interest of the tenant and his family. Such payments can also be made without the tenant's consent if he has left the accommodation to which the benefit relates and there are rent arrears at that address, but the amount. paid directly must not exceed the arrears.
I share the worries of my hon. Friend the Member for Ilford, North. The Department encourages closer liaison between local authorities and landlords. I was interested in his idea of a registration scheme to control fraud. It has attractions and I will bring my hon. Friend's suggestion to the attention of my colleagues in the Department of the Environment. The day-to-day administration of housing benefit is the responsibility of local authorities and we are cautious about imposing additional burdens on them. The issues that my hon. Friend raised are precisely those that the cross-London steering group will address. I shall say more about that group in my speech.
My hon. Friend the Member for Blackpool, North (Mr. Elletson), who was supported by my hon. Friend the Member for Scarborough (Mr. Sykes), spoke about the problems of those who live and work in tourist areas. Such problems arise because of the movement of people and the claiming of benefit, sometimes inappropriately. We must maintain a balance. Where people live is largely a matter of individual choice, and the free movement of people is an essential feature of an efficient labour market. The Government do not wish to restrict that.
It would be wrong to impose controls through the benefits system on the area or type of accommodation to which people wished to move. To go down such a restrictive route in a democratic society would be fraught with difficulty. It is better to ensure that the conditions of entitlement to benefit are rigorously satisfied and that those who abuse the system lose all claim to financial support from the taxpayer.
That is why I was pleased that my hon. Friend spoke of Operation Sea Breeze and that my hon. Friend the Member for Ribble Valley (Mr. Evans) spoke of the recent operation in Preston. Only by making it clear and public to people that those who abuse the social security system will be caught shall we be able to make progress.
We will continue to bear in mind the problems of tourist resorts when we are targeting our clampdowns, and I hope that my hon. Friends will be reassured by that. We will also look at the suggestion of improving the contact between the Benefits Agency and the public in disclosing fraud. We also now have the national service level agreement with local authority associations, designed to improve inter-agency liaison and co-operation, particularly in relation to housing benefit frauds in tourist areas, to which my hon. Friends referred. We will continue to 1298 develop those relationships further to improve our record in catching those who abuse the system. I hope that those measures will be of assistance to my many hon. Friends who represent tourist areas and associated places.
The speech of the hon. Member for Belfast, North (Mr. Walker) reminded us of the problems over the water. I was pleased that he did so, and am grateful for his attendance this morning. I listened to him with care. Just the other week, I was fortunate enough to visit the Province, in connection with the launching of the Child Support Agency there. I enjoyed my visit—I always enjoy my visits there—and I look forward to making more. I will ensure that his remarks, which fall more appropriately in the remit of my right hon. and hon. Friends in the Northern Ireland Office, are brought to their attention.
My hon. Friend the Member for Teignbridge (Mr. Nicholls) made an interesting and powerful speech. He was kind enough to apologise to me because he is unable to stay for the winding-up speeches. He reminded us most importantly that the money that the social security system distributes is not its own money. It does not belong to the Department, to the Chancellor or, sadly, to me. It is money which we have taken from people, who have earned it, to ensure that public services and the needs of others are looked after. That reiterates the point that Ministers have made from the Dispatch Box many times. Those who abuse the system are not getting back at the Tory Government but robbing their friends and neighbours. My hon. Friend made that point extremely clearly.
My hon. Friend also made an effective point about the attitudes of working people towards fraud. He made a clear distinction between those attitudes and the attitudes that we sometimes hear from those who represent left of centre parties. The hon. Member for Withington made his party's view clear, and I respect and understand that. However, some Opposition Members have said things that have caused us worry, and may have caused the hon. Member for Sheffield, Brightside (Mr. Blunkett) to make his comments, which have been quoted today, about molly-coddling and the Labour party's past associations. We should welcome a break with those associations, but they have been at least part of the reason why the Labour party has seen such a slide in its support in the past decade.
The hon. Member for Withington, like others, spoke about new age travellers. Without necessarily condemning the life styles of those who seek to be alternative, many of us feel strongly that they should not support that by claiming from the rest of society. The concern about new age travellers is not that they want to be different—many people want and are entitled to be different; the question is whether they are entitled to be different at other people's expense. Unfortunately, new age travellers symbolise those who want their alternative life styles to be supported by the very people whose attitudes they mock and deride. That is why it has been necessary to take action.
Nevertheless, the Department must always remember that any measures it takes cannot be directed at individual groups on the basis of, "We don't like your face, John." We must draw up rules that apply to all, which is what we have done in toughening the regulations on the requirement actively to seek work, about which my hon. Friends feel so strongly. The Employment Service ensures that all those who register for unemployment benefit are taking reasonable steps to find employment. Regulations 1299 were introduced in December 1992 to remove entitlement to income support from unemployed people and childless couples who do not actively seek work.
Measures have also been taken to ensure that benefit claims by new age travellers do not inconvenience ordinary members of the public. One or two of my hon. Friends referred to the trestle tables set up to pay benefits on one occasion last summer and said that that was awful. I understand their point, but, on behalf of the Benefits Agency, I must explain that it must bear in mind the care and consideration that it owes to other claimants. If a large group of new age travellers descends on a particular office, that can be intimidating for the staff and for other claimants. On past occasions, we have been requested by the civil authorities to find an alternative way to pay benefits to new age travellers and that has been the driving force, rather than any desire to give preferential treatment to new age travellers or others who descend en masse on a particular office.
We have tried to ensure that it is clearly understood that new age travellers must satisfy the same conditions for entitlement to benefit as everyone else by proving that they are both available for and actively seeking work. We maintain close co-operation with the police to minimise any disruption to other benefit claimants and to prevent new age travellers from making fraudulent benefit claims.
The Benefits Agency has established a central contact point to enable police intelligence units to share information so that district managers can be forewarned of approaching groups of travellers. That will help the agency to handle benefit claims in the most efficient way, with due regard to the needs of its other claimants. It is well aware of the need to clamp down on any fraudulent claims.
I hope that that explanation has put the matter in context. I recognise that, in total, new age travellers constitute a small proportion of those claiming income support or unemployment benefit. However, in the areas where they congregate they can cause considerable disruption to ordinary people who are going about their business and are frightened by the presence of people who are identifiably different. Of course, the fact that a person's appearance is different is not the issue, but it is wrong when such people use their numbers to be intimidatory. The Benefits Agency is entitled to feel uncomfortable about that, on other people's behalf. My hon. Friends have made their position clear and I am happy to assure them that the agency takes the matter seriously.
The hon. Member for Islington, North (Mr. Corbyn) reminded me of bygone days. A decade ago, I served with the hon. Gentleman on Haringey council. It was wonderful in the early days. If it had not existed, the Sun would have had to invent it—it did everything that was expected from a loony left Labour council. It was marvellous. There were three political parties on the council at that time—[Interruption.] Perhaps the hon. Member for Withington will give me a little leeway. That council was comprised of the Labour party that ran the council, the Conservative opposition, and the Labour party that did not run the council. The degree and intensity of debate between the two Labour parties was of the greatest concern and interest to us all. I must leave it to the hon. Member for Islington, North to say which side of the counter he was on in respect of that debate. At least I 1300 learnt at first hand the difficulties of looking after a London borough and of providing the housing and other benefits that are now part of my brief.
The hon. Member for Islington, North referred to the cross-London boroughs team. We acknowledge the initiative involved in bringing that team together and its effect, and we shall strongly support it. The hon. Gentleman spoke of his recent visit to Centrepoint. Some months ago, I visited Centrepoint in Vauxhall. We have made, and continue to make, strenuous efforts to ensure that young people who are entitled to receive benefit do so. I was struck by the number of youngsters at Vauxhall who had come from disturbed backgrounds. They move about a lot and it is difficult for them to obtain information—and for benefit staff to keep track of them and to help. We have sought to improve our information procedures. The hon. Member for Islington, North did not acknowledge that or give credit where it was due.
As to hardship payments, we have improved the information available, to make it clear that more people are eligible than was originally thought. We have produced a booklet to help young people and their advisers. Each Benefits Agency office has a special officer with responsibility to liaise and deal with young people. We have made strenuous efforts to help. Sometimes, we have been hindered by comments by Opposition parties to the effect that no young people can claim benefits—period—and that income support cannot be paid to any 16 or 17-year-olds. That is not true. In particular circumstances, 16 and 17-year-olds can receive income support. However, we have often reiterated our general policy that that is not the best option for them. Sixteen and 17-year-olds should be in continuing education, training or jobs. We will not change that policy, because we believe it is right. Where people fall through the net and are vulnerable, the Department stands ready to support them. We are trying hard to get the balance right.
My hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland) made a spirited and determined contribution to the debate and gave a variety of examples of fraud being tackled in different circumstances. She gave a catalogue of the savings that can be achieved by a determination to detect and to root out fraud.
The point that I most drew from my hon. Friend's speech relates to attitudes. She indicated how attitudes to fraud and to similar crimes have changed. Some people feel that if they are taking money from the Department of Social Security, they are taking money from the Government and are somehow being clever or getting their own back. That is not true. My hon. Friend the Member for Teignbridge spoke of our belief that all crime is indivisible. I condemn City fraud and sharp practice as determinedly as anyone, and as the hon. Member for Withington would expect. Just as crime is indivisible, so, too, are attitudes to dishonesty. If people think that obtaining something from the Government by subterfuge is all right, we shall be on a slippery slope. Perhaps we are many years down that slippery slope.
One reason why we face the high benefits fraud bill that we do is that attitudes have changed in the way suggested by my hon. Friend the Member for Sutton and Cheam. The spirit of honesty for which she called must be rekindled, but that cannot be done solely by the Department—or by the House in the attitudes that it displays, although that can help. Neither can it be 1301 rekindled solely by the Government. The spirit of honesty and fair dealing of one towards another is a matter which society must take strongly. The various opinion formers, whoever they may be, must support all those who profess adherence to values that are decent, honest and timeless. The comments of my hon. Friend the Member for Sutton and Cheam were timely today and I thank her for them.
My hon. Friend the Member for Sutton and Cheam also referred to the progress that we have sought to make on order books. I am pleased that she welcomes our efforts. We have made strides in ensuring that order book fraud will be more difficult. It costs a great deal of money, so I am grateful for my hon. Friend's comments and for her support for those who have done so much work to take that process forward.
Both my hon. Friend the Member for Sutton and Cheam and my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) referred to the difficulties caused by the thin borderline between legality and abuse. That has been marked by some newspaper articles about some who have come to this country from the European Community and who appear to be taking advantage of our benefits system. That is a genuinely difficult issue because we have treaty obligations to those in the European Community, and we are determined to stand by and to support those obligations.
However, I agree strongly with those who have expressed concern about the apparent ease with which people from other EC member states can claim benefit here. We have already tightened up the income support rules that apply to people who come from other member states to seek work here. My hon. Friends were right to raise points about that matter.
My hon. Friend the Member for Bury St. Edmunds was especially concerned about housing benefit. Overseas students are not treated more favourably than home students. Most are excluded on the ground of nationality. Only certain vulnerable students may claim housing benefit, and overseas students who have overstayed their period of leave, who are subject to a deportation order or who are judged by the immigration authorities to be illegal immigrants are excluded from housing benefit, even if they are in a vulnerable group.
As the House appreciates, there is a distinction between persons from abroad and persons from the EC, to whom different legislation applies. We have carefully tightened up this week on particular abuse that was prevalent among persons from abroad. Most of them come to this country on visas that provide that they will not be in receipt of public funds while in this country. It has become the practice for some 10,000 a year to apply, towards the end of their stay, for leave from the Home Office to vary that restriction. The law was that if people applied for such leave, benefits became available at that stage. Few who made a request to change the visa in the particular circumstances that they described would have their visas changed. Accordingly, this country found itself paying £17 million of benefits a year to people who had no hope of having the visa restriction changed. This week, therefore, we have moved to close that loophole and we believe that were right to do so.
I can confirm to my hon. Friend the Member for Bury St. Edmunds that we keep the position on asylum seekers pretty well under review. However, I make it clear to the House generally that the restriction I have just mentioned does not apply to genuine asylum seekers. This country 1302 has a long and proud tradition of being able to receive those who, for various reasons, are unable to continue their activities abroad. That tradition goes back to the Huguenots and many others.
However, we must be careful in these modern days, especially because of the problems of economic migration which my hon. Friend the Member for Bury St. Edmunds made clear, to ensure that that hospitality is not abused. There is a difficult line to find, as debates in the House over the past two or three years have made clear. The Department of Social Security will faithfully back up the view of the Home Office in its distinctions on particular cases. I assure the House that we look carefully at the matter, but that we intend to ensure that those genuinely claiming to be refugees will get through under the new system far more quickly. They need not fear; they will continue to be covered. I hope that, by doing so, we strike the right balance between this country's proper hospitality and abuse.
§ Mr. Bradley
Although I agree with what the Minister has said, will he confirm, so that we do not again get matters out of context, that the numbers of people who apply for political asylum are small, so that the amount that we are talking about is equally small?
§ Mr. Burt
Yes, indeed. Applications for asylum in the United Kingdom totalled 22,000 in 1990. In 1991, they shot up to 44,000. The Home Office took certain action and, by 1992, the figure had come down to 24,000. That shows how volatile the numbers can be in particular circumstances, but they illustrate that we are talking about small numbers.
It is interesting, however, for those who look after purses to note that small numbers add up to a lot. The hon. Gentleman is constantly on at me and my colleagues about small amounts of money that we might be able to use to improve the benefits system in a particular way. We have to tell them that we are sorry, but we do not have the money. The £17 million that I have just referred to and false claims can add up to the sort of money that we might be able to use for just those things on which we want to spend money. That is why small amounts are important.
The hon. Member for Withington referred to take-up. I tried to make it clear in my speech that I had set my remarks about fraud in the context of this Government's determination to ensure that those who are entitled to benefits get them. The total amount unclaimed is estimated to be £1.7 billion, but that sum has to be set in the context of the amount actually claimed. We must remember that almost £9 out or every £10 is claimed and that four out of five who are eligible to make a claim do so. It also tends to be the smaller amounts that people do not claim, rather than the larger amounts. We want people to claim what they are entitled to, but we cannot force them to claim. Nevertheless, we have taken action, though various campaigns, to try to improve information about benefits. I mentioned earlier the £15 million that we spend annually on trying to make sure that people know what is available.
As for the Chancellor of the Exchequer's remarks, my right hon. and learned Friend was not suggesting in any way that the Department of Social Security should discourage the claiming of benefit. What he was seeking to do, and what the Government have sought to do in recent weeks, was to make it clear that the whole of the social 1303 security budget has to be looked at in terms of trends for growth. My right hon. and learned Friend was looking at the trends in the number of people making claims.
Reference has already been made to the impact that these trends have had on invalidity benefit. Concern has been expressed about who is truly eligible for invalidity benefit and who is not. It was in that context that the Chancellor made his remarks, but the Department and the Government are determined to ensure that those who are eligible to claim do so. There was no suggestion in my right hon. and learned Friend's remarks that that will not remain the case.
The hon. Member for Withington referred to the perceived threat to post offices. I was able to say a few things at that time. May I reiterate, however, that the anticipated growth of automated credit transfer is likely to be more than offset by an overall increase in the volume of DSS transactions with the Post Office over the next few years. We are committed to ensuring that our contractual arrangements with the Post Office continue to promote a viable and national network of post offices. We have already given that commitment. I am happy to reiterate it.
The hon. Gentleman referred to the National Audit Office report. We welcome that report in general. It reinforces a number of messages that we have been trying to get across about the need to bear down on fraud and abuse. It highlighted the extent of instrument of payment fraud—the order books. The report was complimentary about the results achieved. It highlighted a number of areas for improvement: more effective allocation of resources, improved intelligence gathering, greater security of order book delivery and the need to change the style, design and content of order books.
We have already taken action. Reference has been made to the work that we have done on order books, the result of which was introduced this week. We are also committed to investing in better intelligence sharing and in specific action with the Post Office to help to improve the delivery of order book transactions.
The hon. Member for Withington referred to the need for secrecy about the report. I hope that I can reassure him. We have two things principally on our minds in relation to the restriction of information. The first is the need to protect our investigative staff. It should be noticed that yesterday's raid, which involved the seizure of benefit books and the possible saving of many millions of pounds—one national newspaper today suggested £36 million—had to be carried out with armed police available. People who are involved in criminal operations that could net such large sums will go to great lengths to protect themselves and stop at very little to get away with their crimes. It is essential that we protect our staff, so we have to be cautious about information in some cases.
Secondly, and as the hon. Gentleman recognised, we also have to bear in mind the risk of copycat fraud, so we sometimes have to be a little careful about the information that we can relese to the public. Knowing him as I do, I am sure that, in our private conversations, we can come to proper arrangements about any information that he might legitimately need for his work. There is no problem about that.
We spent a little time talking about local authorities and their involvement in helping us with housing benefit 1304 fraud. I pay tribute to their work. We have found them enormously helpful in many ways. I regularly meet representatives of local authority associations to discuss their housing benefit work, and I have found it one of the best examples of co-operation between national and local government that I have come across in my time in the House.
The hon. Member for Withington raised an issue mentioned to him by organisations such as citizens advice bureaux. They wonder whether, in view of the speed of the changes, we provide enough training. We try to ensure that we do. We provide free fraud training for local authority fraud investigators, and we have been able within our own budget to secure additional funding for that purpose. More than 80 per cent. of the investigators who attended the training in 1992 felt confident that they could usefully apply what they have learnt. We monitor the training to ensure that it is adequate. We thus take full account of the concerns of people outside and inside the system.
I have already mentioned the cross-London fraud working group, which is a very helpful initiative. The Department has agreed to support actively this newly formed London-wide team of local authority specialists, which has been set up to tackle organised housing benefit fraud. I am happy to support that team and have already agreed that DSS officials should attend its meetings. That should ensure the contintuation of the good relationship between central and local government. In answer to a specific point made by my hon. Friend the Member for Ilford, North, I am sure that he will find the team very helpful in dealing with the problems of hopping from borough to borough.
The hon. Member for Withington referred to the new system of subsidies and the changes that we have made. He expressed concern about the setting of targets. As I said, I have spent considerable time discussing such subjects with local authority representatives. The development of systems to encourage local authorities to uncover housing benefit abuse takes time, and we keep that development under review. We believe that the baseline targets that we have set have been appropriate. They are not too difficult to achieve, but we will keep them under review. We in no way intend to create disincentives for local authorities that have achieved a high level of performance. We shall review the baseline setting methodology in the light of the savings achieved in the coming year.
§ Mr. Bradley
How many local authorities have achieved their targets at the lower level and at the higher level?
§ Mr. Burt
I may have to write to the hon. Gentleman about that; it is an especially detailed point. The higher baseline represents less than 3 per cent. of expected housing benefit and council tax benefit expenditure. If local authorities provide sufficient additional resources to tackle fraud seriously, there is no reason why savings far in excess of the baselines should not be achieved.
§ Mr. Bradley
My question was asked in the light of the Minister's statement that the Government believe that the targets are appropriate. Clearly, we need to know how appropriate. We need to know what performance levels local authorities are achieving against the targets. I believe that an answer may now be winging its way to us.
§ Mr. Burt
The information provision system in this place is amazing. On this occasion, I must disappoint the hon. Gentleman because it is too early to say precisely what the achievements will be. I sought to show, by the answer that I gave—that the higher baseline represents less than 3 per cent. of expected housing benefit council tax benefit expenditure—that we have set realistic targets. I understand the hon. Gentleman's concern, but we know that from the local authorities.
The way in which we have worked with local authorities and changed the incentives—I know that the hon. Gentleman and local authorities welcome that as a response to what they have been saying to us—shows our good faith on this matter. It is to our mutual advantage that we work with local authorities and provide a system that saves the public money, but, at the same time, enables local authorities to do that little bit more. That has been the intention of finding a system that has given them an incentive to do work that then gets them extra money. That is not a bad thing for local authorities and they have appreciated our efforts there.
With that good faith in mind, we will look at the targets, because it is not our intention to penalise local authorities that are working effectively. I am not sure how I can help the hon. Gentleman further, but I am happy to listen.
§ Mr. Bradley
The Minister's comment slid off his lips, as we were expecting the answer from somewhere else. He said that he would write and tell me which local authorities had achieved their targets. Perhaps when he sees that information, he may be in a better position to review the targets.
§ Mr. Burt
I give the hon. Gentleman a commitment that when I am in a position to write to him with substantial information, I will do so. It might be a little precipitate to do that now, but I note the hon. Gentleman's point and I will write to him.
In conclusion, I shall clear up a few final points because we have covered so much. Market testing is a real issue in the Benefits Agency and the Government. The aims of market testing are clear. We are trying to ensure that good value for money is achieved. Sometimes, the best way to save money and change practices has been through the process of market testing. No firm decisions have been made on any market testing of the fraud operation.
We are carefully exploring the scope for ensuring the most efficient and cost-effective way of handling fraud investigations. A preliminary study has been carried out, which will be carefully considered by the Secretary of State. I can reassure the hon. Gentleman that, whatever arrangements might be entered into in the future, questions of sensitivity and confidentiality will remain of paramount consideration.
1306 I turn to the point of targeting our anti-fraud effort. I can reassure the hon. Member for Withington that, as far as I am concerned, cases are dealt with on a case-by-case basis. Having said that, we cannot ignore patterns of fraud when we see them. In recognising the context of fraud, and perhaps finding an area where fraud, or a specific sort of fraud, is prevalent, individuals are treated as individuals. Benefit investigators know that. If we get that balance right, we will be able to deal with the sensitivities raised by the hon. Gentleman, which are shared by many, and ensure that we direct our efforts to recover fraud savings from the areas that are most likely to produce them.
We have had a long and useful debate on the subject of fraud. With estimated savings of £1 billion this year, that amount is a substantial part of any Government's budget, even a Department of Social Security budget of £80 billion. I am grateful for the attention and attendance of my hon. Friends, who gave us the benefit of their thoughts on this subject. They can reassure their constituents that they have a Government who are determined to ensure not only that those who are entitled to benefits receive them, but that those who are not, do not.
The warning is clear for those who seek to cheat, not me, but their fellow citizens. They will be found out and forced to repay. They may find themselves with a criminal record or a spell in gaol. We know that there are serious fraudsters about. There is nothing wrong in letting people know that other folk are diddling them. I hope that the Government's message of determination will be noted from the debate.
§ Motion, by leave, withdrawn.