Benefit Fraud

– in the House of Commons at 3:33 pm on 18th June 1996.

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Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State 3:40 pm, 18th June 1996

I beg to move, That this House welcomes the recent report from the Social Security Committee on measures needed to tackle housing benefit fraud; is appalled at the complacency of Her Majesty's Government's response; endorses the proposals made by the Committee; believes that further measures are urgently required to root out organised landlord fraud in the housing benefit system, to step up the number of home visits to claimants, and to clean up the National Insurance number system; and affirms its belief that accuracy and efficiency in the spending of social security funds is vital for those in need and for the taxpayer. Let us first establish the principle—fraud, wherever perpetrated, in the benefit system or in the tax system, is wrong. In the benefit system, every pound that is defrauded is a pound less for those in real need or for the taxpayer. The accurate spending of the social security pound is good for claimants and for the nation as a whole, and the greater the accuracy that can be achieved, the more we shall be able to restore and maintain confidence and faith in our welfare state.

There should be no dispute on either side of the House about that basic starting point for our discussion. It is when we move on to determining the nature and extent of that fraud and how best a Government can set about tackling it that we start to enter a debate between the parties.

There has been some debate in recent weeks about how much fraud is in the system, and much of that discussion has focused on the extent of housing benefit fraud. In the survey of housing benefit fraud that the Government carried out recently, they estimate that there is £1 billion of fraud. The Select Committee on Social Security heard evidence that it might be twice as much as that. I emphasise the word "might", because the Select Committee was cautious in advancing that figure. It also said that it might be greater than £2 billion. At no stage has the Select Committee or the Opposition said that the amount of housing benefit fraud is £2 billion. We have said that it is likely that the Government's estimate is an underestimate.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I thought that we might get some people up at this point.

Photo of Michael Fabricant Michael Fabricant , Staffordshire Mid

The hon. Gentleman was being so reasonable up to that point. Has not the National Audit Office endorsed the Government's figure? Will the hon. Gentleman be honest enough to go a step further in what he was saying, by pointing out that the Select Committee report was based not on any survey, but simply on the opinions of those who gave evidence to it?

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

First, the National Audit Office has not endorsed the Government's figure; it has commented on the Government's survey. Secondly, I shall come in a moment to the hon. Gentleman's point about the so-called assertion that was made to the Select Committee, because it was based on a considerable body of evidence.

The Government are proud of their survey. In their response to the Select Committee, they talked about how rigorous and scientific it was. Their amendment to our motion says that it was "systematic". It was not. The methodology that they used in their housing benefit fraud survey was fundamentally flawed. First, they visited only 5,000 claimants out of a total of 5 million. Secondly, the test that they used to determine the amount of fraud was, in effect, a memory test. If claimants could remember exactly what they had said when they first applied for housing benefit and gave precisely the same answers then as they had previously, the fraud investigator assumed that there was no fraud and that it was an honest, above-board claim.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

May I help the hon. Gentleman to stop digging himself further into a hole? Is he not aware that the investigators required the people they called on in the sample to provide documentary evidence of identity and other facts that related to their claims? The survey was based not on memory but on documentary evidence.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

The fundamental test was a memory test. The Government continually fail to acknowledge that the determined fraudster, who quite possibly made his original application on the basis of false papers, and certainly of false information, will have been as confident about producing the self-same false documents and information the second time around as he was the first. An approach that takes that as its starting point is flawed.

The evidence to the Select Committee came from one borough. I accept that it is evidence from only one place and that it is not necessarily a scientific analysis of circumstances across the country. However, the Haringey survey, which was reported in great detail to the Select Committee, was comprehensive. Every housing benefit claimant was visited by the fraud investigators. Its emphasis was on the amount of landlord fraud in the housing benefit system. Every landlord with more than 30 properties receiving direct payment of housing benefit was targeted, visited and questioned in detail, and evidence was demanded.

The evidence that resulted from those visits is stark. It was given to the House by my hon. Friend the Member for Birkenhead (Mr. Field), who chairs the Select Committee, in the debate on 11 March. It is worth reflecting briefly on the nature of the evidence. He had asked those who carried out the Haringey survey to provide details of the first 15 landlords they visited and the extent of fraud in each case.

Photo of Alan Duncan Alan Duncan , Rutland and Melton

Just so that we know where the hon. Gentleman is coming from, does he think that the estimates of the present level of fraud are overstated or understated?

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

The hon. Gentleman should know, first, that the point that I am coming from is that I do not like fraud in the housing benefit system and, secondly, that I have already said that it is extremely likely that the Government's estimate of the extent of fraud is an underestimate. I believe that there is more fraud in the system than the Government assert. I am in the midst of giving the evidence to support that case.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I give way to the hon. Gentleman because this is clearly a day for extremely interesting and useful interventions from the Conservative Benches.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

I am most grateful to the hon. Gentleman.

So that the House can understand, if the hon. Gentleman feels that the Government's estimate is on the low side, can he explain why Opposition spokesmen have criticised the Government for making too high an estimate of local authority fraud levels? The hon. Member for Manchester, Withington (Mr. Bradley) made just that assertion from that very Bench in 1993.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I shall come to that precise point in a moment. The point that my hon. Friend made in 1993 was about the nature of the incentive, or rather disincentive, system that was put in place by the Government, which up to 1993 discouraged local authorities from identifying and rooting out fraud. I shall come back to that in a moment.

Let me return to the compelling evidence from the Haringey survey and the 15 landlords about whom my hon. Friend the Member for Birkenhead spoke on 11 March. In the case of the first landlord, to whom £13,000 a week was paid direct from the local authority in housing benefit, the survey found that 25 per cent. of the money was being fraudulently claimed. In the case of the second landlord, 23 per cent. was fraudulently claimed; the third, 67 per cent.; the fourth, 26 per cent.; the fifth, 16 per cent.; the sixth, 15 per cent.; the seventh, 11 per cent.; the eighth, 33 per cent.; the ninth, 59 per cent.; the 10th, 29 per cent.; and the 11th, 15 per cent. And so the list goes on.

The Haringey survey of landlords with multiple properties, all in direct payment from the local authority of substantial sums week after week, found that the average level of fraud was 20 per cent. That compared with the average level of fraud found by the Government in their survey of somewhere between 6 and 7 per cent.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

No, I will not give way because I want to make progress on this point. I will give way later.

Of course I accept that multiple property-owning landlords in one London borough are not typical of landlords across the country as a whole, but the extent of fraud in those cases ought to alarm anyone. One of the things that worries me deeply is that the Government are far too complacent about landlord fraud where multiple direct payments are made.

The rather arcane argument that the Government and some of their Back Benchers appear to be having about precisely what the level of fraud is—whether it is £1 billion or £2 billion—evades the real problem and the real issue at the heart of the matter. Yes, we need to consider how we can cut down on fraud by claimants, but we also need to ensure that we cut down on fraud by landlords.

Such evidence as exists—the only comprehensive survey in the country is the Haringey survey—shows that the level of landlord fraud is very substantial indeed. The last thing that hon. Members should be is complacent about that.

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

Is it not the hon. Gentleman who is banging on about whether the figure is £1 billion or £2 billion? Of course everyone opposes fraud.

If the hon. Gentleman reads the evidence given to the Select Committee, he will find that, rightly, the decision was taken to survey the worst part of the borough of Haringey first, and that is where the large excess of fraud was found.

This question remains, however: why does the hon. Gentleman seek to prove the higher figure? What is his ulterior agenda? What would he try to do with that figure if he were able to prove it? Are we right to suspect that he wants to say, "Here is a figure; a Labour Government could get that money back easily, so we shall spend it on something else"? In other words, it is the Labour party pretending that it would increase expenditure without there being any pain in doing so.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

First, I am not banging on about whether it is £1 billion or £2 billion overall—the Government are doing that. The hon. Member for Dover (Mr. Shaw) has written to me about it. The Secretary of State has written to all the local authority associations, asking for the evidence on which the Select Committee based its assertions. We know what the evidence is, we know how the Select Committee reached its conclusions and we are saying that the Government are being far too complacent.

I am surprised that the hon. Member for Harrow, West (Mr. Hughes) asks why we believe that additional measures should be taken to combat fraud, especially landlord fraud. The reasons are simple; we believe that fraud is wrong and we want to do everything possible to eradicate it. We do not believe that the Government are doing enough, and we believe that we could do better. That is our simple agenda. If the hon. Gentleman thinks otherwise, he confirms what I have always thought of him—that he is less intelligent than he looks.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I give way to my hon. Friend the Member for Birkenhead.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee

Are not the Tories today in danger of doing two things? First, they are in danger of appearing to the public as defending landlords who are ripping off taxpayers. Secondly, in disagreeing with us in our wish to control fraud so that we shall have a larger budget available to those who are in genuine need, they appear to be obstructing the wish of the House that money should be spent as taxpayers require, on genuine claimants, not on those who are committed to criminal fraud.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

My hon. Friend is right. The Department of Social Security budget is £90 billion this year. I want to ensure that every pound of that is wisely and properly spent and goes into the pockets of those who need and deserve it, and are legitimately entitled to it. I want none of that money to go into fraudsters' pockets. I fear, however, that the Government are being complacent.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I will not give way to the hon. Gentleman at the moment because I want to make progress.

In their response to the Select Committee's report, the Government adopted an attitude that seemed to say, "Aren't we doing well as a Government? We have done all these things; we have taken all these steps; we are fighting fraud; we are talking about fraud. Nothing else needs to be done." That is the overwhelming thrust of the Government's response to the Select Committee, even though the Select Committee said, "This problem is urgent. Serious issues are involved. We have evidence that there is massive organised fraud from some"—I emphasise some—"landlords in the private sector." Yet the Government say, "Everything that we are doing is perfectly all right and we have everything under control."

Two passages in the Government's response might repay closer scrutiny. First, the Select Committee had suggested that any landlord receiving direct payments of housing benefit from the local authority should be required to list the other properties for which payments were being made, either in the same borough or in a different one. That is a simple enough procedure; it would enable cross-checks to be made automatically between different properties. What did the Government say to that?

There is a balance to be struck between imposing undue information burdens on landlords … and requiring them to provide information appropriate to the privilege of receiving money direct from public funds. The recommendation would impose an additional burden, whilst being easily evaded by less scrupulous landlords. So the real reason why the Government refused that recommendation was that it would impose "an additional burden" on landlords.

Secondly, the Select Committee suggested that each landlord with more than 20 direct payment claims from a local authority should automatically be investigated as a matter of urgency—again, a sensible suggestion. Such landlords, after all, receive the most money, week after week, in direct payments sometimes amounting to thousands of pounds. The Government replied: The Government is unable to accept that the Committee's blanket approach to larger landlords would be appropriate at this stage". Yet these "larger landlords" receive the largest amounts and thus constitute the greatest risk to public funds. This is just sensible targeting at the top of the range where fraud can lose the greatest amount to the public purse. Still, the Government dismissed the idea as a "blanket approach" that they were unable to accept. Well, they ought to accept it and in general they ought to accept more of the Select Committee's proposals.

We know how landlord fraud operates. We know that landlords create fictitious tenancies; sometimes there are even fictitious properties. We know that sometimes there is collusion between landlords and their supposed tenants. We know that they spread their fraud across local authority boundaries. We know that they sometimes claim that higher rents are being paid than actually are. There is a host of ways in which fraudulent payments of housing benefit can be obtained.

We have proposed a series of detailed steps that we believe should be taken to help to stamp out landlord fraud. They include giving local authorities the right to obtain proof from landlords and managing agents of their right to control a property for which they are claiming direct payment of housing benefit, with the provision that a local authority could refuse payment if it was not satisfied with the information obtained.

We believe that landlords should be required to list other properties in their control for which direct payments are being received. We believe that local authorities and the Benefits Agency should be allowed lists of all redirected mail for claimants from the Post Office. We believe, too, that landlords of multiple-occupation dwellings should be required to have a licence. A self-financing licensing scheme would both help to deter fraud and do much to improve safety standards and maintenance in such houses. However, when my hon. Friend the Member for Greenwich (Mr. Raynsford) proposed such a scheme during the passage of the Housing Bill, the Government rejected it.

We believe that special teams of investigators should be established across all local authorities, not just in London—which the Government, rather grudgingly, have come to accept, and we welcome their conversion. We believe that at least 10 such teams should be established around the country and that they should deliberately target organised landlord fraud. We believe that all landlords who receive 20 or more direct payments should be investigated as a matter of course.

We believe that the finders keepers rule—which encourages competition rather than co-operation between the Benefits Agency and local authority fraud investigators—should end, so that we do not end up with the same investigators chasing the same fraud, thereby duplicating effort. We believe that there should be an automatic link to the tax system, so that information about all direct housing benefit payments made to landlords will automatically be passed by local authorities to the Inland Revenue. That would be a fairly powerful deterrent to landlords claiming housing benefit, which was not genuinely directed at the needs of a tenant.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

Finally, we believe that a proper monitoring system should be in place to ensure that local authorities fulfil their obligations in this respect. I see that the hon. Member for Colchester, North (Mr. Jenkin) has now returned to the Chamber, so I shall give way to him.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

I assure the hon. Gentleman that I did not leave the Chamber and that I was elsewhere in the Chamber. I am interested in the source of his innovative ideas, as they are familiar to me—the vast majority of them were put in the Social Security Committee's report by me and other hon. Members, including the hon. Member for Birkenhead (Mr. Field). Why is it that the hon. Member for Islington, South and Finsbury (Mr. Smith) has got all his ideas from the hon. Member for Birkenhead? Should not the hon. Member for Birkenhead be the shadow spokesman on social security? It is obvious that the Labour Front Bench does not have any ideas of its own.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I am proud that the Labour party has looked at the Social Security Committee's report, at the evidence that it received and at the sensible recommendations that it made. We want to implement its recommendations. I am surprised that the hon. Gentleman is not leaping to his feet to defend the Select Committee—he is a member—and arguing that the Government ought to be implementing its recommendations, rather than dismissing them as a burden on landlords, or saying that this is a blanket operation that they will not adopt now, or saying that they will set up an inter-departmental ministerial working party to look at fraud. That has been the Government's response to what he and his colleagues have said. Instead of complaining about me picking up the Select Committee's report and running with it, he ought to be complaining loud and clear about the way in which his Government have not done that.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

A considerable number of our proposals for cutting down on landlord fraud go further than the Select Committee recommended. If the hon. Gentleman does not know the content of his own Select Committee's report, perhaps he ought to read it.

Photo of Mr Jeff Rooker Mr Jeff Rooker , Birmingham, Perry Barr

My hon. Friend referred to monitoring. We have to address the issue of accountability. No single official at local authority level is responsible for the housing benefit budget. For example, in my local authority the official who was responsible for the operation of the system refused to accept responsibility for the housing benefit payments—£300 million—but accepted responsibility only for the administration. When it all went wrong and the official was moved elsewhere, it was as if no one was responsible for that huge sum.

This issue has to be dealt with—there has to be accountability at the local level, so that there is a proper reporting system from those responsible for administering the system, through to the local auditors, through to the Benefits Agency and then to the Secretary of State. It cannot be left as a paperwork exercise, as it is now.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

My hon. Friend has made an extremely good point. Clear lines of accountability exist in some of the best local authorities. That is not the case in many local authorities. We should ensure that best practice is disseminated among local authorities so that proper accountability can be achieved. That could be accomplished through the monitoring procedures that we advocate.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee

The accounting officer is the chief officer in the agencies. That is the proper procedure which I think should be followed in all spheres. For example, the Prime Minister, as First Lord of the Treasury, should be clearly accountable for the Budget and for any fraud. Similarly, the chief executive in local authorities should be the chief accounting officer who should be responsible for the money spent by that authority.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

My hon. Friend makes a good point.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

It is not meaningless, because my hon. Friend makes a precise point about accountability. If there is a clear responsibility attached to the most senior officer in the authority, the matter should receive proper attention. That is the key point that the hon. Member for Croydon, North-East (Mr. Congdon) should take into account.

The Government claim in their amendment and in some of their statements to the press in the past week or so that local authorities started taking fraud seriously only when the Government introduced incentives.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

The Minister chortles about that point, but it is untrue. Up to 1993, there was a specific disincentive in the system—which was put there deliberately by the Government—designed to hinder local authorities in the fight against fraud. In its January 1993 report entitled "Remote Control: the National Administration of Housing Benefit", the Audit Commission said: There are other perverse incentives which may place public money at risk. For example, the lower subsidy received for overpaid benefit means that an authority, which believes that it is unlikely to recover an overpayment, is better off if it ignores any evidence of possible overpayment. Since any benefit paid following a fraudulent claim is treated as an overpayment, this creates an incentive to ignore possible fraud. In 1993, the Audit Commission made that clear analysis of the way in which the Government had created a system that actively discouraged local authorities from following up fraud. The Government then introduced a system of incentives that made the situation better. However, they are now making it worse again. None the less, in 1993 the Government recognised that there was a problem and they decided to improve incentives.

Although a discouragement was built into the system before 1993, local authorities up and down the country had an extremely good and active record of combating fraud. I shall give just three examples. Swansea introduced a separate fraud team in 1987 comprising two anti-fraud officers and clerical back-up. In 1990—three years before the Government woke up to the disincentives problem—it was increased to a team of four plus clerical support. In 1989, the borough of Camden set up a dedicated anti-fraud team of three staff, which was later expanded to four. It also began carrying out many residency checks, with home visits, prior to 1993.

The city of Southampton appointed its first full-time designated housing benefit fraud officer, with clerical support, in July 1991. Before then, it had an inner-city fraud team that examined housing benefit fraud and other fraud issues across the board. In April 1993, it appointed two further people to the team. The Government started collecting statistics on fraud, let alone doing anything about it, only in 1986, which was precisely when good authorities such as Swansea were already starting to take practical action to tackle the problem.

If the actions of individual local authorities were not enough, the London boroughs fraud investigators group, which draws together investigators from different London boroughs across the capital city, was set up in 1991. For four years, it called on the Government to set up a Londonwide anti-fraud team. Although it is pleased that the Government have now acceded—rather belatedly—to that request, it does not quite know why the Government took so long to wake up to the need for such a team. So when the Government try to claim, as they do in their amendment, that it is only because of the incentives that they have put in place that local authorities have started to tackle fraud, they are wrong. Local authorities were way ahead of the Government in the actions that they were taking.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

Does the hon. Gentleman concede that weekly benefit savings have almost trebled since the incentive scheme came in, yet local authority associations, which are dominated by Labour, are saying that our increased targets are too high? Why is that? Will he condemn it?

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

The complaint that the local authorities are making is not that the targets are too high, but that the nature of the incentive system that the Government have put in place takes an incentive up to a certain ceiling and then gives much less of an incentive for local authorities to go beyond it. Local authorities have pointed out the flaws in the incentive mechanisms.

However, a new problem is about to hit us. It lies in the bringing forward of compulsory competitive tendering in housing benefit.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I will not give way; I have done so extremely generously, and must make some progress.

The advent of compulsory competitive tendering in housing benefit payments and, perhaps most alarmingly, in fraud investigation in local authorities, was revealed in a written answer to me from the Under-Secretary of State for the Environment, the hon. Member for Croydon, Central (Sir P. Beresford): Our proposals for changes to the framework for compulsory competitive tendering for professional services include a proposal to raise the percentage of financial services work which must be exposed to competition from 35 per cent. to 65 per cent., and limit the availability of exemptions from CCT for authorities which cannot meet that requirement without exposing benefits work to competition. The legal definition of financial services work includes benefits work and relevant authorities may well choose to expose this work to competition in order to meet their competition requirements."—[Official Report, 12 June 1996; Vol. 279, c. 163.] If the Government are intent on forcing local authorities to put out to private tender the payment of housing benefit and council tax benefit, and the work to detect fraud in the receipt of those benefits, any shred of a pretence of having a serious anti-fraud strategy goes out of the window. Targeting organised landlord fraud, which is probably the biggest area in housing benefit fraud, takes highly skilled and trained professional investigators.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

It also requires a bona fide and entirely confidential exchange of information between local authorities and the Government. That is not the sort of activity that should even be considered for privatisation. Conservative Members do not seem to understand the enormous importance of the need to protect, with publicly accountable officers in charge, the confidentiality of information for the general public, while at the same time cracking down on fraud. That need must be paramount. If the Government force CCT on the payment of housing benefit or on fraud investigation, they are opening the gates to inadequate, sloppy procedures in investigation and the destruction of that important principle of confidentiality.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I will give way for the last time to the hon. Gentleman, who has been very persistent.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

I am grateful to the hon. Gentleman. He is in danger of not fulfilling a promise that he made to me earlier. He promised that he would reconcile the statements made by the hon. Member for Manchester, Withington (Mr. Bradley) in July 1993 and by the hon. Gentleman at the Dispatch Box today. To remind him, three years ago the hon. Member for Withington made two substantive points. His first point was that there was a danger of overestimating the level of fraud—if the hon. Gentleman wants to check, the speech begins at column 1253 of Hansard on 16 July 1993—and his second point was that there was a danger of the incentive figures being set too high. If the hon. Gentleman would care to reconcile those figures, I would be most interested.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I gave the hon. Gentleman the answer for which he is looking when I spoke specifically about what the Audit Commission had said back in 1993 about the nature of the disincentives in the system at the time. I also draw the hon. Gentleman's attention to the very fine words of the Minister for Social Security and Disabled People, the hon. Member for Bury, North (Mr. Burt), then the Under-Secretary of State for Social Security, referring precisely to the speech made by my hon. Friend the Member for Manchester, Withington (Mr. Bradley) on 16 July 1993. The hon. Member for Bury, North said: 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."—[Official Report, 16 July 1993; Vol. 228, c. 1296.] My hon. Friend the Member for Withington held that view at the time and he still holds that view.

The second area where the Government need to take some action is in stepping up the number of home visits that are made to claimants. Back in 1979, about 3.5 million home visits were made during the course of a year. In 1994, that figure was down to about 500,000, so the Government had made the situation much worse. Now the Government have realised that home visits are quite important, so they are stepping up a little bit the number of home visits that are made. Some 300,000 more home visits are now being made during the course of a year.

However, we believe that the Government should expand substantially the number of home visits that are made. Of course, there should be a dual purpose in visiting at home. There should be a determination to identify where a fraudulent claim is being made or paid, but there should also be a determination to ensure that people are receiving that to which they are properly and legitimately entitled. Accuracy in the spending of social security funds is a two-sided coin. That always used to be the purpose of home visiting under the previous Government, when 3.5 million home visits were made in the course of a year. It should continue to be the purpose of home visiting.

The work that has been done by the National Audit Office demonstrates clearly that, in terms of inaccuracy of payment of income support, the balance of inaccuracy weighs heavily to the current detriment of the Department rather than to its benefit.

We believe that the Benefits Agency can and should organise its home visits much more efficiently. Figures from the Department of Social Security show that the average cost per visit is £54. Yet the most efficient local authorities manage to achieve a far lower cost per visit.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe , Glasgow Maryhill

Will my hon. Friend comment on the experience of a constituent of mine? A few weeks ago, when a benefits fraud check was carried out in my constituency, two officers knocked on his front door at half-past 7 in the morning, entered and then knocked on his bedroom door until he woke up. This was a person about whom there was no suspicion whatever. He was in fact a perfectly legitimate claimant. Part of the debate should focus on the purpose of home visits, and we must ensure that people are not treated as if some kind of Gestapo was going around.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

My hon. Friend is right to draw attention to that, and she has written to me about the case.

We must ensure not only that home visits are conducted efficiently—to which I shall return in a moment—but that they are conducted in a manner that respects the liberties of the citizen, and that should be one of the elements of the system that the Department puts in place.

As I said, home visits could be organised more efficiently. The best local authorities have detailed software back-up, which provides all the information to ensure that the most is got out of every single visit: properties are grouped street by street and estate by estate, so that unnecessary travelling is avoided, and so on. That is the way in which they should be organised, and it is possible to achieve greater efficiency in doing so.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

Before the hon. Gentleman goes any further, will he confirm the figures given in his document on that subject, in which he says that he expects his fraud investigators to carry out 50 visits a day, which means that they will have eight minutes between ringing the bell on one door, completing the interview and ringing the bell on the next? How much time will be spent on benefit advice; how much time will be spent on fraud advice; and how serious does he consider that objective to be?

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

It is an entirely serious objective, because it is precisely what is being achieved by the best local authority officers who currently carry out home visits. Some home visits, of course, will be much shorter than that, but others will take longer. The Department's figures seem to assume that a visiting officer will sit down and talk through the entire life history of the claimant, his or her reading pattern, what films he or she last saw and the network of relationships of every single claimant in great detail over several cups of tea, taking several hours at a time. That is the current performance of investigators from the Department, but the best local authorities do it far more efficiently.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

No, because I have already given way to the hon. Gentleman's boss.

The third area where the Government need to improve their performance is national insurance numbers. The Government have given us different totals at different times of the year, in different debates and different answers, for the precise number of national insurance numbers that are in circulation. We had an interesting answer on 5 March from the Under-Secretary of State, who said that it was all terribly simple. He said that there were two different computers, and that, yes, they had different totals on them. The national insurance recording computer system, which is based on contributions that are paid, contains 63.6 million records. The departmental central index system, which is based on entitlement to claim benefits, contains 77 million numbers.

Thanks to the clarity with which the Under-Secretary of State explained the arrangements to us, we all understand them. What the Government have so far failed to explain, however, is a discrepancy identified by the Select Committee. It relates to national insurance numbers classed as inactive because they belong to deceased persons. Although, by virtue of having existed, a deceased person must surely be listed on both computers, there are nearly 1 million more numbers on one computer than on the other. That is a dramatic disparity.

Even if the Government were able to explain why nearly 1 million numbers are unaccounted for, however, it would still be far too easy to establish a national insurance number and use it for fraudulent purposes. There is a good deal of organised big-time fraud at present: people with portfolios of national insurance numbers are using them to claim benefits to which they are not entitled because their identities are entirely fictitious. The swipe card technology which the Government are now introducing—and which we support—may bear down on the level of error in payments that are made, but it will not tackle the fundamental problem of the fraudulent obtaining of national insurance numbers.

The Government should take a series of steps to cleanse the national insurance number system of numbers that go astray in that way. They include greater vigilance in preventing people from using false identities to apply for national insurance numbers, and more frequent checks by the Contributions Agency to reconcile benefit claims with contributions paid. At present, such checks are carried out annually, and do not pick up frauds that intelligent fraudsters perpetrate between checks.

Local fraud investigators should be allowed access—currently denied—to the Contribution Agency's departmental central index. On-line data matching across departments should be introduced, with a timetable for rapid future progress. Special checks should be run on all inactive numbers, and there should be a flagging system to ensure that any number that is inactive for any reason is targeted. There should also be a special unit to co-ordinate the cleansing and investigation of all suspect numbers. The Government are coming up with some bits and pieces, but they are not yet doing enough.

We believe that the Government should deal with another small problem. It is highlighted by the case of Mr. Mark Lee, which was described in The Sunday Telegraph a couple of weeks ago. Mr. Lee, a convicted fraudster, had obtained a mortgage by fraudulent means and was sent to prison as a result, but the income support system continued to pay the interest on his mortgage, even though the mortgage had been fraudulently obtained. The Department of Social Security's answer was, "This is not a matter for us because there is no specific fraud in the claiming of benefit for the interest payment."

Clearly there is a loophole in the law. If the mortgage was obtained fraudulently, surely the taxpayer, via the Department of Social Security, should not be picking up the tab for keeping up the mortgage payments. The Government should urgently consider that matter, to find out how that legal loophole can be tightened.

In the past year or two, the Government have talked a lot about fraud. They have done a little bit about it. Labour Members welcome much of what they have done—the measures are sensible—but the Government are being far too self-congratulatory about what they have done. Their response to the Select Committee report is riddled with complacency. They are going backwards on what they have achieved because of their ideological attachment to compulsory competitive tendering.

The Government should adopt at the least the spread of measures proposed by the Select Committee. They should go further than that and embrace our recent ideas and proposals. There is far more to be done to tackle fraud, and it is a Labour Government who will set about doing it.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security 4:36 pm, 18th June 1996

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'welcomes the priority given by Her Majesty's Government to tackling all aspects of benefit fraud; endorses the Government's successful work in detecting and preventing fraud which has resulted in the benefit savings target of £1.3 billion being exceeded in 1995–96; congratulates the Government on carrying out the first systematic review of the amount and type of Housing Benefit fraud; notes that Housing Benefit administration is the responsibility of local authorities and that local authorities only started tackling fraud seriously once the Government introduced financial incentives for them to do so; welcomes the new fraud strategy which will result in savings of £2.5 billion a year by 1999; deplores the Labour Party's attempt to exaggerate the amount of fraud as a pretext to spend more money; and condemns the Labour Party's continuing half-heartedness in tackling benefit fraud and abuse.'. No one will be fooled by the cynical speech of the hon. Member for Islington, South and Finsbury (Mr. Smith). He tried to con people that Labour is no longer soft on fraud and deliberately exaggerated the amount of fraud, so that Labour can pretend that its spending plans could be painlessly financed by cutting fraud. He wanted to disguise the flimsiness of that claim by peddling a plethora of spurious statistics and dubious detailed policies. His speech shows not the zeal of the convert, but the guile of the con man.

Rooting out fraud and abuse always has been, and remains, my top priority. I am happy to say that that was recognised by the Select Committee on Social Security, which said that the Secretary of State has shown himself to be"— I pass over the kind remarks about my intellect and ability— the most determined to counter fraud".

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

No: it responded to my natural modesty.

Since I became Secretary of State, we have saved record amounts on fraud, and we have plans to go on breaking those records year after year. In a moment, I will spell out what we have achieved and what we will achieve, but first I want to dismiss the ridiculous claim of the hon. Member for Islington, South and Finsbury that he and his party are—suddenly—tough on fraud.

The simple truth is that Labour has always been at best indifferent, and at worst hostile, to tackling benefit fraud. Nothing Labour Members have said today should be allowed to conceal that fact. The hon. Member for Sheffield, Brightside (Mr. Blunkett) castigated the Labour party for being for too long linked with the freeloader"— and so it has. The fact that, before this debate, Labour has never initiated a debate on fraud illustrates its sheer indifference to the subject. When we have had such debates, Labour has invariably tried to play down the amount, and the importance of the issue.

I remember the hon. Member for Manchester, Withington (Mr. Bradley) accusing us of overstating the amount of fraud in the system. He argued that, even if our estimates were true, the amount was not significant. His words were: We should continually bear in mind the fact that, in the context of the overall budget, even £1 billion is not a large amount". Today, the Labour Front-Bench team are overstating the amount of fraud in the system precisely because they now realise that £1 billion is a large amount, and they desperately need to conjure it up from somewhere to cover part of their spending plans.

Stopping housing benefit fraud is the responsibility of local authorities—most of which happen to be Labour. Most of them made little or no effort to tackle fraud—until I set each authority a target, backed by tough penalties and incentives, to galvanise it into action. In the first year, local authorities doubled the amount of fraud they detected, and increased the figure dramatically again the second year—yet members of Labour's Front Bench condemned those targets when I introduced them.

The hon. Member for Withington, Labour's Front-Bench spokesman at the time, said: 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 will find it extremely difficult to hit even the lower targets … the Government have set the targets unrealistically high".—[Official Report, 16 July 1993; Vol. 228, c. 1254–55.] Since then, the Opposition have opposed our measures to prevent abuse of housing and other benefits.

In January, we introduced a reform to ensure that taxpayers no longer pay rents in full to any new claimant who chooses to occupy a property with a rent above the average for the type of property suitable for the household in that area—and Labour opposed it. That measure will make collusive deals between landlord and tenant to rip off the taxpayer harder, yet Labour opposed it.

From the autumn, a further reform will ensure that housing benefit does not pay higher rents for unemployed young people than they would normally be able to afford out of work. Labour opposed that reform too, just as it opposed other measures to prevent abuse—such as the objective medical test for incapacity benefit, to stop fit people abusing the system, and the removal of entitlement to housing and other benefits from bogus asylum seekers.

Although Labour said that asylum seekers were mostly genuine and came to the United Kingdom to escape persecution, not to acquire our benefits, the figures tell a different story. Our benefit changes were made in February. The number of people claiming asylum in that month fell 7 per cent. below last year's level. In April, the figure was down a quarter, and in May it was down one half.

Of course it is too early to be certain that trend will be sustained, or whether it will be reinforced when the Asylum and Immigration Bill is enacted—but the first signs that the flow of bogus asylum claims is being stemmed are encouraging. That is good news above all for genuine refugees, as it will be easier to deal speedily with their claims.

The Opposition's indifference and hostility to tackling fraud is in marked contrast to our commitment and success. I have consistently given the issue the priority it deserves. I put in place the organisation to pursue fraud effectively, appointed a senior official with exclusive responsibilities, set up a fraud board and appointed a Minister with specific responsibility for tackling fraud—my excellent hon. Friend the Under-Secretary of State, the Member for North Hertfordshire (Mr. Heald).

I developed for the first time a method of measuring the extent and incidence of fraud in each benefit. I increased funding for the fraud effort, and ring-fenced it against running cost cutbacks. I introduced home visits for new claims. I gave local authorities the incentives to tackle housing benefit fraud to which I have referred, plus extra guidance and help.

All those measure are already showing up in increasing success in detecting and stopping fraud. In each of the last four years, savings have exceeded targets—and targets have been sharply increased.

Photo of Mr Jon Owen Jones Mr Jon Owen Jones , Cardiff Central

Does the Minister, in his attack on fraud, intend to ensure that his party pays back the money paid to it by the fraudster Asil Nadir?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

That is not a responsibility of mine, and nor is it relevant to today's debate. One of my main responsibilities is dealing with the frauds perpetrated by Robert Maxwell—the only Labour Member ever to take a serious interest in occupational pensions.

Total savings for last year as a result of my measures are expected to exceed £1.3 billion, including some £220 million of fraud discovered by local authorities—which, together with the Benefits Agency, discovered about £390 million of housing benefit fraud over the past year. We know how much fraud is detected. The question is, how much at present remains undetected? If one is to plan an effective fraud protection strategy, it is essential to know how much fraud there is, of what kind and what type of fraudster commits it.

In the past, no Government in this country or abroad had succeeded in measuring fraud, but we have developed a reliable method of doing so. It involves taking a representative sample of claimants, examining all available information on each claimant, sending trained investigators to visit claimants at home, carrying out visits unannounced and repeatedly until contact is made or non-residence established, and requiring the claimant to prove his or her identity and facts relevant to the claim.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe , Glasgow Maryhill

Does the Secretary of State set any parameters for the hours during which home visits should be made or for the conduct of the officials who make them?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

I will certainly look into the case that the hon. Lady mentioned earlier, which would not have been a routine visit. They are not made any more—any more than I imagine the hon. Member for Islington, South and Finsbury intends 4 million such visits as part of his unbelievable campaign.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe , Glasgow Maryhill

I was talking about the spotlight campaign in Glasgow.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

The hon. Lady reminds me that she opposed our spotlight campaign in Glasgow. Unlike her, a large number of Glasgow citizens co-operated with that campaign, which succeeded in making considerable savings.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe , Glasgow Maryhill

On a point of order, Mr. Deputy Speaker. The Secretary of State is in danger of misleading the House. I said that the Government should put as much energy into identifying people who are due benefits but not receiving them.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

That matter has absolutely nothing to do with the Chair. The hon. Lady has been in the House long enough to know that there are other means of seeking such redress as she believes is appropriate.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

With the co-operation of the citizens of Glasgow, some £2.8 million has already been saved in that city, which means that we are better placed to meet the needs of genuine claimants in that part of the world.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

In the light of my hon. Friend's point of order, will the Secretary of State withdraw the slur against her views that he just perpetrated?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

If I have in any way slurred any hon. Member, of course I withdraw my remarks—but the hon. Lady gave the clear impression that she was not supportive of the spotlight campaign.

Photo of Mr Roger Evans Mr Roger Evans , Monmouth

She said money should not be spent on that campaign.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

My hon. Friend recalls the hon. Lady saying that she thought money should not be spent that way. She may have said that.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe , Glasgow Maryhill

For the record, when the Secretary of State came to Glasgow specifically to blitz benefit fraud, I commented—and I stand by this—that the right hon. Gentleman would do well to put equal effort into assisting people who have been awarded benefits running into thousands of pounds but have not received them. Of course I do not condone fraud, but it is contemptible to chase people for fraud and do nothing about claimants who are due benefits.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

The hon. Lady has done her best to save her reputation from her previous comments.

The systematic surveys undertaken by fraud officers have enabled them to establish the amount and type of fraud. The results show that about 10 per cent. of income support and housing benefit claims are fraudulent.

Criticisms of the survey methodology simply do not hold water. The interview was not a just a memory test, as the hon. Member for Islington, South and Finsbury said. It required documentary proof of identity and other facts. Far from ignoring landlord fraud, the survey was particularly well designed to detect it. The hon. Gentleman should understand enough about landlord fraud to know that it requires either a bogus property or a bogus tenant. Visits established with absolute certainty whether or not the property existed, and with near certainty whether the tenant was genuine. Finally, the methodology was endorsed by the National Audit Office.

I have no incentive to understate the amount of fraud. Indeed, until today, the Opposition have always accused me of exaggerating it. By contrast, Labour now has every incentive to exaggerate. It wants to appear tougher than the Government, so as to con people that it is no longer soft on fraud. Above all, it needs to conjure up imaginary "savings" to offset the real cost of its spending plans. That is why Labour Members leaped uncritically at the suggestion that housing benefit fraud could amount to £2 billion, instead of the £1 billion established by our rigorous and systematic study.

The hon. Member for Islington, South and Finsbury said that those are not the bases for Labour's figures, and that Labour Members do not endorse the £2 billion figure, but the Leader of the Opposition seized on that very figure in his speech in the Southwark cathedral series, which preceded my speech.

The £2 billion figure is, to say the least, flimsy. The figure is mentioned by the Select Committee in its report, but the Committee does not examine it, let alone endorse it. The figure relates to a guesstimate made by the local authority investigative officers group. It is not based on any systematic survey, representative sample or audited methodology.

LAIOG members are professional investigators, but they are not trained in statistics, sampling or survey methodology. They sensibly target their efforts on areas in which they are most likely to detect fraud. However, they then scaled up the percentage of fraud found on those drives and applied it to the population as a whole. In other words, the LAIOG figures vastly exaggerate the amount of fraud.

For the Opposition to set aside an audited, thorough figure for that type of guesstimate is irresponsible, and demonstrates that they are less interested in truth than in propaganda.

Today the hon. Member for Islington, South and Finsbury placed much weight on a single survey carried out by Haringey into 15 highlighted cases, and mentioned fraud levels of up to 50 per cent. Haringey claims that there is a very high level of fraud in its area, and has increased significantly the amount of fraud it has discovered since I gave it incentives and subjected it to penalties if it failed to do so. But the total amount of fraud it detects and stops is less than 3 per cent. of its housing benefit budget.

Across its budget, Haringey does not seem to have identified, let alone stopped. the levels of fraud suggested by the hon. Member for Islington, South and Finsbury. Perhaps he would care to explain the discrepancy between the figures he gave and the average savings that Haringey is achieving.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

The hon. Member for Birkenhead (Mr. Field) rushes to his aid.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee

The Secretary of State realises perfectly well that Haringey has, sensibly, started in those areas in which it will gain the biggest rewards for taxpayers. As he is almost limbering up to attack and to dismiss the Haringey survey, as he did before the Select Committee, would he like to provide us with evidence from other local authorities that have conducted similar surveys on landlords with many claims, and have come up with figures different from Haringey's?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

In a moment, I shall mention the figures produced by the London fraud investigators group, which believes that, in total, there is £40 million of landlord fraud in London. That figure is based on figures from its members in London, and it tallies with our figures.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee

I am sure that the Secretary of State will quote that figure again shortly, but it does not answer the question that I asked him. Because he was knocking the Haringey survey, I asked him whether he could cite a single survey from elsewhere that deals with the same problem and the same issue—landlords with many housing benefit claims—that disproves Haringey's figures? Can he or can he not do so?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

I am not trying to knock the figures provided by Haringey. I am suggesting that its figures relating to a section of its claims—the percentage of fraud discovered—should not be used across all claimants in the borough, and even less so for all claimants in the nation. That is the only point that I am making. I have no doubt that there will be subsections of claimants in any borough with a very high level of fraud and abuse, and it is right and proper that fraud officers should target them and make them their first priority.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee

I am grateful to the Secretary of State for distancing himself from his Back Benchers by making a clear statement to the House that he thinks that landlords with large numbers of properties are a real problem, and that fraud among that group should not be taken as representative of fraud among all claimants.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

Some landlords with many tenants are a problem, but, of course, the landlords with the most tenants are councils and housing associations. There are some very reputable large private landlords, and it is as absurd to lump them all together as it would be to try to blackguard the name of all housing benefit claimants.

The Opposition, having seized on the flimsy figure of an extra £1 billion of fraud, then had to invent even flimsier claims that they could get it back. So they put together three rather tenuous fraud programmes, and plucked savings estimates for each of them out of the air. By an extraordinary coincidence, the savings from those three fraud programmes add up to exactly £1 billion.

Today, it was noticeable that the hon. Member for Islington, South and Finsbury singularly failed to defend or even to mention the detailed savings figures, which, elsewhere, he has proposed are realistic.

He proposes, first, to get back an additional £310 million of landlord fraud. The problem is that, on all the best evidence, in total there is only about £150 million of landlord fraud. That figure emerged from our survey, and, as I mentioned, our survey should be particularly accurate in identifying and estimating the amount of landlord fraud.

As I said, our estimate is also consistent with the estimate of the London fraud investigators group, which believes that there is about £40 million of landlord fraud in London, where it is particularly rife. London accounts for a fifth of all properties; therefore, grossing up—but allowing for a slightly higher rate in London—produces a similar figure. So it is simply impossible for Labour to save an extra £310 million when there is only £150 million of such fraud to be stopped. One cannot get a quart out of a pint pot Labour proposes a programme of 4 million home visits to all benefit claimants. Allegedly that would save an extra £520 million net of the cost of those visits, over and above the savings that we intend to make. But we know from our surveys that about 10 per cent. of claimants are defrauding the system. To visit 100 per cent. of claimants, therefore, means 90 per cent. of visits will be wasted or ineffectual.

We want to target visits so as to catch likely fraudsters, but to minimise ineffective and costly visits. Therefore, I initiated a programme to visit almost a third of all income support claimants each year, including 600,000 visits to check existing claimants. Those visits will be targeted on likely fraud, using the most powerful data matching system in Europe.

Visits need to be thorough to be effective, which takes time and costs money. Our visits take an average of 80 minutes, cover about 80 questions and cost £21 each. However, Labour's proposal—which is quite explicit in its document—relies on each investigator doing 50 visits a day, at a cost of £3 each. That means that the investigator will have only eight minutes to move from one address to the next and to carry out the interview. It might be possible for my hon. Friend the Member for Falmouth and Camborne (Mr. Coe), sprinting fast between doors, to achieve that.

I challenge the hon. Member for Islington, South and Finsbury to tell us what identity checks he proposes to undertake in the fewer than eight minutes that will be available. What documentary proof must be found by their breathless investigators? What further proof will be required of other facts in the claim? Will investigators return if no one is in? My understanding is that Haringey counts "no one at home" as an effective visit. Can he confirm that his proposals rest on the same assumption?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

I shall give the hon. Member for Islington, South and Finsbury a chance to gird himself to answer the question.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

The Secretary of State asks a direct question, so it is perhaps courteous to give him a direct answer. Of course the system used by Haringey and other local authorities—because it groups properties by area, and achieves very great efficiency by doing so—means that some people who are out are not visited again immediately. Then, of course, one goes back to that area and tries again. The important thing is the grouping of property by street and area, so that efficient visiting can take place and the cost to the taxpayer can be reduced. That does not happen now with the DSS, which is grossly inefficient in its organisation, but it does happen in the most efficient local authorities.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

I can correct the hon. Gentleman's error. We operate a similar system of grouping—

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

That is because they take 80 minutes, not eight. That is the big difference. Subsequently, we follow up the work that we have done.

The hon. Member for Islington, South and Finsbury proposes to save an extra £170 million from stopping abuse of national insurance numbers. He implied that there must be national insurance number fraud because there are more NINOs than people in the United Kingdom. We keep the national insurance numbers of dead and emigrated people, not least to prevent fraud.

The reason there are more dead people on the departmental central index computer than on the national insurance records computer is that, as well as including those with national insurance contributions, the DCI computer includes those who make benefit claims but have no national insurance record. It keeps records of them when they are dead. I hope that that sets to rest the hon. Gentleman's spurious point about the difference in the numbers.

What is more, the records are clearly marked, so that, if someone tries to claim on a dead person's national insurance number, alarm bells ring. We do not pay them benefit unless they happen to be called Lazarus.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

I can assure the hon. Gentleman that all our evidence suggests that resurrection is a rare phenomenon in this country at this time.

The hon. Member for Islington, South and Finsbury, who is obviously busy trying to find support for his spurious points, assumes that one national insurance number in 500 is involved in identity fraud. The only justification for that number is to arrive at the hon. Gentleman's spurious savings figure of £1 billion. One United Kingdom citizen in 500 implies some 110,000 people, which would mean that one income support claimant in 50 was using a false national insurance number. There is no evidence that multiple identity fraud is that extensive.

It is not easy to get a new national insurance number. The applicant must first explain why he does not have one already, because virtually every British-born citizen is allocated a number as a consequence of the child benefit system. The fraudster must usually claim to be from abroad. If they claim to be from the European Economic Area or a British citizen brought up abroad, they will now have to pass the habitual residence test.

That route is distinctly unattractive for the multiple identity fraudster, but it would be reopened by the Opposition, who propose to abolish the habitual residence test. [Interruption.] Oh, the hon. Member for Islington, South and Finsbury said that he does not intend to abolish that test.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

The Secretary of State said that the Opposition have promised to repeal the habitual residence test. When? Where? What is his evidence?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

I am prepared to accept the hon. Gentleman sedentary comment, which he did not repeat, that the Opposition now say that they will not repeal it.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

Quite honestly, I thought that the Opposition had promised to repeal it. I will check in the Official Report to see whether that is so. If the hon. Gentleman is saying that they intend to keep it, that is interesting. If he is saying that they do not know, that is as ineffective and will have much the same effect as his lamentable failure to answer the questions on "Newsnight" the other evening. I suggest that in future, for this sort of debate, he should find out what his party's policies are before criticising ours.

The alternative to claiming to be someone who is subject to the habitual residence test is to claim to be an asylum seeker. There are currently 46,000 asylum seekers claiming benefit, which is far short of the 110,000 people the Opposition claim are involved in national insurance number fraud, even if all of them were fraudsters using multiple identities.

Alternatively, the Opposition's multiple identity fraudsters must be involved in what is called piggy-back fraud, which means that they pretend to be a citizen who is not currently claiming benefit. That sort of fraud would have been exposed by the identity checks during our fraud survey. If Labour's estimate of one in 50 claimants was correct, 100 of our 5,000 sample would have been found to be involved in those frauds. In fact, the survey showed that only two were involved in such fraud. There may also have been some in the non-resident category who were involved in multiple identity claims, but they would have been picked up in our estimate of the total of fraud.

En passant, I should mention that, under the type of home visiting proposed by the Opposition, non-resident fraud will not be established, because the visitor will simply note down "not at home" and will not go back. We go back repeatedly until we establish contact with the person or non-residency.

The comprehensive measures to combat this type of fraud, of which tightening up on all aspects of NINO issues is important but only a partial element, will eliminate a large part of the national insurance number fraud that already takes place. Any genuine element within Labour's figures simply represents double counting of the savings for which we are already budgeting.

Since I became Secretary of State, we have been unprecedentedly successful in tackling benefit fraud, but I want to exceed our successes. That is why, last year, I announced a comprehensive fraud strategy for the next five years. We are already implementing that programme with investment and information technology. We are increasing the resources that we devote to fraud. This year, we are making home visits to a third of all income support claimants to reduce the risk of fraud, and we are also spotlighting different parts of the country for intensive fraud efforts. Early returns from Operation Spotlight suggest that it is already having excellent results, not just in Glasgow.

We are investing heavily in state-of-the-art technology. We are setting up a new computer system to enable us to match and verify housing benefit claims in different parts of the country. Last month, I announced the winning consortium to develop the new benefit payment card. That will mean that claimants no longer have to carry valuable order books around with them, and will largely eliminate fraud by people stealing or forging order books and girocheques.

Cumulatively, my new fraud strategy should be saving £2.5 billion a year before the end of the century. That will help to control the cost of the welfare state, and will help us to continue to support the people who need it.

Labour's document on fraud contained the first detailed proposals to emerge from the party's interminable review of social security.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

Before the Secretary of State finishes dealing with the figures, perhaps he might like to correct what I am sure was an inadvertent error in what he told the House earlier.

He said that Haringey's savings from its work on fraud amounted to only 3 per cent. of its budget. As I understand it, the savings achieved so far—we are not yet at the end of the process—amount to £6.5 million out of an overall housing benefit budget for the borough of £120 million. That means that the figure is more like 5 per cent. than the 3 per cent. that the Secretary of State gave. I hope that he will seek the leave of the House to correct that information.

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

I was using the figure for the last full year that has been reported. The hon. Gentleman is correct to say that, in 1995–96, the figure is £6.4 million—not £6.5 million—but the total housing benefit fraud has not yet been reported. It is still only a fraction of the level that he tried to suggest existed. He should apologise to the House for the impression that he has falsely created.

Labour's document on fraud contains the first detailed proposals to emerge from its interminable review of social security. Six months ago, the hon. Gentleman promised that he would think the unthinkable. In his document, he has merely produced the unoriginal, the unworkable and the unscrupulous.

The issues in fraud are simple. We need to understand the amount and type of fraud. We need to provide the right incentives to encourage local authorities to tackle it, and to deploy the Government's anti-fraud resources to give the best value for money. Labour fails on all three counts. It deliberately exaggerates the amount of fraud, ignores the role of local authorities and proposes to squander taxpayer's money on tasks that would have negligible returns. It ducks the real issues and offers quack remedies.

If Labour fails so spectacularly on fraud, where the issues are simple, how can it hope to offer solutions to the more complex challenges of the welfare system, such as helping people off welfare and into work? Indeed, how can a party so incompetent even in opposition possibly claim to offer competence in Government? However, Labour's fraud policies are not just incompetent: they are fraudulent. Bogusly high fraud figures offer bogus finance for all too genuine spending plans. The higher the fraud numbers it claims, the deeper it will have to dig into our pockets when, if it is elected, it has to implement policies that it cannot finance.

Our fraud programme, by contrast, is based on real numbers and real action. Tackling fraud has always been my top priority, and it will go on being my top priority. We have already achieved record savings, and we plan to break those records again. Our fraud programme means that help can be given to the people who need it and that taxpayers can afford to give that help. Our policies aim to keep fraudulent claimants off benefit, and to keep fraudulent politicians out of office.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee 5:11 pm, 18th June 1996

The Secretary of State's response was somewhat uncertain. I am sorry that he was not able to read the original comments that I drafted for the Select Committee report. They were much more favourable to him than those that appeared. The problem is that Conservative members of the Committee always think that the Chairman is up to some plot when such words appear, so they watered down my comments. I am happy to explain that there is no plot and pay him credit because, in respect of tackling fraud, he is the most serious figure to hold his office.

We must understand why the Secretary of State is so anxious about this debate and his response to the Select Committee report. He has a difficult task. It was not merely to wrong-foot him that our first report was on housing benefit fraud. We did not intend to make him look soft on fraud or the causes of fraud, although some of the interventions of Conservative Back Benchers in the speech of my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) suggest that that is the image that is being put over to the country. Rather, the Select Committee was anxious to change the House's image in respect of fraud and to bring it into line with the image that most voters have of fraud.

The report was meant to concentrate minds on the fact that it would be amazing if there were little fraud when the largest single departmental budget—of more than £90 billion—is involved. We suggest that fraud is very large indeed. I do not fall for the Secretary of State's trick question about what I would suggest the level of fraud is. By its nature, we can never know the extent of fraud in a system. Good government requires, as does the defence of freedom, that we should be vigilant all the time and seek new ways to crack down on fraud.

The report said that the country's image of fraud as having a dual nature is correct. An element of serious criminal fraud operates against our budgets, an aspect to which I shall return in a moment. In examining housing benefit fraud, we had, because of its nature, to concentrate on landlords because that benefit is peculiar in that, although it helps claimants, it is often paid direct to the landlords. In doing that, I have no wish to put forward the image that claimants do not commit fraud; they do and that is wrong. We may sympathise more with those who have few funds who commit fraud when compared with those who have large funds who commit it, but fraud is wrong whoever does it.

In case there is any doubt in the House, I shall read a letter that I received today from someone who did not know about today's debate. She wanted to relay her anguish about her experiences and wrote: Do you and others at Westminster know the depth of my anger and anguish when I stand in line in the Post Office to pay £2.95 to send a letter by special delivery and at the same time watch a foreigner in front of me collect seven £10 notes and take his mobile phone out of his bag? I am just one of those contributing towards the £70 but could not afford a mobile phone or the cost of the calls. I want to know when anyone is going to do something about all this because I know the people of this country are being destroyed. I write to you although I know Peter Lilley is actually the man in charge". There is fraud that is committed by determined individuals who should not be claiming such benefits and there are people in gangs who commit fraud against our budget. There is also a third category of people who do small jobs on the side, or who have boyfriends and do not declare them. Most of my firepower is directed at those claimants who deliberately work the system and commit fraud, and at the gangs.

The report aimed to change the image of the House's concern with fraud away from one that was concentrated on individuals towards the serious criminal fraud element that operates against the social security budget. The Secretary of State was careful not to say that the Select Committee was wrong to estimate the figure at £2 billion because no one knows what figure for fraud he will find next year. He was anxious not to knock his feet away in case he is able to say before the general election that £2 billion is the figure involved. Such figures grossly underestimate the element of serious criminal fraud in our system.

I want to dwell on three points that show why I am worried. The Secretary of State has commissioned the most expensive investment programme that any Department has introduced so that we can have smartcards in the system. The group that has won the contract gave the Select Committee a seminar about how the process will work. It was at pains to point out that it is responsible for security, once it has been told that somebody should be paid, until the actual payment.

If I am right in saying that the Secretary of State underestimates the extent of organised fraud against our system, the new and expensive smartcard system will be given many instructions to pay benefit to people who should not get it. In other words, taxpayers will pay a massive sum to invest in high technology that will make it easier rather than more difficult for people to commit fraud in claiming benefits to which they are not entitled. It will, we hope, prevent some fraud in stolen giros and impersonations, but it will not deal with fraud committed before that part of the operation. That is the part on which I am concentrating. [Interruption.] The Secretary of State disagrees from a sedentary position. I am happy to give way if he wants to put something officially on the record. Time will tell which of us is right—those who disagree from a sedentary position or those who are on their feet. That is the first issue.

The second issue is our national insurance numbers. I go much further than the careful and cautious remarks that my hon. Friend the Member for Islington, South and Finsbury made to the House today. I believe that our national insurance number system has been overrun. At some stage, the Government will have to face up to that and introduce a new system. They will need identity checks, fingerprinting and DNA testing for such a system. That is how large I believe the overrunning of the system is. It is not the system's fault, for of course it was born in 1948 to serve another purpose than the service that it now carries out, which is both to allot benefits and, in some instances at least, we hope, prevent fraud.

The third issue of concern is the impossibility that the Secretary of State faces in getting any one of those wonderful computers in any one area talking to computers in other areas. He was at pains today to blame Labour councillors for not jumping to and responding more vigorously to the incentives that he now gives to crack down on fraud in the housing benefit system. However, his Government introduced the housing benefit system and allowed the anarchy that we now face to reign.

Some hon. Members may be shocked to know that the Government allowed every local authority to design its own form. So the forms ask different questions in different ways of different claimants. In those circumstances, it is impossible to do a data-matching exercise without incurring massive costs. So, although the Secretary of State wants computers to talk to computers, as he and the House will know, they can do so only in one area—Westminster. The data in that borough are such that the computers can talk to one another; but computers cannot talk across borough boundaries.

The carelessness and casualness of the Government in designing the housing benefit system, the faults which they are trying to blame on other people, are such that it is difficult to crack down on the extent of fraud that we believe exists in the current system.

I end with a challenge. The Secretary of State was kind to the Select Committee report in his comments today. How else could he respond, for there is a Conservative majority on the Committee? Once or twice he had a go at us. That was fair enough. He suggested obliquely here and there that perhaps we had not probed our evidence properly or that we had been too simple or trustful in accepting the figures that we put in our report. So let the debate be joined properly.

The Secretary of State is giving challenge money to local authorities to help them improve their fraud prevention techniques. Will he allot some to the Select Committee so that we can undertake some of the surveys that we would have liked to undertake? To take one example that he mentioned, we could find out whether the piggy-backing that he described in the national insurance system is as small a problem as he suggested. I believe that it is much more serious. The Secretary of State was right to say that we did not have the resources to conduct the detailed memory plus other survey that his Department conducted.

I make a plea in the debate tonight that the Select Committee should receive challenge money so that we can more seriously set about our business in defining the true proportions of fraud. The aim of the Select Committee report was to change the debate—hence the unease of the Secretary of State—away from the idea that much fraud is committed by individual claimants. Although the Secretary of State did not suggest that most fraudulent claimants acted in Labour-controlled areas, we know his line of thought. The report showed that there was another side to fraud.

The housing benefit budget is the largest of all Government budgets. It is inconceivable that it is not under attack by serious criminal fraud. We said in the report that it was. We listed four whole pages of recommendations, most of which the Secretary of State says he is still thinking about. The question that taxpayers are asking is: when will the Secretary of State make up his mind?

Photo of Bernard Jenkin Bernard Jenkin , Colchester North 5:24 pm, 18th June 1996

There is no real disparity of intent or objective between the hon. Member for Birkenhead (Mr. Field) and my right hon. Friend the Secretary of State. Indeed, the principal purpose of the rhetoric adopted by our report was to encourage vigilance and to test assumptions. I make no apology to my right hon. Friend for being part of the exercise to challenge things that are currently accepted as true, to test the validity of arguments and to come up with new ideas.

I wish to point out the place of the figure of £2 billion in that report. It does not appear in any written evidence that we received. Although it features in our findings, it does not appear in the relevant paragraphs to which the summary of findings refers. The figure of £2 billion was not even uttered by the man who gave evidence when it entered the debate.

The figure of £2 billion came from the hon. Member and my former hon. Friend—I use the word "former" in the merely technical sense—the Member for Stratford-on-Avon (Mr. Howarth). On page 56 of the evidence, the hon. Gentleman himself extrapolated the figure from comments made by Mr. Webster of the Local Authority Investigation Officers Group, saying: But we are talking here of trivial sums"— hon. Members will understand that he was using the term in its ironic sense. If your assessment of the scale of fraud is right, the totality of fraud is somewhere nearer £2 billion. Mr. Webster replied: I agree with you. The figure was introduced into the debate by a Labour Member of Parliament. The witness was led into talking about a possible figure of £2 billion. As my right hon. Friend the Secretary of State rightly says, it is not based on any scientific or methodological survey.

As my right hon. Friend the Secretary of State also said, if one extrapolates to the entire United Kingdom figures from one of the worst boroughs, which is targeting some of the worst properties in London, one might reach such a figure. Until we have harder and firmer evidence, it would be irresponsible to base policy on that extrapolated figure. Yet that is exactly what the hon. Member for Islington, South and Finsbury (Mr. Smith) has done. He has changed his whole policy as a result of that extrapolation by one of his hon. Friends, not even uttered by the witness who was being interviewed at the time.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I note that it is in paragraphs 49 to 51 of the Select Committee report that the figure of £2 billion is adumbrated. I have never endorsed that figure as a specific figure, but the hon. Gentleman suggests that I have for the purposes of his argument. I notice in the proceedings of the Committee an item that says: Paragraphs 23 to 58 read and agreed to. The hon. Gentleman agreed to those paragraphs. Why is he now disagreeing with something that he agreed to when the Committee report was accepted?

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

The hon. Gentleman's problem is that he cannot see the difference between a speculative guess, used tentatively to highlight the potential for fraud, based on what one witness said, and a hard and fast figure. Although he says that he has never endorsed the figure, he appears to have adjusted his party's policy on the basis that it is gospel. That is nothing short of hypocrisy—if I may use that term.

Photo of Mr David Shaw Mr David Shaw , Dover

Does my hon. Friend accept from me, as a fellow member of the Social Security Select Committee, that what we were trying to do was to come up with an order of magnitude of fraud in relation to total housing benefit of £10 billion? We were considering the possibility that fraud might be higher than the £1 billion that many people were accepting, and whether it could be as high as £2 billion. We were trying to consider all the implications of that in relation to a total figure of about £10 billion, but in my view we never said that it was a hard and fast figure that could be relied upon. We were simply trying to ensure that it was not £3 billion, £4 billion, £5 billion, £6 billion, £7 billion, £8 billion or £9 billion.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

With some qualifications, I agree with my hon. Friend. The important reason for including the figure in the report was to attract attention to the problem of social security fraud, to encourage vigilance and to encourage a questioning and exploratory attitude. My right hon. Friend the Secretary of State has exemplified such an attitude in his quest to deal with the problem of social security fraud, and the hon. Member for Birkenhead has given a lead in promoting such an attitude, but that attitude was consistently resisted by Labour Front Benchers until suddenly they recognised that there might be a political opportunity in it. That typifies the way that the so-called new Labour party works; it is all for effect and there is little substance behind it.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee

Would it not help us to gather evidence, and thereby help the debate, if the Secretary of State gave the Select Committee some challenge money, so that, for example, we could study the hon. Gentleman's constituency to discover the extent of fraud there, and study my constituency and four others with different characteristics throughout the country? Then we would be in a better position to know whether the problem is localised, as the hon. Gentleman would say, in bad authorities, or whether the bad people are evenly spread throughout the country.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

I think the hon. Gentleman is trying to bribe me with my own Government's money. Of course I very much like the idea of the Select Committee on which I serve becoming an agency of the Government, but that would be contrary to the spirit of independence of Select Committees from the Executive, and it would be a precedent-setting event if such a thing were to occur.

Nevertheless, I very much hope that my right hon. Friend the Secretary of State listened to what the hon. Gentleman said in his speech about the type of survey evidence that is necessary. Surveys are cheap compared to the costs of social security fraud, and I very much hope that, specifically, survey evidence on the security of the national insurance number system might be undertaken, to give confidence in the system if confidence is due and to expose how we might better police the system if that proves necessary. The questions have been asked, and surely it is the Government's duty to ensure that we have either confidence or action.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

My hon. Friend, serving on the Select Committee, has vastly more knowledge of this complicated subject than I do. When the continuing spotlight programme on benefit fraud is introduced to constituencies such as mine, which has finite boundaries, if its results are known, it should surely be possible to extrapolate from those figures a figure per thousand benefit claimants. Surely that would not be a million miles, statistically, from the reality.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

I think that that is right, depending on the nature of the area surveyed. The important thing about my right hon. Friend the Secretary of State's survey of housing benefit fraud, which included 5,000 respondents, was that it was based on a genuinely random sample, not selected from one specific authority. The survey was genuinely investigative; the strings were pulled until the investigators found what was on the end of them. Therefore, it could reasonably be taken to be a fair picture of social security fraud—at least, the fairest concrete picture that is as yet available to us. It produced the figure of £1 billion, on which it is prudent to base policy, not a more inflated figure, which was speculative and was included in our report to promote debate and questioning rather than as a basis for policy and recommendations.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

There does not seem to be, in the Select Committee, or across the Floor of the House, much disagreement about the fact that housing benefit is one of the major areas of fraud and that there has been tremendous growth in the payment of that benefit. Has the Select Committee considered the possibility of making direct payments the norm, on the basis that landlords own fixed assets so they are not transient and do not move around? One might have a starred service for the better landlords, to whom direct payment was made.

Instead, that is currently at the discretion of the local authority. In the Isle of Wight, we had a very good system. Now that we have a unitary authority, it has scrapped it and returned to paying the money to tenants, who are often vulnerable and on the move. That is where a great problem occurs with the type of fraud that I am sure the Select Committee has considered.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

Whether the local authority pays housing benefit direct to the tenant or direct to the landlord, it is obviously essential that there should be an actual building and a real tenant with a genuine national insurance number and a genuine basis for a housing benefit claim, that the amounts claimed should be the amounts that are required and fairly due in rent, and that there should be no skimming off in between.

I do not know whether it is possible or desirable to make it the norm to pay the landlord rather than the tenant, because very often the tenant might pay at a slightly different time from when the landlord expects the rent. I think that that matter should be at the discretion of local authorities, although I am interested to know what my hon. Friend the Under-Secretary of State for Social Security, the hon. Member for North Hertfordshire (Mr. Heald), might say about the suggestion when he replies to the debate.

I was pleased to support the report because it encourages the questioning attitude that I have discussed, but I was especially pleased with the Government's pretty generous response to that report. Of 33 recommendations—I notice the hon. Member for Islington, South and Finsbury sniggering—only six were totally rejected. Eleven were fully accepted, eight were partly accepted and six are still under consideration. That is not a bad record of influence for a Select Committee—certainly not one to be sneered at, or one to suggest that the Government are resistant to many of our suggestions.

One recommendation is vital for combating that type of fraud, or frauds where there are technical breaches or technical impersonation, where the statutory requirements of the payment of benefit are being manufactured. I refer to on-line data matching. The private sector uses vast computer systems to handle vast numbers of transactions. The banking automated transfer system must handle a huge number of transactions; and the credit card companies use a single processing centre located in the constituency of my hon. Friend the Member for Basildon (Mr. Amess).

It should therefore be possible, once it has been decided what to pay and whom to pay it to, to put all the information into a single live database system, so that anyone can look up a national insurance number and see what is coming in and what is going out—including all benefits. That must be the objective. The Secretary of State has kindly accepted it as such, but has refrained from issuing a timetable for its implementation.

I wish to press the Minister on one point: there should be a target date for putting all receipts of national insurance and all payments of insured and uninsured benefits on one computer system, so that people can see, at the flick of a switch, what is going on in individual accounts. That is why we recommended that people should be sent an account of their national insurance contributions and claims at least once a year—so that they can see for themselves what is being paid in and what they are claiming. If someone who should not be claiming has been claiming, that would quickly become apparent, and we would gain a great deal of information about false claims for insured benefits.

I understand the Government's reticence about pursuing this recommendation. As soon as we start sending people information of this kind, many of them will of course write in for further information, and supplying it will cost the Government a great deal of money. That, however, is not a reason in the long term for not setting up such a system. People increasingly believe that they have a right to such information. They feel a sense of ownership, in terms of what they have contributed to the national insurance system. If we are not prepared to reinforce people's sense of ownership, that will serve merely to underline another fraudulent aspect of the system, which is the fact that people's contributions are really just another form of tax to be distributed by the Government at their own behest, for their own convenience and for their own purposes. All we are really buying in return for our contributions, runs this argument, are the promises of future Governments, which will not necessarily be honoured.

The hon. Member for Birkenhead touched briefly on the wider nature of social security fraud, but the Select Committee dealt extensively with that matter in its report, published on 1 November 1995, on the work of the Department of Social Security and its agencies. The worst fraud perpetrated on beneficiaries of the system lies not in the encouragement to falsify, lie and defraud in a technical sense but in the system's perverse incentives to adjust one's circumstances in such a way that one becomes genuinely eligible for benefits. That is the most corrupting aspect of the system.

It should come as no surprise to find that a state bureaucracy responsible for handing out £90 billion can encounter technical problems. We Conservatives do not believe in the efficacy of the command economy, but that is what the benefits system amounts to at the moment. The system encourages disincentives to work—a fact that the Secretary of State seems to have acknowledged by starting to reduce the advantages that some single mothers appear to derive from the benefits system. Built into the system are some perverse incentives, encouraging the creation of what Charles Murray has termed "an underclass". Its members live a completely different life style; no longer do they have any incentive to look for work or to rely on themselves: they become genuinely state-dependent.

That is the true fraud being perpetrated on so many people. We should applaud and encourage those who climb out of state dependency, and we should look for ways of shaping the future benefits system so as to avoid these detrimental effects. People must have a much more genuine stake in what they have invested in the welfare system, thereby giving them more incentives both to save and to work.

Those ideas have been assiduously encouraged by the Adam Smith project on the future of welfare, and would be further encouraged by developing its system of fortune accounts. Every individual would have a fortune account, not the dead letter box that his current national insurance number represents. Such an account would show the money that a person had accumulated over a lifetime, for pensions and for unfortunate eventualities such as disability or permanent illness.

On his recent visit from Chile, Mr. Piniera, the former Social Security Minister of that country, explained how he had introduced such a system there. It would do away with a great deal of fraud and with many of the incentives to fraud and corruption. It would also increase work incentives and improve the economy's savings ratio. That is exactly what we want: a system that does away with fraud by policing it effectively and by creating the right incentives to work.

I hope that the people listening to the debate will not be taken in by the speech made today by the hon. Member for Islington, South and Finsbury—it was the sort of fraud we can do without. What we need is a debate as good as the one between my right hon. Friend the Secretary of State and the Chairman of the Select Committee, the hon. Member for Birkenhead. That would be much better than hearing the ideas that the hon. Gentleman has lent his Front-Bench colleagues to give their arguments a semblance of respectability. Failing that, we shall be destined always to hear a false debate that will lead nowhere—a debate more interested in presentation than substance. Such a debate, if led by Opposition Front-Bench spokesmen, would certainly fail the nation.

Photo of Ms Liz Lynne Ms Liz Lynne , Rochdale 5:47 pm, 18th June 1996

I welcome the chance to discuss benefit fraud again, even though we debated it a short while ago. It is a matter of such significance that it warrants another debate.

Benefit fraud undermines confidence in the welfare state. We should not just discuss it; we must take action to prevent it. Housing benefit fraud is a responsibility of local authorities. Whether it amounts to £1 billion or £2 billion, the amount of fraud is still immense. I should like to dwell on the survey done by the Department of Social Security which states that one in five claims is fraudulent or incorrectly based; and that housing benefit errors and frauds are worth £840 million a year. That is immense, even if we take those figures. Fraud was £730 million. As I said, that is bad enough, but when we take into account housing benefit fraud when it is linked to the payment of income support, the figure goes up. The Government have quoted the figure of £1 billion. Of that, £900 million is fraud. As we have heard today, the Social Security Committee said that it could be as high as £2 billion. Whatever the figure, we have to do something to combat that fraud.

Let us look at what local authorities are actually doing. Last month, there was a report—an academic study—by the unit for the study of white collar crime at the Liverpool business school at John Moores university. It sent out survey questionnaires to 360 district, metropolitan and London boroughs. The return rate was 40 per cent., which I believe was quite good. The report said what the savings were. I would like to blow the trumpet of Liberal Democrat authorities here—Liberal Democrat savings were 2.3 per cent.; the Conservatives' 2.2 per cent.; and Labour's 1.44 per cent.

It was also said in the survey that the fraud investigators in Liberal Democrat authorities actually performed better. The weekly benefit savings were per investigator. In Liberal Democrat authorities, the weekly benefit saving was £209,755; in Labour authorities it was £191,248; and in Conservative authorities it was £179,010. I would like to look at the reasons why this could be the case. One of the main reasons is that Liberal Democrat authorities have employed fraud investigators for longer.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

It could be that there is less fraud under Conservative authorities. I am not saying that that is any particular credit to Conservative authorities—it could be a reflection on the areas concerned. It could be a reflection on all manner of things. There could be less fraud in Conservative authorities—although I admit that there is only a small number of them at the moment.

Photo of Ms Liz Lynne Ms Liz Lynne , Rochdale

Yes, there is a very small number of Conservative authorities at the moment—and I am glad that the hon. Gentleman accepts that fact. I was quoting figures for the amount of housing benefit paid within that area. For the Liberal Democrats, it was 2.3 per cent. of the amount of housing benefit paid within that area, and for the Conservatives it was 2.2 per cent—the hon. Member cannot get away with that argument.

Tackling benefit fraud is not just a matter for local authorities; it is a matter for Government Departments as well. I believe that there should be greater co-operation between Government Departments and local authorities. Perhaps if there was greater co-operation, we would get away from the large-scale fraud that we have at the moment. If more fraudsters—I am talking about landlord fraudsters—ended up with convictions, it might be an actual deterrent.

We are not talking about some small-time crime, we are not talking about the individual who defrauds housing benefit—even though that is serious—we are talking about landlords on a large scale who are ripping off the taxpayer by overstating rents, by claiming on empty properties and by creating fictitious tenancies. The book must be thrown at them—and there is little evidence that that is happening.

Prosecution of landlords is often neglected, partly because it would take council staff away from detecting new fraud—because they have to meet Government targets. The only thing that happens to these fraudsters is that the benefits stop, the pay cheques stop. They do not actually get prosecuted. I believe that the lack of prosecutions leads to a climate of acceptance.

I asked a written parliamentary question to the Home Office not so long ago and I got a depressing reply. I asked whether the Home Office looked at the correlation between the number of criminal prosecutions and housing benefit fraud. I also asked whether it looked at the level of housing benefit fraud. I also asked whether there were any joint initiatives between the Home Office and the Department of Social Security. I was told in the reply that it does not know how many offences of housing benefit fraud there have been, and no, it is not working with the Department of Social Security. That is not good enough. We must ensure that fraudsters are prosecuted.

In the debate in March, we spoke about other fraud—I will not go into the detail of what was said then, except to say that I welcome the home visits being restored. I was worried when the Government cut them, but now they have been reinstated, that will cut down on a lot of benefit fraud.

I now turn to the Child Support Agency and the way that fraud is perpetrated. It is often said that the CSA is effective in detecting benefit fraud. In April, the Chairman of the Social Security Committee, the hon. Member for Birkenhead (Mr. Field), said in The Independent on Sunday:By sheer accident we have created a most efficient anti-fraud unit. I am afraid to say that that is far from the case. The Child Support Agency presented to the Minister a report on "good cause" provisions. The report stated: Prior to the setting up of the CSA, the question of maintenance was dealt with as part of the consideration of a benefit claim by the local DSS office. Liable relative officers were charged with the duty to arrange maintenance payments where this was appropriate and possible. The report went on to say: One apparent benefit of their work, often claimed, was the fact that questions were asked about the other parent at a very early stage prior to benefit being awarded, or just after, leading to the deterrence of collusive desertion claims (where couples fraudulently claimed to have split up), or leading to early reconciliations. The report continued: It therefore must be of concern that any part of the claims process which apparently had been effective in deterring some fraudulent claims should not now be used.

Photo of Frank Field Frank Field Chair, Social Security Committee, Chair, Social Security Committee

The last time we debated this point, the hon. Lady was being cheered and I was being hissed by campaigners against the Child Support Agency. I accept the validity of the point that she is making. The Government could respond by suggesting that all people begin the CSA proceedings when they make their initial claim for benefits, in which case the questions that were asked in the old days about who the father is and who the husband is would be asked immediately, instead of almost a year down the line. I see the hon. Lady's point but, unlike her, I still support the CSA. The point that she made at the meeting and today is valid. Although the CSA is an agency against fraud, it is not as effective as it could be. This is a reform that we should have.

Photo of Ms Liz Lynne Ms Liz Lynne , Rochdale

I take the hon. Gentleman's point, but we will obviously disagree on the Child Support Agency. I happen to believe that it ought to be scrapped and replaced with a fair and unified family court system. It could address the problems of fraud that we have here.

Under the current system, it is easy to defraud the system. Prevention is far better than detection. The problem is that, even if fraud is detected, there is such a backlog with the Child Support Agency that it takes months and months for fraudulent claims to be investigated and for questions to be asked.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

The Social Security Committee was most impressed by—I mean that in a technical sense—the number of single parents who received maintenance application forms and then simply dropped off the benefits system. They ceased to claim because they did not want their circumstances, or the circumstances of the absent parent, to be scrutinised. That speaks volumes about the amount of fraud that the Child Support Agency has stopped.

Photo of Ms Liz Lynne Ms Liz Lynne , Rochdale

A tremendous amount of fraud is occurring at present, and the old liable relatives unit was able to detect fraud better. Fraudulent claims cannot be dealt with because the Child Support Agency has such a backlog. Our argument with the Child Support Agency and our argument today sums up what is wrong with the benefit system generally. Too many people do not look at the facts about benefit fraud and the extent of that fraud both within the Child Support Agency and across the board.

As I said before, people are concentrating too much on detection rather than the prevention of benefit fraud. We owe it to the taxpayers and to the honest claimants to concentrate on detection. There are a tremendous number of honest claimants; they are in the majority and we must not be sidetracked from that fact. Most of those who claim housing benefit do so because they are desperately in need: they do not try to defraud the system. I believe that all hon. Members agree with that. We must tackle benefit fraud in order to save the taxpayer money and to help those who are genuinely in need.

6 pm

Photo of Mr David Porter Mr David Porter , Waveney

This is another Opposition day, so the Opposition have another chance to pick a stick with which to beat the Government. Opposition Members seem to think that benefit fraud is an easy subject to sound tough about and that, by sounding tougher than the Government, they can steal some more Conservative party clothes. I suggest that they are wrong on both counts. Over the years, the Labour party's attitude to spending other people's money, its stress on rights ahead of responsibilities, and its often shameful record on the local government side of benefits, make its claim that it is the taxpayers' friend sound somewhat hollow.

No one has argued—and no one will—that we should not reduce fraud. As has been said, any reduction in benefit fraud has a double benefit: it stops money going to criminals, with the message that that sends in the law and order debate, and it means that more money is available to those who need the safety net of the state.

I serve on the Education and Employment Committee which, among other things, is examining the pilot schemes for the jobseeker's allowance in October. Last week, Committee members visited an Employment Service jobcentre and a Department of Social Security Benefits Agency office in Peckham, which are next door to each other. I drew from that visit the obvious conclusion that we need to merge the administration of employment-related benefits and social security benefits.

When I visit the Benefits Agency office in Lowestoft in my constituency, it seems obvious that the scope for confusion, fraud, error and sheer frustration could be reduced by linking the administration of housing benefit and council tax benefit with social security benefit. In child support cases, when there is a discrepancy between what one parent claims to earn and what the other parent says he or she earns, linking Inland Revenue information with benefit administration would surely serve as a disincentive to cheating the system. I believe that going the whole way and integrating the entire tax and benefit system would not necessarily be a bad thing. Such a move would send the right message: benefit fraud is robbery like any other form of theft.

We have laws to stop people robbing banks and each other, but those crimes are still committed. Laws cannot prevent every fraud, but we must make it as hard as we possibly can to commit fraud. With the advent of technology on a large scale and at a reasonable cost, we have a potential weapon against fraud of immense potency. I wonder whether we are harnessing it to the full.

We know already about DSS plans to link local authority and Benefits Agency computers to combat exclusively housing benefit fraud. As my hon. Friend the Member for Colchester, North (Mr. Jenkin) said, multiple claimants can be spotted with any simple package of software. The use of false names, the names of the dead and post office box numbers, and the conniving of householders to help others, are harder to spot, but they are not beyond the realms of current technology.

Smartcard technology and the identification card have been offered by some as a panacea, but we should remember that stolen or forged ID cards would swiftly become valuable items for sale on the black market. We have personal numbers for national insurance, the national health service and the Inland Revenue. A single self-chosen personal identification number might help also. There has been talk about having to amend the Data Protection Act 1984 if dedicated systems freely exchange information. I ask my hon. Friend the Minister to clarify in his winding-up speech whether increased use of technology will mean reform of the Data Protection Act.

Is it not incredible that we can surf the Internet and have a guided tour of the White House for the price of a local telephone call in the United Kingdom, yet my constituents cannot go into the benefits office in Lowestoft and view their Child Support Agency case on a computer screen in front of them? The Child Support Agency situation highlights the need for an integrated system to allow for fairer and more accurate assessments, which would, in turn, encourage compliance.

The need for parents who do not have continuing care—for reasons willing or unwilling—to shape the concept of child support is paramount. The need to assess income so that no one is better off on benefit than supporting his or her children is a separate but related part of the equation. The need for unemployment and training support that does not make it better to receive benefit than to stay in work is also part of the equation. What people earn in employment or through self-employment has a direct bearing on their dealings with the Child Support Agency.

If we had a better system that recognised the need of the absent parent to be in work or training as part of a long-term commitment to the children, that would go a long way towards increasing the credibility of the system. If the system had integrity, that would act as a disincentive to defrauding it willingly. There must also be a little more flexibility. For example, if parents share custody of children regularly during the week on an agreed and working basis, surely child benefit should also be shared on the same agreed and working basis.

My final point relates to the culture of fraud. We know that a downside of the welfare state is that it encourages dependency. Further reform of the welfare state in the next decade must increasingly address that problem, but another little noticed consequence is a reluctance to do anything about the problem while getting angry and blaming the Government. I shall give the House an example.

I am sure that all hon. Members have been approached by constituents who are livid because someone near them is working while claiming benefit. We might be given some details of the scam when we ask for them. I was told recently about the existence of a pool of battered, anonymous cars that are shared by a number of people who are fraudulently obtaining benefit while working a night shift at a factory and who return home in a different car every day to throw any observers off the scent.

We often press our constituents for names and for chapter and verse of fraudulent behaviour, but they are reluctant or refuse to give names and addresses—possibly because they are afraid of reprisal. I am told that the Government are to blame, but I am not given the names to report to the fraud department. In my experience, the fraud department and Benefits Agency offices do a good job often with few staff, but they cannot catch the cheats without information.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

In my experience, when we are given the necessary information, we do not receive any feedback about the results of any investigation. The result is that the fraud continues to be perpetrated, no action is taken and no reason is given, because the Benefits Agency will not discuss individual claims. There must be a more active exchange of information and much better feedback in order to encourage society to police itself and to encourage people to hand over the information so that they can see the results for themselves.

Photo of Mr David Porter Mr David Porter , Waveney

My hon. Friend is absolutely right. I understand that there may be difficulties if a fraud investigation is conducted, it proves to be unfounded and a person is identified unnecessarily, but I agree with the thrust of my hon. Friend's comments.

Going one step further, the fraud departments link in with the police, Customs and Excise and with other agencies. I wonder whether there is a case for transferring benefit fraud investigations wholesale to the police in order to strengthen their work. We cannot change overnight the culture of dependency or the view that the benefit system is a legitimate target for theft. I suggest that we need a better run, more integrated, non-overlapping and non-wasteful administrative machine. If that is achieved, the staggering losses resulting from fraud will be cut to a minimum.

I agree with the hon. Member for Rochdale (Ms Lynne) that prison sentences should reflect the seriousness of crimes involving fraud. If we do all of those things, rather than inspire the same feelings as does European bureaucracy—loathing of a monster that is out of control—our system will inspire confidence in the service by, from and to the taxpayer.

Photo of Kate Hoey Kate Hoey , Vauxhall 6:09 pm, 18th June 1996

I very much agree with the hon. Member for Waveney (Mr. Porter), which shows that there can be—and is—cross-party consensus on this important issue.

As a member of the Select Committee on Social Security, whose report we are debating, I am pleased to have the opportunity to raise once again some of the important issues that the Committee uncovered in its investigations into housing benefit fraud. I am also pleased to be able to challenge again the whole attitude to fraud at national and local authority level.

This debate must put to bed for good any lingering doubt that anyone has ever had that attacking benefit fraud is somehow attacking the poor. It is quite clear that such an attitude was held in certain parts of the country by certain people, but that is no longer so. It is clear, certainly to Opposition Members, and generally on both sides of the House, that the people who suffer most from benefit fraud are those in greatest need.

I want to refer to the Select Committee's recommendation on the Data Protection Act 1984. It is important to point out that the evidence that members of the Committee took questioned whether the Act was working in the interests of people who were trying to root out fraud. We took evidence from Andrew Webster of the London boroughs fraud investigators group, who said: I have to say that I sometimes wonder who the Data Protection Act is actually protecting, because obviously the genuine honest claimant has nothing to fear. The genuine honest person in this country has nothing to fear. The only people who hide behind the Data Protection Act are the criminals. I am not interested in protecting the civil liberties of large landlords who are perpetrating housing benefit fraud and I hope that the recommendation on the Data Protection Act is considered seriously.

The Association of Chief Police Officers told the Committee: There appears to be no clear authority for police to give Local Authority investigators details of previous criminal activity or other potentially useful intelligence. It is absolutely certain that there is a need for co-operation between agencies. Indeed, one of the Committee's recommendations says: the Department of Social Security and the Data Protection Registrar should review the data protection legislation, and any law and practice on which data protection legislation is based … to ensure that the legislation does not constitute a barrier to counter-fraud work. Data protection is fine, but it must not be allowed to get in the way of information on fraud coming forward.

Earlier, the Secretary of State challenged the Opposition's assessment that there is £2 billion-worth of fraud, and other hon. Members have said that the figure was an exaggeration. No one can say that the figure is an exaggeration, because no one knows the real extent of fraud in the benefit system. I wonder how many people in Haringey, when asked to put a figure on the extent of benefit fraud before the investigation began there some years ago, would have come near the figure that has emerged from the small pilot study.

I certainly do not have any hidden agenda on exaggerating the amount of fraud, because I happen to represent a borough whose name was, until recently, synonymous with fraud and corruption. I am proud to represent the area that includes the London borough of Lambeth. Indeed, I am even more proud now that the borough is starting to get its act together and beginning to adopt an approach that is in the interests of its residents.

Lambeth has had a history of problems relating to allegations of fraud and corruption, especially in the late 1980s and early 1990s. During the past two years, however, the council has been committed to breaking with the past and tackling the root problems in its management and culture. That commitment was epitomised by the appointment of the new chief executive, Heather Robbatts, in April 1995. With the support of all the political parties on the council—it is, of course, a hung council—she has implemented a programme of sweeping changes in the council's management, personnel and operations. With the support of its members, she is beginning to change the whole culture of the council and its attitude to fraud.

A key part of that approach has been to improve the council's arrangements for dealing with allegations of fraud and corruption, which has involved the reorganisation of the internal agencies, responsibility for the investigation of fraud and corruption and the creation of a corporate anti-fraud team—CAFT—which reports directly to the chief executive.

The effectiveness of the new arrangements was demonstrated in the first few weeks of the establishment of CAFT by something known as Operation Jobson. In April 1995, the council and the Benefits Agency initiated the provision of a complete listing of the council's payroll data on employees for the Benefits Agency. The agency checked every employee against its computer records. No one queried civil liberties there. When the corporate anti-fraud team was set up in October 1995, 120 employees appeared to be fraudulently claiming benefit. By December 1995—only six months ago—the figure was 150.

CAFT took on responsibility for that exercise in October, and a team of hand-picked officers from the council's internal audit department were seconded to investigate and facilitate disciplinary action. That action has continued. Interestingly enough, 59 of the employees identified instantly disappeared from the council's employ—if they ever existed. The lessons learned from the exercise were that effective action required the detailed co-ordination of investigation and management action, and that CAFT, the chief executive and the head of personnel should establish a team that had power to intervene and co-ordinate work across all the council's departments.

There is no doubt that, in some local authorities, for different reasons in different departments, there is a culture of not really wanting to get to the bottom of what is happening. It was crucial to the setting up of the Lambeth team that it reported to the chief executive, was given high status and was seen as permeating the entire council and having everyone's commitment.

An anti-fraud policy statement was drawn up and circulated to every member of the council. The matter was taken very seriously. The matter may seem trivial to some people who think that people would not do anything other than be against fraud. The reality is that because of our attitude towards fraud, some people did not feel that it was their responsibility or had anything to do with them. They perhaps felt that attacking fraud was picking on the poor. Such an attitude had to be changed; a corporate attitude had to be taken.

The council is promoting whistleblowers. Wanting to shop one's mate if he or she is involved in a fraudulent act is no longer seen as something of which to be ashamed. At the end of the day, such people are working against the interests of those whom they have been employed to represent and support.

CAFT' s duties are to consider not only benefit claimant fraud but contract fraud and educational awards fraud. The latter is another big type of fraud which certainly occurs in inner-city areas. Education grants are sometimes awarded when people do not attend college or use false names. Sometimes, the college for which people have been given grants in my borough has not existed. Employees claiming benefit is also a big type of fraud in local authorities. Other types of fraud include housing improvement grants fraud, private use of council resources, selling of council house keys—unauthorised tenancies—theft and misappropriation of council funds and equipment, and investigation of anonymous allegations.

CAFT brings all those types of fraud together. Fraud does not mean simply benefit fraud. All sorts of other public frauds are taking place and need to be taken on board as part of a partnership approach, which includes building an anti-fraud culture in the council, implementing a programme of fraud awareness seminars and maintaining close liaison with local police and the Benefits Agency.

I welcome what my local authority is doing. In a couple of months' time, when the team is complete, it will be leading the battle against fraud in the country. That is a terrific achievement for a borough that has had such a history. It is crucial that boroughs that accept the faults of the past and start to put them right should not be slated in the newspapers. Newspapers, and those who want to investigate fraud and mismanagement, should start looking at the boroughs.

I am not suggesting to the hon. Member for Colchester, North (Mr. Jenkin) that there is huge fraud in Colchester, but the fact that the borough has not even started to consider the matter makes me question whether it has any real determination to discover whether there is a problem. There is not a single borough in Britain that is not deeply involved in some kind of fraud. It is crucial that those boroughs that do the good work, and those chief executives and council leaders who take the initiative, are given credit for it and not slated by the media.

One matter which I keep raising but on which I do not seem to make much progress concerns child benefit fraud, which the Social Security Select Committee may shortly consider. I have a letter detailing someone's experience in trying to report a possible child benefit fraud to the DSS. It states: After obtaining the number of my local DSS office … from directory inquiries I initially rang seven times when the line was engaged. On the eighth occasion I got through and was transferred to the Child Benefit Section which was also engaged for three calls. At 11.30 am (an hour after starting the calls) I was successful in speaking to someone, who then just gave me another telephone number to call in Newcastle upon Tyne. This number was also engaged until 12.50 pm, then no answer at all until 1.05 pm, and then engaged again until 14.00 pm. I finally tried Directory Inquiries again who gave me a freephone number … which was engaged on five attempts.Just after 14.30 pm I was successful in getting through and explained the nature of my complaints against my neighbours, who have claimed Child Benefit for two years whilst renting out their flat in London and living and working abroad. The letter continues: I gave the name, address, reference number etc. of the errant claimants and was told that they would be written to, but my name and address were declined. I went on to explain that I did not feel that a letter was a practical way of dealing with the matter, and offered the mother's address in London which was also refused.My overriding impression of the whole experience is that my time was completely wasted. I am very surprised that it proved so difficult to report a benefit fraud, and fail to see why the DSS staff in London could not take the details and why I had to pay for all the calls. The Minister, to whom I have written on the issue of child benefit, responded to me at the end of March. He said: I appreciate your concern that a family might continue to receive Child Benefit by Automated Credit Transfer … after they have gone abroad. ACT is currently the cheapest and most secure method of payment.Child benefit is paid to over seven million families in Great Britain, and in the vast majority of cases there are no changes of circumstances which affect benefit entitlement until a child approaches school leaving age. Earlier, I had asked for information about Operation Rattle, set up by the DSS to investigate child benefit—the title is rather good, given what it was investigating—so the Minister went on to say: I should like to explain a little more about 'Operation Rattle', which was launched in November last year. This followed on from a pilot which showed that there was a loss of funds to the Department when people from abroad who were being paid Child Benefit by ACT returned to their home country and failed to notify the Child Benefit Centre.The Operation involves close working between Benefits Agency and so on. He continued: To date, overpayments amounting to £3 million have been identified. I do not know how big the pilot was, where it took place or how such decisions were reached. The Minister went on to say: Payment is stopped immediately when a nil entitlement situation is discovered. He then quoted some horrendous figures about the money that had already been saved as a result of the pilot, which amounted to about £8 million, even in that short time with such a small number of people.

Every year, recipients of child benefit paid by automated credit transfer receive a form asking whether there are any changes in their circumstances; if there are not, nothing needs to be said or done, so the child benefit continues to be paid into the bank account. One can have a baby in this country, register for child benefit, go off to live wherever and continue to receive the money.

People may say that that involves only a few people, but we do not know. I do not believe it is only a few people. I think that large numbers of people are abusing the child benefit system. They receive child benefit from an early age having had their baby here. They may be travelling business people. The irony is that it is not poor people who are doing this but well organised, quite rich people who are using London as a business place. They go into and out of the country, keep an address here, have a bank account and receive the child benefit.

What happens when the children reach the age of 16? Presumably, because child benefit is a means of obtaining a national insurance number, they can continue to claim benefit for the rest of their lives while living in Spain. It is astonishing that this matter has not been investigated more. Such matters must be investigated and fraud made much more difficult. No one ever checks whether a child exists or what school he or she attends. There are no means of making such checks. It is a big area of neglect which should be considered seriously. I hope that the Minister will respond to some of the points I have made.

Having got all that off my chest—I feel strongly about it—I welcome some of the Government's responses to the Select Committee's recommendations. I should like to see them all being put into immediate effect, because anything that the Select Committee has done in the past has come to be seen as received wisdom a few years later.

The Select Committee's work in this area is highly commendable and I hope that the Government will implement its recommendations as quickly as possible. The key message that we must get across is that fraud, whether small, medium or large, is not acceptable. It is an insult to the poor. It affects the poor more than anyone else and the House must be united in its determination to stamp it out.

Photo of Nick Raynsford Nick Raynsford , Greenwich 6:27 pm, 18th June 1996

I declare an interest: I act as a consultant to HACAS, the social housing agency. I have also written a book in the past on the subject of housing benefit, although it is now out of print and even if I had received any royalties in the past, which I did not, I certainly would not be getting any now.

This has been an interesting debate on an extremely important issue. We have heard a number of valuable contributions. I think particularly of contributions from members of the Select Committee, including my hon. Friend the Member for Birkenhead (Mr. Field), the Chairman of the Select Committee, and my hon. Friend the Member for Vauxhall (Miss Hoey), who has spoken most recently. They both made eloquent and telling contributions to our debate.

We have heard contributions from Conservative Members, revealing their interest and concern in a number of extremely important issues relating to social security and fraud, but in some cases revealing a certain touch of difficulty, if not ingenuity, in trying to reconcile their support for the Committee's recommendations with their opposition to the Opposition motion which seeks to give effect to a number of the Select Committee's important recommendations.

I also apologise to those hon. Members whose speeches I did not hear in full tonight. Unfortunately, tonight's debate has coincided with the sitting of a Standing Committee of which I am a member, and I was required to attend on three occasions, on all of which, I am pleased to say, the Government were defeated.

Housing benefit fraud is big business. It is also unique for, unlike almost any other big business in late 20th-century Britain, housing benefit and housing benefit fraud are immune to downsizing. While British industry and the British people coped with downsizing and recession—many losing their jobs in the process—housing benefit and housing benefit fraud have been oases of unparalleled growth. Indeed, if our gross domestic product were measured in terms of housing benefit expenditure and housing benefit fraud, we would unquestionably be one of the most successful countries in the world.

The scale of the increase in housing benefit expenditure has been phenomenal. It has almost doubled in real terms during the past six years—from £5.5 billion in 1989–90 to £10.8 billion in 1995–96. That has not happened by accident; on the contrary, it has been the direct result of Government policy. There has been an increase in the number of people claiming housing benefit—there were about 600,000 additional claims during that period—which reflects an increase in the number of people who are unemployed and the increase in poverty in the early 1990s recession. But the real reason for the huge increase in housing benefit expenditure, as the Select Committee's report so rightly highlighted, has been the exponential rise in rents as a direct consequence of Government policy.

Between 1988–89 and 1994–95, council rents rose on average from £19 a week to £35.80 a week; housing association rents rose from £23 a week to £43 a week; and private sector rents rose from £29 a week to £69 a week. Those huge increases directly reflected Government decisions to cut subsidies to local authority and housing association homes and to deregulate the private market. Ministers knew full well what the consequences would be. When pressed—we did press them—they repeatedly told us not to worry about rising rents because, in that felicitous phrase, housing benefit will take the strain". What a strain it has been. The average weekly payment of housing benefit rose by 100 per cent. between 1989 and 1994.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

The hon. Gentleman claims that deregulation was such a bad thing. Is he saying that he would go back to what we had before—the regulated private sector?

Photo of Nick Raynsford Nick Raynsford , Greenwich

If the Minister will bear with me for a moment, he will hear the full argument about the extent to which deregulation has not just led to a huge increase in expenditure but opened the door to a level of fraud that is a disgrace and that, instead of being used to help people in need, is lining the pockets of people who should not be receiving it. [Interruption.] Later in the debate—if the Secretary of State will contain himself—I shall explain some of the measures that Labour will take to ensure proper safeguards against abuse, and at that point the Minister will be well aware of what action a Labour Government will introduce to deal with the problems. We would not tolerate the extraordinary exponential growth in expenditure, which has been to little public benefit, over which his Government have presided.

In the deregulated private sector, average weekly payments rose from £21.06 in 1989 to £47.28 in 1994a staggering increase of 125 per cent. The combination of that rapid expenditure growth and a deregulated environment provided an ideal framework in which fraud could thrive. Deregulation not only allowed huge increases in the amount of rent that could be charged but removed the previous safeguard that allowed local authorities to require a fair rent to be fixed by a rent officer. To add insult to injury, a significant extension of direct payments to landlords—rather than payments being channelled through claimants—offered even more enticing opportunities for fraudsters to cash in on the bonanza.

I ask the Minister to think about these figures. At the current average level of private rents, a landlord will receive for each tenant £2,458 per annum. The landlords investigated by the London borough of Haringey—those with more than 20 claims—were receiving on average more than £49,000 per year minimum. These are the cases that the Secretary of State does not believe it is reasonable to investigate. He believes that it will be too burdensome on landlords to require them to be subjected to certain checks to see whether public money is going in the right direction. That is the legacy of the Conservative Government.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

I am sure that the hon. Gentleman and his party are committed to the fight against fraud, but will he demonstrate that commitment by referring to paragraph 59 of the Select Committee's report, which he welcomes in the motion? The paragraph refers to the harassment and the attempts to discredit Mr. Bernard Crofton. Will the hon. Gentleman join me in condeming the Labour councillors who are responsible for that authority, and condemn what they attempted to do to Mr. Crofton? Will he undertake on behalf of his party to do something about their appalling behaviour?

Photo of Nick Raynsford Nick Raynsford , Greenwich

I am second to none in demanding tough action against fraud and in my support of local authority officers who take effective action against fraud, wherever they are. I have played a considerable role in recent weeks in trying to ensure that the London borough of Haringey responds positively and appropriately to the difficult challenges it faces. I hope that, in exchange, the hon. Gentleman will take a similar view of the behaviour of a member of his party who featured in an article in the South London Press, on Friday 22 March, which said: A sobbing former Tory chief has been jailed for 18 months for mortgage and benefit fraud. I suggest that the hon. Gentleman divert his attention to the failures of members of his own party.

The huge escalation over the years in housing benefit expenditure provided both the opportunity and the cover for a literal explosion in the number and scale of fraudulent claims. Rather than seeing the huge increase in public spending as a problem—which they would undoubtedly have done in any other part of public policy—the Tory Government, perversely, saw it as evidence of success. They claim that it achieved a magical recovery in the private rented sector and that therefore it is justified.

The harsh truth, however, is that the "magical recovery" has been far less dramatic than Tory Ministers would have us believe. Although the explosion in expenditure has been disproportionate, the number of new private lettings has not been. Despite all the assistance offered—not just through housing benefit but the equally lavish spending on the business expansion scheme and by abnormally favourable market conditions because of the depressed home ownership market—the total number of private lettings in England has recovered to a little over 2 million, which is almost exactly the figure the Tories inherited from Labour in 1979. Furthermore, with the ending of the BES subsidy and with long-overdue evidence of recovery in the home ownership market, most commentators expect that the revival in private renting, which was achieved at such huge cost, will not be sustained.

Let me make one thing absolutely clear: Labour wants to see a healthy private rented sector, but it must be economically viable in its own right and be dependent on huge transfers of money through the housing benefit scheme. Reducing dependence on housing benefit makes sense in social and in economic terms. In case Ministers look doubtful, let me quote from their White Paper on housing, published a year ago, entitled "Our Future Homes". It stated quite correctly that providing a subsidy to a local authority or housing association to enable them to charge a below market rent can be cheaper over time than paying housing benefit on a market rent for several decades". In the meantime, we must take tough action to tackle the scandalous and expensive abuse of the housing benefit system that has been allowed in recent years as a result of Government action and Government inaction. Both have been prompted by the Government's ideological obsession with deregulation. Even today, that obsession is still rearing its head, being used as a justification for not taking action to tackle landlord fraud more effectively.

My hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) rightly pointed out that the Government's response to the Select Committee's report was deplorably vacuous and lukewarm in respect of two specific recommendations for tackling landlord abuse more effectively. The Secretary of State is well aware of the evidence, quoted in the Select Committee's report, of extensive fraud perpetrated by landlords who receive a significant number of housing benefit payments in the London borough of Haringey. The study showed that the incidence of fraud among the claims investigated was more than 20 per cent., yet the Government consider it sufficient to undertake an assessment of fraud risk rather than act decisively to clamp down on such abuse.

The final irony—I urge the Secretary of State to listen; he might even enjoy the next passage—is that the landlords who have been the beneficiaries of this extraordinary largesse from the Government over the past few years are not generous with what they have received. They have not produced many new homes, as we have pointed out, and many of the homes that they have produced have been in poor condition. There are still a disproportionate number of squalid and dangerous properties in the private rented sector. To add insult to injury, the beneficiaries of all that public money resent the suggestion that action should be taken to clamp down on benefit fraud.

Mr. Geoffrey Cutting, representing the Small Landlords Association, is quoted in the 17 May edition of Inside Housing magazine—I invite Ministers to listen carefully—as saying: the defrauding of landlords by the state far exceeds the defrauding of the state by landlords … When the state defrauds landlords they can expect landlords to respond by defrauding the state". I should be interested to hear the Secretary of State's response to that thinly veiled incitement to malpractice. Will we hear an unequivocal, unreserved condemnation of that disgraceful statement?

Photo of Peter Lilley Peter Lilley Secretary of State for Social Security

Yes. For the hon. Gentleman's benefit, I unequivocally condemn such a remark. I was only sorry that he did not join the Select Committee in unequivocally condemning attempts to stop the housing officer in Hackney doing his job.

Photo of Nick Raynsford Nick Raynsford , Greenwich

I remind the Secretary of State that I made it clear, in my response to an earlier intervention, that I thought it absolutely right for local government officers to be able to continue to pursue the fight against fraud in an effective and proper way. I have no doubt that that should be the case regardless of the London borough, or other local authority, in which those officers work. [Interruption.]

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I remind the House, and Government Front Benchers in particular, that I deplore seated interventions, especially when they are repeated.

Photo of Nick Raynsford Nick Raynsford , Greenwich

Thank you, Madam Deputy Speaker.

Much can and should be done, as a matter of urgency, to call a halt to the abuse of housing benefit and to ensure tough action against the fraudsters. My hon. Friend the Member for Islington, South and Finsbury mentioned a number of our policy proposals. He spoke of the need to tighten the rules on direct payment of benefit to landlords, and to insist on proof of the landlord's ownership—or the managing agent's control of the property—and disclosure of other addresses to which housing benefit is paid. All those measures will help to stamp out bogus claims from "paper tenancies".

My hon. Friend spoke of the need for checks on redirected mail, which allow benefit to go on being paid long after entitlement has ceased, and the introduction of a self-financing national licensing scheme for multi-occupied houses. Such a scheme would have many benefits apart from stopping fraud: it would help to improve poor conditions, and would save many tenants from risks that are often life-threatening. My hon. Friend also mentioned the importance of targeted investigation and the use of more specialist fraud-busting teams, able to operate—like many of the fraudsters—across local authority boundaries. Labour believes that every area in the country should be covered: there should be no hiding place or soft-touch area for organised fraudsters.

My hon. Friend spoke of achieving better co-ordination between the various agencies involved, including local authorities, the Department of Social Security and the rent officer service. The latter can play a crucial role, as it has a duty to assess whether rents are reasonable for housing benefit subsidy, and considerable knowledge about appropriate rent levels. Astonishingly, the Government appear to be largely unaware of the scope for anti-fraud activity by rent officers. Similarly, co-ordination between local authorities and the Inland Revenue will help to identify landlords who are defrauding the housing benefit system, the Inland Revenue or both.

Photo of Ms Liz Lynne Ms Liz Lynne , Rochdale

While the hon. Gentleman is referring to the remarks of his hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), can he confirm that current Labour party policy is not to reverse the habitual residence test?

Photo of Nick Raynsford Nick Raynsford , Greenwich

No, I cannot. The hon. Lady will appreciate that I have approximately one minute left. Moreover, the question should have been addressed to my hon. Friend the Member for Islington, South and Finsbury, the social security spokesman, rather than to me as housing spokesman.

We believe that all those measures are important and necessary, and should be introduced as a matter of urgency. Under a Labour Government, they will be. We will support the sensible recommendations of the Select Committee, as well as other measures that we have ourselves proposed, some of which I have outlined.

The contrast between our commitment to effective action and the Tories' shameful record could not be more revealing. They created an environment in which fraud could thrive; they ignored the warnings about potential abuse of the system, and complacently interpreted the escalation in housing benefit expenditure as evidence of success; and they have been remiss in tackling organised fraud for fear of upsetting landlords, many of whom have been actively engaged in defrauding the social security system on a vast scale. Even now, they remain lukewarm in their commitment to effective action. Their proposal to put housing benefit out to competitive tendering is sending precisely the wrong message.

There could be no clearer sign of the fundamental difference between the parties on the issues that really count. Labour is determined that there should be a social security system that delivers benefits to people in need, not a social security system that is open to fraud on the scale that we have seen.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security) 6:45 pm, 18th June 1996

We have had a good debate, featuring distinguished contributions from my hon. Friends the Members for Colchester, North (Mr. Jenkin), for Isle of Wight (Mr. Field) and for Waveney (Mr. Porter) and some interesting comments from Opposition Members—although, in many instances, they may not have been quite as distinguished.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

It may seem graceless, but it is accurate none the less. The hon. Member for Greenwich (Mr. Raynsford) sits chortling, but let me begin by quoting from the Select Committee's report on housing benefit. Mr. Bernard Crofton of Hackney council is described as an inspiration to those working seriously to tackle fraud. The Committee goes on to deplore the way in which Hackney councillors have treated Mr. Crofton—the way in which they have tried to discredit him—and refers to "selective leaking" of the council's procedures.

Opposition Members are relying heavily on the Select Committee report tonight. I invite the hon. Member for Greenwich to condemn the councillors who are hounding Mr. Crofton—someone whom the Committee has described as an inspiration to those working seriously to tackle fraud. I now give the hon. Gentleman the opportunity to say those words.

Photo of Nick Raynsford Nick Raynsford , Greenwich

As the Minister was clearly incapable of listening to what I said, let me repeat it a third time. I give way to no one in my determination to ensure that local government officers, whatever the authority in which they work—Hackney, or any other authority—should be able to pursue their work in rooting out fraud in the most effective way. I expect councillors to give full support to an authority that acts to deal with fraud. As I said earlier in response to an intervention from the hon. Member for Colchester, North (Mr. Jenkin), I have been actively involved in recent months in helping to ensure that the London borough of Hackney does precisely that in the months ahead.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

Should it not be pointed out that the councillors responsible for the conduct of that policy against Mr. Crofton are still full members of the Labour party, and that no action is being taken against them? Does that not speak volumes about what the Labour party still remains—an evil in this land?

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

It is a litmus test, and one that the Labour party has failed tonight. The hon. Member for Greenwich holds up a press cutting about a Conservative who has been disgraced for fraud. I condemn that man; but the hon. Gentleman is not prepared to condemn councillors who are hounding a man who is an inspiration to those working against benefit fraud.

It is all part of a picture. We heard about Lambeth from the hon. Member for Vauxhall (Miss Hoey). Lambeth is now improving its position, after so many years of scandalous neglect when it would never have considered taking fraud seriously. The hon. Lady said that Lambeth—a Labour council—did not want to know when it came to allegations of fraud.

The hon. Member for Islington, South and Finsbury (Mr. Smith) is a Front-Bench spokesman and had so much to say in criticising Conservative Members who, over many years, have tried to stamp out fraud. When he was chairman of Islington housing committee, what did he ever do to clamp down on benefit fraud? Nothing. It is all very well to produce sneering comments about small landlords and to attack what the Government are doing, but tonight I should like to stand up and be counted.

The Conservative Government have revolutionalised—[Interruption.] They have revolution—[Interruption.]—whatever the word is. They have radically improved our measures against benefit fraud, which is largely down to the efforts in recent years of my right hon. Friend the Secretary of State, who introduced tough incentives to force local authorities kicking and screaming into the 21st or the 20th century, so that they would investigate benefit fraud effectively.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

It is.

In 1993–94, weekly benefit savings for local authorities amounted to £92 million; now they amount to more than £200 million. They have almost trebled as a result of our measures.

Some hon. Members said that we did not know how much benefit fraud there was. It is true that, for years, we did not. The figures on fraud that had been detected used to go up year by year and we did not know how much fraud there was, but the benefit reviews, which use the best methodology that could be devised and which are approved by the National Audit Office, have shown us the scale of benefit fraud. It is about 10 per cent. In unemployment benefit, income support and housing benefit. It is shocking, but it has been carefully researched and studied and we know the extent of it.

Having found the extent of fraud, in the second year of his period of tenure, my right hon. Friend the Secretary of State took action. He announced a programme that will, over five years, reduce benefit fraud by 70 per cent. Last August, we launched the barcode scanner, which, since its introduction, has saved more than £200 million in relation to the face value of order books.

We introduced, in September 1995, the pilot freephone hotline; in October 1995, the Post Office reward scheme, which has saved £12 million since it was implemented; in November 1995, Europe's largest data-matching computer system of its type, the new NINO—national insurance number—procedures and tougher verification; and, earlier this year, cross-matching with stolen birth certificates to ensure that we have a better system for national insurance numbers.

On 5 March, the date of the previous debate on these issues, my right hon. Friend announced the spotlight on benefit cheats area campaigns. I have been to 15 areas. Yesterday, I launched the campaign in Cardiff and today I launched it in Plymouth.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

Labour authorities are no doubt co-operating.

I have met benefit investigators working for the Benefits Agency, who are experts in their sector. Every area that I visited last year has achieved record weekly benefit savings, and they are committed to doing even better this year. It is wrong for the Labour Front-Bench spokesman to criticise investigators and to pretend that they could not even—[Interruption.] The hon. Gentleman criticised investigators' professionalism. He said that they could not arrange even a route of visits from one door to the next, in order to do their work, but they do that. What is more, they do data-matching.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

Let me put the Minister right on one simple point. I am criticising not Benefits Agency staff, but the Government for the way in which they have organised things.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

I am grateful to the hon. Gentleman for changing his position, but the fact is that he criticised the benefit investigators, who have not only trained local authority officials, but provided them with a manual that sets out the procedures that they should adopt. They are working closely together, with agreements that have been hammered out and that work effectively. For the hon. Gentleman to criticise Benefits Agency staff in that way is wrong and deplorable.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

I do not have time. I have six minutes left and a bit more to say.

What has Labour's contribution been to tackling benefit fraud? Its local authorities have had to be dragged into attacking housing benefit fraud. Its Front-Bench spokesmen have been here claiming that there has been £1 billion more housing benefit fraud than we say, but Labour's council leaders tell me that our targets for them are too high and that they cannot—

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

The hon. Lady says that they are not. I went to the meeting with the local authority associations on 18 March, when they told me exactly that. My right hon. Friend has been creating a raft of measures against benefit fraud which, rightly, have been praised by the Select Committee, but where was the Labour party? It was not suggesting ideas, that is for sure—it was just complaining. There has never been a constructive contribution.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

I do not have time.

Now that the scale of fraud is known and the strategy is in place and working, Labour is trying to jump on the bandwagon and to use a crude overestimation of fraud to sound tough and to explain away its expensive spending plans. It is inventing fraud and announcing half-baked measures to detect it.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

I am not giving way. I have already given way to the hon. Gentleman.

Labour claims that it would detect an extra £310 million-worth of landlord fraud, but it has not done its homework, as it totals only £150 million. Why did it get it wrong? It wanted to. It does not know anything about fraud detection and it has never had an interest in it. It says that its home visits would save an extra £520 million. It talks about 4 million visits at £3 a go, allowing only eight minutes for each visit. I have asked benefit investigators how they would get on if they had eight minutes between investigations and how they could fit in the 77 minutes that they normally take to interview someone thoroughly to check his documents, to consider his position and perhaps to advise him about what benefits were available to him. One of them told me: "I would need a rocket tied on my back." Another said: "I couldn't do a proper job."

That is just Labour all over. It has not done its homework. Why has it got it wrong? It wanted to and it does not understand fraud detection.

Labour talks about stricter procedures on national insurance numbers, ignoring the fact that such procedures are being put in place. In November 1995, we tightened the registration procedures. In February, the new database for stolen birth certificates was introduced. In October, the new P46 procedure to check new workers' claims against national insurance numbers will be introduced.

My right hon. Friend has revolutionised the battle against benefit fraud, but Labour authorities have had to be dragged into helping. Labour spokesmen have had no ideas—just complaints—and now they are trying, belatedly, to jump on the bandwagon, but without doing their homework.

Photo of Oliver Heald Oliver Heald Parliamentary Under-Secretary (Department of Social Security)

No, I have not. Labour has had no new ideas.

My hon. Friend the Member for Colchester, North raised a number of important questions about the way in which national insurance number surveys should be conducted in future. Apart from the measures that I mentioned, we should have the detailed strategy for national insurance numbers that we have for benefit fraud generally and housing benefit—which the Government will be announcing. We should also improve the approach to fraud through the spotlight process. My hon. Friend the Member for Isle of Wight referred to the programme in his constituency, where claimants have been given two weeks to get their benefit claims in order. We are about to start active operations and take focused measures.

Every time we launch a new spotlight campaign, we learn something—which is the way in which the Government should approach benefit fraud. Apart from the strategy and measures that we have in place, we must constantly investigate and make improvements. We do not need any lessons from the Labour party, which has done nothing over the years. Opposition Members speak as if they have spent 17 years giving us fantastic new ideas for cracking benefit fraud. Nothing could be further from the truth.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 239, Noes 266.

Division No. 151][7.00 pm
Adams, Mrs IreneChurch, Judith
Ainger, NickClapham, Michael
Ainsworth, Robert (Cov'try NE)Clark, Dr David (South Shields)
Allen, GrahamClarke, Tom (Monklands W)
Alton, DavidClelland, David
Anderson, Donald (Swansea E)Clwyd, Mrs Ann
Anderson, Ms Janet (Ros'dale)Coffey, Ann
Armstrong, HilaryCohen, Harry
Ashdown, Rt Hon PaddyConnarty, Michael
Barron, KevinCook, Robin (Livingston)
Battle, JohnCorbett, Robin
Bayley, HughCorbyn, Jeremy
Beckett, Rt Hon MargaretCousins, Jim
Benn, Rt Hon TonyCox, Tom
Bennett, Andrew F.Cunliffe, Lawrence
Benton, JoeDafis, Cynog
Bermingham, GeraldDarling, Alistair
Berry, RogerDavies, Bryan (Oldham C'tral)
Blair, Rt Hon TonyDavies, Chris (L'Boro & S'worth)
Blunkett, DavidDavies, Rt Hon Denzil (Llanelli)
Boateng, PaulDavis, Terry (B'ham, H'dge H'l)
Bradley, KeithDenham, John
Bray, Dr JeremyDewar, Donald
Brown, Gordon (Dunfermline E)Dixon, Don
Brown, N (N'c'tle upon Tyne E)Dowd, Jim
Burden, RichardDunwoody, Mrs Gwyneth
Byers, StephenEastham, Ken
Callaghan, JimEtherington, Bill
Campbell, Mrs Anne (C'bridge)Fatchett, Derek
Campbell, Menzies (Fife NE)Faulds, Andrew
Campbell, Ronnie (Blyth V)Field, Frank (Birkenhead)
Campbell-Savours, D NFlynn, Paul
Canavan, DennisFoster, Rt Hon Derek
Cann, JamieFoster, Don (Bath)
Chidgey, DavidFraser, John
Chisholm, MalcolmFyfe, Maria
Galbraith, SamMartlew, Eric
Gapes, MikeMaxton, John
Garrett, JohnMeacher, Michael
Gerrard, NeilMeale, Alan
Godman, Dr Norman AMichael, Alun
Godsiff, RogerMichie, Bill (Sheffield Heeley)
Golding, Mrs LlinMichie, Mrs Ray (Argyll & Bute)
Gordon, MildredMilburn, Alan
Graham, ThomasMiller, Andrew
Grant, Bernie (Tottenham)Mitchell, Austin (Gt Grimsby)
Griffiths, Nigel (Edinburgh S)Moonie, Dr Lewis
Griffiths, Win (Bridgend)Morgan, Rhodri
Grocott, BruceMorley, Elliot
Gunnell, JohnMorris, Rt Hon Alfred (Wy'nshawe)
Hain, PeterMorris, Estelle (B'ham Yardley)
Hanson, DavidMorris, Rt Hon John (Aberavon)
Hardy, PeterMowlam, Marjorie
Harman, Ms HarrietMudie, George
Harvey, NickMullin, Chris
Hattersley, Rt Hon RoyMurphy, Paul
Hill, Keith (Streatham)O'Brien, Mike (N W'kshire)
Hinchliffe, DavidO'Brien, William (Normanton)
Hodge, MargaretO'Hara, Edward
Hoey, KateOlner, Bill
Hood, JimmyO'Neill, Martin
Howarth, Alan (Strat'rd-on-A)Orme, Rt Hon Stanley
Howarth, George (Knowsley North)Pickthall, Colin
Howells, Dr Kim (Pontypridd)Pike, Peter L
Hoyle, DougPowell, Sir Ray (Ogmore)
Hughes, Kevin (Doncaster N)Prentice, Bridget (Lew'm E)
Hughes, Robert (Aberdeen N)Prentice, Gordon (Pendle)
Hughes, Roy (Newport E)Prescott, Rt Hon John
Hughes, Simon (Southwark)Primarolo, Dawn
Ingram, AdamPurchase, Ken
Jackson, Glenda (H'stead)Quin, Ms Joyce
Jackson, Helen (Shef'ld, H)Radice, Giles
Jamieson, DavidRandall, Stuart
Janner, GrevilleRaynsford, Nick
Jenkins, Brian (SE Staff)Reid, Dr John
Jones, Ieuan Wyn (Ynys Môn)Rendel, David
Jones, Jon Owen (Cardiff C)Robertson, George (Hamilton)
Jones, Lynne (B'ham S O)Robinson, Geoffrey (Co'try NW)
Jones, Martyn (Clwyd, SW)Roche, Mrs Barbara
Jones, Nigel (Cheltenham)Rooker, Jeff
Jowell, TessaRooney, Terry
Kennedy, Charles (Ross,C&S)Ross, Ernie (Dundee W)
Kennedy, Jane (L'pool Br'dg'n)Rowlands, Ted
Khabra, Piara SSalmond, Alex
Kilfoyle, PeterSheerman, Barry
Kirkwood, ArchyShore, Rt Hon Peter
Lestor, Joan (Eccles)Short, Clare
Lewis, TerrySimpson, Alan
Liddell, Mrs HelenSkinner, Dennis
Litherland, RobertSmith, Andrew (Oxford E)
Livingstone, KenSmith, Chris (Isl'ton S & F'sbury)
Lloyd, Tony (Stretford)Smith, Llew (Blaenau Gwent)
Llwyd, ElfynSnape, Peter
Loyden, EddieSoley, Clive
Lynne, Ms LizSpellar, John
McAllion, JohnSquire, Rachel (Dunfermline W)
McAvoy, ThomasSteel, Rt Hon Sir David
McCartney, IanSteinberg, Gerry
McFall, JohnStevenson, George
McKelvey, WilliamStott, Roger
Mackinlay, AndrewStrang, Dr. Gavin
McLeish, HenrySutcliffe, Gerry
McNamara, KevinTaylor, Matthew (Truro)
MacShane, DenisThompson, Jack (Wansbeck)
Madden, MaxTipping, Paddy
Maddock, DianaTouhig, Don
Mahon, AliceTrickett, Jon
Mandelson, PeterTurner, Dennis
Marek, Dr JohnTyler, Paul
Marshall, David (Shettleston)Vaz, Keith
Marshall, Jim (Leicester, S)Walker, Rt Hon Sir Harold
Martin, Michael J (Springburn)Wallace, James
Walley, JoanWise, Audrey
Wardell, Gareth (Gower)Worthington, Tony
Welsh, AndrewWray, Jimmy
Wicks, MalcolmWright, Dr Tony
Wigley, DafyddYoung, David Bolton SE
Williams, Rt Hon Alan (Sw'n W)
Williams, Alan W (Carmarthen)Tellers for the Ayes:
Wilson, BrianMr. Greg Pope and Mr. John Cummings.
Winnick, David
Ainsworth, Peter (East Surrey)Dover, Den
Aitken, Rt Hon JonathanDuncan, Alan
Alexander, RichardDuncan Smith, Iain
Alison, Rt Hon Michael (Selby)Dunn, Bob
Allason, Rupert (Torbay)Durant, Sir Anthony
Amess, DavidDykes, Hugh
Arbuthnot, JamesEggar, Rt Hon Tim
Arnold, Jacques (Gravesham)Emery, Rt Hon Sir Peter
Atkins, Rt Hon RobertEvans, David (Welwyn Hatfield)
Atkinson, David (Bour'mouth E)Evans, Jonathan (Brecon)
Atkinson, Peter (Hexham)Evans, Nigel (Ribble Valley)
Baker, Nicholas (North Dorset)Evans, Roger (Monmouth)
Banks, Matthew (Southport)Evennett, David
Banks, Robert (Harrogate)Faber, David
Bates, MichaelFabricant, Michael
Batiste, SpencerFenner, Dame Peggy
Bellingham, HenryField, Barry (Isle of Wight)
Bendall, VivianFishburn, Dudley
Beresford, Sir PaulForman, Nigel
Biffen, Rt Hon JohnForsyth, Rt Hon Michael (Stirling)
Body, Sir RichardForsythe, Clifford (S Antrim)
Bonsor, Sir NicholasForth, Eric
Booth, HartleyFowler, Rt Hon Sir Norman
Boswell, TimFox, Rt Hon Sir Marcus (Shipley)
Bottomley, Peter (Eltham)Freeman, Rt Hon Roger
Bottomley, Rt Hon VirginiaFry, Sir Peter
Bowden, Sir AndrewGale, Roger
Bowis, JohnGardiner, Sir George
Boyson, Rt Hon Sir RhodesGare-Jones, Rt Hon Tristan
Brandreth, GylesGarnier, Edward
Brazier, JulianGill, Christopher
Bright, Sir GrahamGoodlad, Rt Hon Alastair
Brooke, Rt Hon PeterGorman, Mrs Teresa
Brown, M (Brigg & Cl'thorpes)Gorst, Sir John
Browning, Mrs AngelaGrant, Sir A (SW Cambs)
Bruce, Ian (South Dorset)Greenway, Harry (Ealing N)
Butcher, JohnGriffiths, Peter (Portsmouth, N)
Butterfill, JohnHague, Rt Hon William
Carlisle, John (Luton North)Hamilton, Neil (Tatton)
Carrington, MatthewHampson, Dr Keith
Carttiss, MichaelHannam, Sir John
Cash, WilliamHargreaves, Andrew
Channon, Rt Hon PaulHawkins, Nick
Chapman, Sir SydneyHawksley, Warren
Churchill, MrHayes, Jerry
Clappison, JamesHeald, Oliver
Clark, Dr Michael (Rochford)Heath, Rt Hon Sir Edward
Clifton-Brown, GeoffreyHeathcoat-Amory, Rt Hon David
Coe, SebastianHendry, Charles
Congdon, DavidHeseltine, Rt Hon Michael
Conway, DerekHiggins, Rt Hon Sir Terence
Coombs, Anthony (Wyre For'st)Hill, Sir James (Southampton Test
Coombs, Simon (Swindon)Hogg, Rt Hon Douglas (G'tham)
Cope, Rt Hon Sir JohnHoram, John
Cormack, Sir PatrickHordern, Rt Hon Sir Peter
Couchman, JamesHowell, Rt Hon David (G'dford)
Cran, JamesHowell, Sir Ralph (N Norfolk)
Currie, Mrs Edwina (S D'by'ire)Hughes, Robert G (Harrow W)
Curry, David (Skipton & Ripon)Hunt, Rt Hon David (Wirral W)
Davis, David (Boothferry)Hunt, Sir John (Ravensbourne)
Day, StephenHunter, Andrew
Deva, Nirj JosephHurd, Rt Hon Douglas
Devlin, TimJack, Michael
Dorrell, Rt Hon StephenJenkin, Bernard
Douglas-Hamilton, Lord JamesJessel, Toby
Johnson Smith, Sir GeoffreyRumbold, Rt Hon Dame Angela
Jones, Gwilym (Cardiff N)Ryder, Rt Hon Richard
Jones, Robert B (W Hertfdshr)Sackville, Tom
Kirkhope, TimothySainsbury, Rt Hon Sir Timothy
Knight, Mrs Angela (Erewash)Scott, Rt Hon Sir Nicholas
Knight, Rt Hon Greg (Derby N)Shaw, David (Dover)
Knight, Dame Jill (Bir'm E'st'n)Shephard, Rt Hon Gillian
Knox, Sir DavidShepherd, Sir Colin (Hereford)
Kynoch, George (Kincardine)Shepherd, Richard (Aldridge)
Lait, Mrs JacquiSims, Sir Roger
Lamont, Rt Hon NormanSkeet, Sir Trevor
Lang, Rt Hon IanSmith, Sir Dudley (Warwick)
Leigh, EdwardSoames, Nicholas
Lennox-Boyd, Sir MarkSpeed, Sir Keith
Lester, Sir James (Broxtowe)Spencer, Sir Derek
Lidington, DavidSpicer, Sir James (W Dorset)
Lilley, Rt Hon PeterSpicer, Sir Michael (S Worcs)
Lloyd, Rt Hon Sir Peter (Fareham)Spink, Dr Robert
Lord, MichaelSpring, Richard
Luff, PeterSproat, Iain
MacGregor, Rt Hon JohnSquire, Robin (Hornchurch)
MacKay, AndrewStanley, Rt Hon Sir John
Maclean, Rt Hon DavidStephen, Michael
McLoughlin, PatrickStewart, Allan
McNair-Wilson, Sir PatrickStreeter, Gary
Maitland, Lady OlgaSumberg, David
Malone, GeraldSweeney, Walter
Marland, PaulSykes, John
Marlow, TonyTapsell, Sir Peter
Marshall, John (Hendon S)Taylor, Ian (Esher)
Martin, David (Portsmouth S)Taylor, John M (Solihull)
Merchant, PiersTaylor, Sir Teddy (Southend, E)
Mills, IainTemple-Morris, Peter
Mitchell, Andrew (Gedling)Thomason, Roy
Mitchell, Sir David (NW Hants)Thompson, Sir Donald (C'er V)
Moate, Sir RogerThompson, Patrick (Norwich N)
Molyneaux, Rt Hon Sir JamesThornton, Sir Malcolm
Monro, Rt Hon Sir HectorThurnham, Peter
Needham, Rt Hon RichardTownend, John (Bridlington)
Nelson, AnthonyTownsend, Cyril D (Bexl'yh'th)
Neubert, Sir MichaelTrend, Michael
Newton, Rt Hon TonyTwinn, Dr Ian
Nicholls, PatrickVaughan, Sir Gerard
Nicholson, David (Taunton)Viggers, Peter
Norris, SteveWaldegrave, Rt Hon William
Onslow, Rt Hon Sir CranleyWalden, George
Ottaway, RichardWaller, Gary
Page, RichardWard, John
Paice, JamesWardle, Charles (Bexhill)
Patnick, Sir IrvineWaterson, Nigel
Pattie, Rt Hon Sir GeoffreyWatts, John
Pawsey, JamesWells, Bowen
Peacock, Mrs ElizabethWheeler, Rt Hon Sir John
Pickles, EricWhitney, Ray
Porter, Barry (Wirral S)Whittingdale, John
Porter, David (Waveney)Widdecombe, Ann
Portillo, Rt Hon MichaelWiggin, Sir Jerry
Powell, William (Corby)Wilkinson, John
Rathbone, TimWilletts, David
Redwood, Rt Hon JohnWilshire, David
Renton, Rt Hon TimWinterton, Mrs Ann (Congleton)
Richards, RodWinterton, Nicholas (Macc'f'ld)
Riddick, GrahamWolfson, Mark
Rifkind, Rt Hon MalcolmWood, Timothy
Robathan, AndrewYeo, Tim
Roberts, Rt Hon Sir WynYoung, Rt Hon Sir George
Robinson, Mark (Somerton)
Roe, Mrs Marion (Broxbourne)Tellers for the Noes:
Ross, William (E Londonderry)Mr. Simon Burns and Dr. Liam Fox.
Rowe, Andrew (Mid Kent)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

MADAM DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.


That this House welcomes the priority given by Her Majesty's Government to tackling all aspects of benefit fraud; endorses the Government's successful work in detecting and preventing fraud, which has resulted in the benefit savings target of £1.3 billion being exceeded in 1995–96; congratulates the Government on carrying out the first systematic review of the amount and type of Housing Benefit fraud; notes that Housing Benefit administration is the responsibility of local authorities and that local authorities only started tackling fraud seriously once the Government introduced financial incentives for them to do so; welcomes the new fraud strategy which will result in savings of £2.5 billion a year by 1999; deplores the Labour Party's attempt to exaggerate the amount of fraud as a pretext to spend more money; and condemns the Labour Party's continuing half-heartedness in tackling benefit fraud and abuse.