Clause 33 - Offence of fraud
Tax Credits
9:45 am
Mr James Clappison (Hertsmere, Conservative)
I beg to move amendment No. 22, in page 21, line 40, leave out 'seven' and insert 'ten'.
We now come to an important part of the Bill and an important amendment that would improve it significantly. The amendment would increase the maximum sentence for offences of fraud involving tax credits from seven years to 10 years following conviction on indictment. We regard it as a test of our determination to tackle tax credit fraud. Deterrence plays a part in that effort—it is not the whole story, but it is an important part of it. I hope that we will have a wider debate on what else needs to be done to tackle fraud during the clause stand part debate and consideration of amendment No. 23.
We need to let those who commit tax fraud know that they are committing a crime and they will be sentenced by a criminal court. Those who commit the most serious and determined fraud must be told that they run the risk of a substantial term of imprisonment. However, as matters stand, that is not
the case. Tax credit fraud is not being treated as seriously as it should be: in fact, in the first two years of the working families tax credit, to September 2001, there were only 22 prosecutions for false applications. Shortly, we will debate the extent of fraud in the tax credit system, but whatever estimate one makes and on whatever basis one makes it, 22 is an extremely low number of prosecutions compared with the relative scale of fraud.
It follows from those figures that there is a very low risk of being prosecuted for fraud. Perhaps we will be told, as we were in an earlier debate, that prosecution is reserved for the most serious cases; if so, the Government are being extremely selective. Given that, for all practical purposes, hardly any prosecutions are instigated, it is likely that some of the more serious cases are not prosecuted. Against that background, it would be interesting to know how the courts have dealt with those who are convicted. According to the most recent Government answer to a written question, only 13 of the 22 people with minor prosecutions outstanding have been convicted thus far. Can the Minister give a breakdown of the sentences received by those convicted of tax credit fraud, and state how many have received a sentence of imprisonment? We believe that tax credit fraud, which defrauds the taxpayer and harms the interests of honest claimants, should be treated more seriously.
Our comments about fraud should cast no reflection on honest claimants. As I hope we made sufficiently clear in earlier debates, we draw a distinction between those who commit fraud and those who make innocent mistakes or are negligent. We do not approve of the way in which, for the sake of convenience, fraud and negligence have been bracketed together in other clauses. I do not want to labour the point, but negligence and fraud are very different matters, and we need to draw a distinction between those who knowingly set out to defraud the system and those who are careless and fail to live up to a proper standard, but who do not intend fraud.
The amendment is important. As the Financial Secretary knows, increasing the maximum sentence is one way to make it clear that an offence should be regarded in a more serious light in future. The amendment is testimony to our determination to tackle fraud, and we hope that the right hon. Gentleman will show that he shares our determination.