Additional Powers to Obtain Information

Clause 1 – in the House of Commons at 4:15 pm on 1st May 2001.

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Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham 4:15 pm, 1st May 2001

I beg to move amendment No. 11A, in page 2, line 26, at end insert— '(2BB) Prior to the exercise of the power conferred on an authorised officer to obtain information under this section, that officer shall obtain in writing the consent to carry out an investigation.(2BC) Consent must be granted in writing or (if not in writing) in a manner that produces a record of its having been granted; and it must—

  1. (a) describe the conduct and data in relation to which it is authorised; and
  2. (b) specify the office, rank or position held by the person granting the authorisation.'.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

With this it will be convenient to discuss the following amendments: No. 12, in page 2, line 26, at end insert— '(2BD) Requests for information made by authorised officers to any of the bodies falling within subsection (2A) shall be made through a central organisation, and a notice requiring data to be disclosed or to be obtained and disclosed—

  1. (a) must be given in writing or (if not in writing) must be given in a manner that produces a record of its having been given;
  2. (b) must describe the data to be obtained or disclosed under the notice;
  3. (c) must specify the office, rank or position held by the person giving it; and
  4. (d) must specify the manner in which any disclosure required by the notice is to be made.'.
No. 15, in page 3, line 14, at end insert— '(2G) A person to whom a notice is given under subsection (2A) above may, by notice in writing given to the authorised officer within thirty days after the date of the notice under that subsection, object to that notice on the ground that it would be onerous for him to comply with it; and if the matter is not resolved by agreement, it shall be referred to an official of seniority within the relevant department, who may confirm, vary or cancel that notice.'. No. 16, in page 3, line 14, at end insert— '(2H) An authorised officer who gives a notice to a person under subsection (2A) above shall also give to that person a written summary of his reasons for applying for consent to the giving of the notice.'. No. 19, in clause 2, page 6, line 48, at end insert— '(8) In this section and in sections 109B and 109BA an 'authorised officer' means an individual holding such offices, ranks or positions with relevant public authorities as are prescribed for the purposes of this subsection by an order made by the Secretary of State who is designated by the Secretary of State as an authorised officer.'.

Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham

The amendments all deal with outstanding concerns about the Department's power to acquire information under the Bill. A number of amendments tabled in the House of Lords addressed some of the concerns that many organisations and companies have expressed, but concerns still remain about certain issues relating to fundamental aspects of the Bill. Amendment No. 11A deals with the lack of independent scrutiny of authorised officers' requests for information. From the outset, organisations as diverse as the British Bankers Association and Liberty have, for obvious reasons, expressed concern about the lack of independent consent from a higher authority to requests for information.

The BBA feels that an officer could convince himself that he had reasonable grounds when, in fact, he was acting on gut instinct or worse, as the system is used more, as a matter of routine. Liberty believes that the provision means that a rogue investigator cannot make inquiries about all and sundry. Therefore, there are still concerns about the lack of an independent check, which are strengthened by the existence in the Taxes Management Act 1970 of a procedure, similar to our proposals, to ensure independent scrutiny. As there is an exchange of information across government—with which we do not have any problems—we are anxious that there should be a consistent system and level of approval of requests for information.

Although the Government do not believe it, the development of social security benefits depends partly on the introduction of tax credits—including, of course, the working families tax credit, which replaced family credit. Already, there appear to be a number of problems with fraud in respect of the working families tax credit, and I understand that the extent of fraud in the Canadian working income supplement system is so great that Canada is moving back to a benefits-based system. In other parts of the world, therefore, tax credits seem to be prone to fraud, and the difficulty that we all face is that the system of checking is different as between the Department of Social Security and the Treasury and the Inland Revenue. That is why we want to achieve a much greater strengthening of the independent scrutiny.

Amendments Nos. 12, 15 and 16 are linked to what we all know as a single point of contact and the potential for trawling or fishing. We seem to have been hung up on the fishing industry in many of our debates. Amendment No. 12 would limit the number of bodies from which an organisation could receive a request for information. As the Bill covers local government and Departments such as the DSS, many people could contact an organisation for information about a possible fraud.

Amendment No. 15 provides that, because of the sheer number of people who could make contact, organisations should have a specific point of contact through which the Government should channel requests. There is no single point of contact in the Government or in local authorities, but the code of practice might be amended to make it easier for companies to be made aware of the fact that they will be dealing with fewer people.

I understand that, following debates in Committee, negotiations have been taking place between the DSS and affected organisations in the private sector. It has been agreed that requests for information will be addressed to a nominated single point of contact, where one has been specified. To try to tighten up on the unknown number of requests that could be made by the public sector, it will make requests only in writing by post, fax, e-mail or electronic password-controlled database access. Telephone contact will be made only by arrangement and only to clarify or query information already provided under a written request. Authorised officers will not make inquiries by means of a personal visit to any corporate premises. That provides reassurance, but I would be grateful if the Minister of State confirmed it. It is important that we are able to reassure the private sector.

I understand from the telecoms fraud group that there are still issues outstanding. The DSS has agreed that only a proportion of DSS officers authorised to use the information powers in the Bill will be allowed to contact telecoms companies. However, that does not apply to the local authorities, of which there are 409. I agree with the group that the Government tend to ignore the sheer number of local authorities and concentrate on their own offices. That is understandable, but it makes it more difficult for the private sector to know with whom it is dealing.

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

May I take the hon. Lady back to amendment No. 11A? I apologise for interrupting her flow of thought and for not intervening sooner. The amendment states: Prior to the exercise of the power … an authorised officer… shall obtain in writing the consent to carry out an investigation. Authorised officers will be empowered by the Bill to carry out searches and they are deemed senior enough do so, but it is not clear from whom they would get that consent. Of whom is consent being asked?

Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham

In order to build in an element of independent scrutiny, we seek to involve somebody further up the system who will not necessarily be part of the organisation from which the investigating or authorising officer comes. If we persuade the Government to accept the amendment, I shall obviously be happy to negotiate on the correct language. We want to build in a firebreak that can pull people up short and make them ask whether they need the information and, if so, why they need it.

Amendment No. 19 has a similar purpose, as it seeks to ensure standardisation across Government in respect of those who can make inquiries. We want to explore the issue of the authorised officer and the need to meet the same standards as the Regulation of Investigatory Powers Act 2000, which most of us probably know as RIPA. The acronym sounds more like a river than an Act of Parliament, but never mind. We are also concerned that there are difficulties in paragraphs 3.5 and 3.6 of the draft code of practice, which outlines the Government's proposed system of authorisation. The authorised officers are of executive officer grade, and, despite many debates in Committee, the Government have not changed that arrangement.

British Telecom, which is significantly affected by RIPA, has pointed out that the grade of authorisation is at variance with the higher grade of management controls that are expected to be introduced under subsections (2) and (3) of section 25 of RIPA for exactly the same type of communications data. Telecommunications companies will be dealing with two levels of officers across government in respect of similar information. BT remains very concerned and continues to hope that the government can deal with its anxieties. We have heard on many occasions about the Minister of State's view that training will deal with that discrepancy in the seniority of the authorised officers, but the problem is more fundamental, as it concerns the provision across companies of similar, sensitive data to very different levels of authority.

We feel strongly about the amendments and believe that the Government still need to negotiate with the companies and organisations that are involved. I would be grateful to hear about the progress that is being made, as I hope that the outstanding concerns will be addressed and that those companies and organisations will get some comfort from the Government.

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

I have much sympathy with the spirit of the amendments, which reflect many of the concerns that the Liberal Democrats have expressed about the lack of independent scrutiny, the advantages of a single point of contact and the seniority of the authorised officers. I am, however, anxious about some of the specifics. As I mentioned in an intervention, amendment No. 11A is problematic. It states that the officer needs written consent, but it says nothing about the people who should provide that consent or their seniority. Interestingly, it was suggested that such people could come from outside the organisation, but if the amendment is to achieve its desired goal, it should be much more explicit. One can imagine implementation through forms of written permission by another authorised officer. I am not sure where that would lead us.

5.15 pm I am sympathetic to the idea of a single point of contact, partly for the convenience of those from whom information is obtained and partly because of the concept of an audit trail. If matters go wrong, and there is some suggestion of abuse of the powers, we need thorough records of their use. The amendments try to achieve that.

Amendment No. 19 seeks consistency about seniority. That is sensible. The hon. Member for Beckenham (Mrs. Lait) made a good point about a telecommunications company being contacted by different Government officials under different Acts, which require different levels of seniority. There is no good reason for that. I am therefore sympathetic to the amendments, but worried about aspects of their implementation.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Perhaps the Minister of State is about to shoot my fox and say that, unknown to me, progress has already been made on reaching agreement with banks and others who will receive calls from Benefits Agency or Department of Social Security staff.

I especially support amendment No. 12, which proposes a central point of control. That could be the only method of preventing the system from spreading to the extent of allowing officials to go on fishing expeditions to find material about individuals. It would therefore be sensible to route all calls through one control centre to an appointed person in the banks or utility companies who understood the system.

People who work in banks or utility companies are busy. If a phone rings and the caller claims to be Joe Bloggs from the Benefits Agency, the person who replies is more than likely to look up the details on the computer and provide the answer without checking the caller's precise identity. Private detectives and similar individuals can be extremely clever at passing themselves off as officials when trying to glean information. Providing for a central point of contact is therefore sensible. I am interested in finding out whether the Minister of State has made progress with the industry on that.

We are slightly ill at ease because we have reached the final stages of considering the Bill, yet one or two matters do not appear to have been resolved to our complete satisfaction. They raise serious questions about individual liberty and privacy. It was ever thus with such measures and we must ultimately rely on Ministers to hatch the best deal possible and hope that it works. However, I share my hon. Friends' anxieties. We remain ill at ease about the clause.

Photo of Mr Jeff Rooker Mr Jeff Rooker Minister of State, Department of Social Security, Minister of State (Department of Social Security)

I remind hon. Members that we have a draft code of practice, and we have said that after Royal Assent it will be issued for full-scale consultation with the industry and all other relevant bodies. By full consultation, I mean a normal three-month consultation with all interested parties. The code will be quotable in courts of law and govern the use of powers in the Bill. I emphasise that passing the Bill this week is not the end of the matter. The guidelines for its powers will be governed by a code of practice about which we will fully consult. If Members in both Houses wish, they can use the time available to debate the matter. The code is not subject to affirmative or, indeed, negative procedures, but there is nothing to stop issues relating to the consultation or the code being debated in the House.

The hon. Member for Beckenham (Mrs. Lait) mentioned various agreements, but I did not make a list of them. The note that I have tells me that all the points that she raised have been agreed with the private sector. I also remind her that they were agreed with the private sector at the time we issued the present draft code of practice. Since the Standing Committee, there has been nothing new for me to report back to the House.

We have dealt with the hon. Lady's list of points. I shall deal with the amendments in chronological order in a moment, but I want to get a further point out of the way so that I do not forget about it. The hon. Lady raised the issue—this was a theme in Committee as well—of comparing the grades of the civil servants authorised to operate under the terms of the Regulation of Investigatory Powers Act 2000 with those who will operate under the Bill. Those who operate under the Act are authorised to obtain traffic data from telecommunications companies. Department of Social Security officers will not be interested in traffic data; they will be interested in who pays the bills, for example, or who lives at the address to which the bills are sent. They will be limited to obtaining that kind of information; they will not be interested in who spoke to whom. There will be no authority for DSS officers to check on traffic data. We are not interested in that. With respect, therefore, it is not fair to compare the civil servants operating under the Regulation of Investigatory Powers Act with those who will operate under the powers of the Bill.

I shall briefly go through the amendments in order. I promise the House, by the way, that I shall not use all the notes available, of which I have 21 pages. Amendment No. 11A would create an unnecessary further layer of bureaucracy, and we do not want to do that because it would incur extra cost and time. We have already explained at some length in Committee why we do not think it necessary for officers to obtain consent before making inquiries, but let me spell it out again, because it is important so far as the staff in my Department are concerned.

The Bill already provides safeguards to prevent the powers to obtain information from being abused. The powers may be used only when their use is reasonable for purposes set out in the legislation. Secondly, the officers who use the powers will not have the responsibility for making decisions about benefit entitlement, or about whether fraud has been committed. So, already, on the second of my seven points, we have reached a further check up the hierarchy.

I noticed that the hon. Lady gave a quaint definition of "independent" by saying that it would refer to someone else in the Department. I thought that "independent" meant independent, as in outside the Department. Perhaps I have misunderstood. The fact is that the people making the inquiries under these powers will not be the people who decide whether someone is entitled to benefit. That is important: they will be removed from the decision-making process. That should give the House confidence that the officers conducting the inquiries will take an objective view when doing so.

Furthermore, one cannot just dismiss the fact that I have said that the officers will be trained by saying, "Oh, they are going to be trained. Well, that doesn't matter; we are not interested in that." The Department is training more officers in anti-fraud and security than ever before, and they are of obtaining professional qualifications accredited by outside bodies. The testimony to the quality of the training in the DSS now is that the private sector advertises for PINS—professionalism in security—trained and qualified staff. The private sector is seeking to poach my Department's trained staff because it knows that they have gained a qualification through quality professional training.

The officers will have to record the details of why the inquiries were made. It will not be possible for them to make inquiries without making such records. Also, if they abuse the powers, they will be found out and punished. That could involve a prison sentence. If DSS officers were to go trawling through computer systems with no good reason, perhaps because a friend or family member had asked them to look into what someone was getting, or to find out where someone was living—[Interruption.] The hon. Member for Brentwood and Ongar (Mr. Pickles) is trying to say something from a sedentary position.

Photo of Eric Pickles Eric Pickles Shadow Spokesperson (Work and Pensions)

I merely wondered how common this was. Does it happen a lot? How many prosecutions take place each year?

Photo of Mr Jeff Rooker Mr Jeff Rooker Minister of State, Department of Social Security, Minister of State (Department of Social Security)

I am trying to be as helpful as I can. What I am saying is that these things happen, and have happened in the past. The numbers involved are small but we catch them, because we police the system. No system is perfect, and people must be confident that officers using the powers in the Bill will be checked out.

In 2000—I believe that I gave these figures in Committee—there were 18 prosecutions, three downgrades, 21 resignations and 30 dismissals among 80,000 staff in the Benefits Agency. Those are small numbers, but I am not suggesting that the situation is not serious: there have, after all, been prosecutions, resignations and dismissals. We are policing what our staff are doing in using their powers, which may be intrusive in terms of access to personal information. We have the Computer Misuse Act 1990, the Social Security Administration Act 1992 and the Data Protection Acts. Prison sentences may be imposed following prosecutions carried out successfully under those Acts. Before the hon. Member for Brentwood and Ongar asks me, however, let me say that I do not know how many people were sent to prison last year.

The number of authorised officers will, as we have said, be limited. We do not expect the Secretary of State to need more than 300 officers, and we propose to authorise only 175 initially. The Benefits Agency has 80,000 staff, fewer than 0.5 per cent. of whom will be authorised to use the powers in the Bill.

The work of authorised officers will be supervised, and subject to regular management checks. We are talking about normal operational factors and arrangements, and about people who are undoubtedly highly trained specialists, with managers who are also trained specialists. We do not want more checks and red tape than we have already. It could be argued that we have gone too far now, but we need this provision because we are dealing with sensitive information.

I remind the hon. Member for Beckenham that it was the previous Government who consolidated provisions into the Social Security Administration Act 1992. It was also the previous Government who extended those powers and made them available to local authorities in the Social Security Administration (Fraud) Act 1997. I am not making a major point about that; I am merely expressing the hope that there is some consensus.

It may be said—although this is a banal way of putting it—that the same group of officials advised both Governments, and that both Governments have soaked up what they said. We have not soaked it up, however; we have subjected it to our own questioning. When planning the Bill, we removed a lot of material that existed in early drafts. My ministerial colleagues and I asked ourselves whether we could stand at the Dispatch Box and feel comfortable about saying that we were satisfied that we were doing only what we considered necessary to police the system further, and that there would be no fishing expeditions and no intrusion on people just because they were claiming benefit. As a result, the Bill has been pared down to become a modest technical adjustment to combat fraud.

Amendment No. 12 relates to centralisation. I know that the hon. Member for Hexham (Mr. Atkinson) has raised the issue before, and I do not criticise him. Ours is a large Department, responsible for spending—I think—a third of all Government money. Our budget for benefits is £100 billion a year—£2 billion a week. That is big money, and a good many people are needed to manage the operation successfully—there are some 600 offices around the country. We have said, however, that all inquiries related to the Bill will be routed through the 13 administrative areas over which the Benefits Agency is spread, in addition to the headquarters of the national intelligence unit, which deals with organised fraud. Therefore, we have cut the number of sites from 600 to 14. I honestly think that that is reasonable. It is not reasonable to route all inquiries through one central office.

5.30 pm We will limit the number of authorised officers to 175 to start with. Ministers—other Ministers; not me—will be subject to questions on how the Bill is working. The code of practice will guide the way in which it operates. The House can revisit the matter any time it chooses if issues are raised that do not conform with the promises and commitments that we have given during the passage of the Bill.

Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham

The right hon. Gentleman mentions that inquiries will be routed through only 14 DSS sites, but there are 409 local authorities. Will it continue to be 409 local authorities?

Photo of Mr Jeff Rooker Mr Jeff Rooker Minister of State, Department of Social Security, Minister of State (Department of Social Security)

I certainly hope not. It is worse than that because there are 409 local authorities and each of them probably has more than a dozen departments, but Ministers at the centre cannot dictate to local authority chief executives how they organise their affairs. In Committee, I gave examples of good practice, particularly in Gloucester, where all inquiries are routed through one department. There is nothing to stop local authorities—it would be good practice—from making a combined effort on anti-fraud measures; regions, or local authorities that are grouped together could combine. They could share anti-fraud measures and activity. There could be a central point for one or more local authorities, but we cannot—it is just not possible—tell chief executives how they will organise.

I accept that that may look like a cop-out. Time will tell whether local authorities are sensible in the way they operate the powers. As I have said, they are not completely analogous with those of the Government. They will not have online access to data in the private sector unless they have specific sanction and authority from the Secretary of State. They are not being given that authority. We are not prepared to say that we have that much confidence in local authorities that we are prepared to make their powers analogous to those of the Government from day one—far from it; we will not do that.

There are excellent local authorities that are efficient, that are good value for money and that have good anti-fraud operations. Other local authorities are at the other end of the spectrum. We well appreciate that there are different practices, but we cannot give an absolute commitment on the basis of all 409 authorities.

Amendment No. 15 provides that organisations can object to a request for information on the ground that it is too onerous. May I briefly remind the House of the position? Businesses expressed concerns that inquiries should be centralised. I have already said that we will get the number down to 14 units from 600. Businesses expressed concerns that they would be asked for information that they did not normally collect. We have made it clear that we will not ask for such information. They expressed concern that they would have to develop new software and new ways of storing information, and to store information for longer. We have given reassurances on all those points. They will not be required to buy new software and to change the way they keep information. At every turn, we have made it clear that we are concerned to keep burdens to a minimum; we have made many commitments to do that. I repeat them on the Floor of the House today.

We have made it clear at paragraph 1.7 of the code of practice that businesses may contact authorised officers if there are problems in meeting a particular request. The code makes it clear that the authorised officer must consider the organisation's objections and amend the request where that would be reasonable. There must be a test of reasonableness. It will not be done on the basis of a hunch or a whim. The code is admissible in court proceedings. That is a further back-up.

I am a little surprised about amendment No. 16. If authorised officers had to give their background reasons for making a request or even a summary, that would let the cat out of the bag. The request might involve a collusive employer, yet the request would be made to the employer. It may be a bank or a financial institution. I am sure that the Opposition are not really serious about amendment No. 16 and therefore I will not spend any more time on it.

In some ways, I touched on the subject of amendment No. 19 when I referred to the Regulation of Investigatory Powers Act and the rank and position of officers. It is not for the private sector to decide which rank of civil servant it is prepared to deal with when the civil servant is exercising powers conferred by statute and agreed by this House. We will not be told that by the private sector, because the law decides that issue, and Government management will decide the rest through executive responsibility. However, we will not be unreasonable. Executive officers cover a range of management in the Department and we are satisfied with the way in which they operate their present powers, which they have used since 1948, to contact companies every day across the country.

I do not accept the telecommunications industry's point about inconsistency between the grades of officers. The nature of the information required is different: we will not be looking for traffic information. It will be made crystal clear that the inquiries made using the powers in the Bill will be made under social security legislation and exclusively for social security purposes, by a named authorised officer working for a DSS intelligence unit or a local authority. Information providers will have a duty to check that the inquiry is from a source known to them as being an authorised officer. They will not hand out information about their customers willy-nilly, because they are not stupid. Companies know that it would be bad public relations, because one bad case could lose hundreds, if not thousands, of customers if they think that their information is not being properly looked after.

I have not used all my notes, and I hope that the House will not invite me to do so, because we debated the issues in Committee. However, that is no reason why they should not come back to the Floor of the House and, in some ways, it has been a useful exercise. I hope that I have been able to put on record a summary of the commitments that we have already given, so that the private sector knows that we seek to work with it and not against it.

Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham

I was interested in the Minister's comments, some of which—like our comments—have been made before. I am reassured that the code of practice is genuinely open for consultation and, I hope, negotiation. I hope that problems will be negotiated, rather than solutions being imposed at the end of the consultation, because it is in the Government's interests—not to mention those of taxpayers—to ensure that the system works well and effectively. If difficulties arose between the private sector and the public sector, including the 409 local authorities, it would make it difficult to ensure that the legislation worked effectively.

I hope that the consultation on the code of practice will include all 409 local authorities, and will give rise to suggestions on how they can reduce the number of points of contact. It would be horrendous to try to keep records up to date for so many local authorities.

Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham

I see that the Minister shares my concerns. Although he unfortunately will not be with us in the next Parliament, we will be able to call in aid his words.

Photo of Mr Jeff Rooker Mr Jeff Rooker Minister of State, Department of Social Security, Minister of State (Department of Social Security)

In that case, and without the benefit of advice, it would be my view that the consultation should include every concerned body, including local authorities. As a result, the code of practice might include advice on how even local authorities use their powers under the Bill. Given that the Government have reduced the number of units from 600 to 14, it is not unreasonable to ask local authorities to designate one point of contact, and if neighbouring authorities can combine their fraud work, so much the better. I shall watch with interest to see whether my words have any effect.

Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham

I just hope that the Minister's words are not informed by a touch of demob happiness. We will also watch the situation closely and keep in touch with those organisations that have expressed concerns. I hope that we will hear that those concerns have been addressed, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

I beg to move amendment No. 11, in page 2, line 31, leave out "has committed,".

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

With this it will be convenient to discuss the following amendments: No. 13, in page 2, line 37, leave out— 'who is an official of a Government department and'. No. 14, in page 3, line 1, leave out "or described".

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

Amendment No. 11 might seem a minor amendment to tidy up the Bill's drafting, but there is an issue of substance behind it. Under clause 1, an authorised officer cannot require information unless it appears to that officer that there are reasonable grounds for believing that the identified person to whom it relates is—(a) a person who has committed, is committing or intends to commit a benefit offence". Let us suppose that the criteria did not include the phrase: is committing or intends to commit and that the House had simply decided that these powers could be exercised only in the case of people with a conviction for benefit fraud. There is no way that the clause would have been drafted in that way, because removing that phrase would mean that the clause read that the officer had reasonable grounds for believing that the person had committed such an offence.

The test of reasonableness cannot apply to history. People have either committed an offence or they have not. So it is odd, and no more than that, that the test of reasonableness in the Bill is applied to three things—whether a person has committed, is committing or intends to commit a benefit offence—because on one of those criteria there is no test of reasonableness. That is what first alerted me to wonder what was going on with regard to inclusion of the words "has committed".

When I queried this in Committee, the initial response of the Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), was to tell me to go back and read the Bill—which I did—where it says that an officer must have "reasonable grounds for believing" that the person has committed fraud and is about to commit fraud again. That is not what the Bill says—it says: has committed, is committing or intends to commit fraud. So the Minister's remarks were not, in my judgment, accurate. The condition is that once someone has committed fraud, they fall within the scope of clause 1, whether or not they are committing or intend to commit an offence.

The Minister went on to say, and this offered me some reassurance: If an authorised officer was dealing with a case in which a claimant had previously committed fraud he could not make inquiries unless he had reasonable grounds to believe that fraud was about to be committed."—[Official Report, Standing Committee A, 3 April 2001; c. 28.] It was spelled out in Committee that not only must someone have committed an offence but they must be about to commit one. That contradicts the Bill, which refers to someone who has committed, is committing or intends to commit an offence.

If the Bill should read "and intends", why does it not do so? If having merely committed an offence is not a sufficient condition, why is it mentioned at all? That is the nub of the amendment. The phrase "has committed" adds nothing to the Bill if the Minister's assurances are correct. If "has committed" is not a sufficient condition and there must be reasonable grounds for thinking that someone is committing or will commit an offence, the phrase "has committed" does not need to be included.

It could be argued that if the phrase is not doing anything it does not matter whether it is taken out or left in. My worry is that leaving it in provides scope for authorised people to say, when challenged, that the Bill allows them to use these powers because someone has committed fraud. If that is not the Government's intention—and the Minister has made it quite clear that it is not—why are they giving themselves that power?

The wording of new clause 2 is better than that of clause 1. New clause 2 refers to a benefit recipient having a conviction for fraud or the officer having reasonable grounds for believing that the recipient is committing or will commit an offence. In the light of our debate in Committee, it has become apparent that if we were to write such a provision from scratch we would probably use the wording in new clause 2 rather than that in the Bill. In new clause 2, the test of reasonableness does not apply to the past, but only to the present and future.

5.45 pm

I do not want to be accused of nit-picking, as my intention is to do more than that. As drafted, the Bill does not make much sense. The test of reasonableness cannot be applied to something that happened in the past, but I am worried that that poor drafting leaves open a possibility that the Government say that they did not intend. The Government say that the fact that a person did something in the past does not give an authorised officer an automatic right to seek that information. However, the fact that the Bill uses the word "or" rather than "and" means that it will be sufficient for a person to have done something in the past.

If the Government agree that that is not what they intend, they should accept the amendment. An authorised officer could take the phrase "has committed" as one of the considerations for deciding whether a person was likely to commit a fraud, but the distinction that I want to make, through the amendment, is that that would not be a sufficient consideration.

The amendment would help the Government achieve what the Under-Secretary assured me in Committee was their intention. The present wording of the Bill would not achieve that.

Photo of Jacqui Lait Jacqui Lait Conservative, Beckenham

Amendments Nos. 13 and 14 are very different from the amendment moved by the hon. Member for Northavon (Mr. Webb).

Amendment No. 13 would ensure the efficient transmission of data between the Government and local authorities. Both have authorised officers, and clause 1(2)(d) enables them to detect more types of fraud. However, there is a limitation on the exchange of information between the Government and local authorities. The Local Government Association has said that it has been advised verbally that it is the intention of the Department to cross check against benefit records and to provide information to the Benefits Agency and local authorities. It also states that it welcomes that clarification of how the Government intends to make use of the power to obtain bulk information from utilities". However, the Bill maintains the Government's ability to obtain bulk information from utilities, and that has given rise to continuing concern about trawling. The LGA states that it would be grateful for confirmation that the results from the data matching process will be made available to local authorities free of charge where there are grounds for considering whether a claim is fraudulent. However, if the Government's express aim is to use the transfer of information to aid the fight against fraud associated with property addresses, it would be most beneficial if that information were readily available to those at the heart of the system—after all, it is local authorities that deal with housing benefit. Although the extent of housing benefit fraud may be the subject of debate, there is agreement across the House that there is a lot of it. Part of the Bill's purpose is to tackle that problem. Amendment No. 13 would allow authorised officers in local authorities to source the information direct.

Amendment No. 14 is also related to trawling. It would ensure that any information sourced from the utilities related to a specific address or location. The amendment would tighten the provisions in the Bill, whereas amendment No. 13 would widen them somewhat. The purpose of both amendments is to tease out from the Government their thinking on these matters.

We are still concerned that access to bulk data from utilities will be based on addresses rather than individuals.

The Under-Secretary said in Committee that the intention was to look for evidence such as high or lower use of utility services. The search is on not individual names but addresses. We accept that. However, the Minister of State focused our concern by pointing out that there are 27 million dwellings in the country. The thought of trawling through 27 million addresses just in case one might find someone committing fraud gives everyone cause for concern. We want to hear from the Government that that is not how they envisage their requirement of "reasonable grounds" as specified in clause 1, subsection (2C). I seek reassurance.

Photo of Angela Eagle Angela Eagle Parliamentary Under-Secretary (Department of Social Security)

I am somewhat perplexed by the reading of the hon. Member for Northavon (Mr. Webb) of the wording in the Bill. We had an interesting exchange in Committee on that very matter. However, what he thinks of as a modest change—to take out "has committed" from section (2C) as part of the definition of those people on whom we will be allowed to check up—would blow a gaping hole in current powers to check on those who commit benefit fraud. It would make the powers that we seek the permission of the House to take in the Bill useless. What would seem to be a pernickety, or even nit-picking amendment, as he called it, would have serious practical consequences if it were agreed. I hope that our exchanges will reassure him and leave him satisfied that the present wording of the Bill does not do as he fears.

The hon. Gentleman fears that the Bill would allow any authorised officer to look at the record of any benefit claimant and, if they had ever committed fraud, to use that as the grounds to search for information on an individual basis. Whatever his interpretation of the Bill, I can assure him that it would not allow that to happen without further tests that would protect the individual.

The best way to explain it is to describe the consequences of the hon. Gentleman's amendment for present powers. He is concerned that the words "has committed" mean that we would be able to make those inquiries and that we would need no further justification. I hope that I can reassure him.

First, I will explain why the words "has committed" are crucial. It is not necessarily the case that the frauds that we investigate are current. For example, at the first sign of interest from the Department—even if it is only a routine review of a claim—a fraudster may sign off benefit. He then goes from committing a fraud to being someone who has committed a fraud, which means that we would not be entitled to continue to investigate the unsolved fraud that we had suspected. That is why the phrase "has committed" is in the Bill.

For example, with jobseeker's allowance, it is a requirement to sign every two weeks to say that one is available for and actively seeking work. If one is not in that situation, one is committing a fraud when one signs to say that. As soon as someone has finished signing, the offence is in the past.

The words "has committed" ensure that we can pick up people who are in the process of committing a fraud and who may realise that we are interested and so allow the benefit claim to lapse or who make other arrangements to put what they have done into the past tense. If the hon. Gentleman's version of the Bill became law, it would stop us investigating any individual who went from committing to having committed an offence by signing off.

I shall attempt to explain why the powers about which he is concerned cannot be interpreted as he suggests. The test of reasonableness that he said did not apply, does apply because we are talking about the same claim—it is not necessarily a claim that is way in the past, as the individual may have let it lapse because he has realised that we are on to him. An authorised officer must be satisfied before using the powers in section (2C) that the tests apply. It must appear to him that he has reasonable grounds for believing that the person about whom he is inquiring has committed—perhaps only a day ago—is committing or intends to commit a benefits offence or is a family member of such a person.

Secondly—this is where the Social Security Administration Act 1992 powers come in—he must be satisfied that his inquiry is reasonable for explicitly set-out purposes. I will not go into those as they have been an obvious part of benefit-related powers for some time.

I hope that the hon. Gentleman will accept that the amendment would damage our present powers and that the powers that we are considering allow us only to make inquiries about individuals whom we suspect—not any individual in the country who may have committed benefit fraud 20 years ago, but someone whom we suspect of being involved in something in the two areas that the authorised officer has to consider. That has to be done reasonably.

If the hon. Gentleman needs further assurances, he should reflect on the fact that the terminology used in the Bill is not new. The words "has committed" appear in all the legislation and have always been interpreted as I have outlined rather than in the way he suggested. I hope that he will accept that the law has tended to support my interpretation rather than his worries. In other words, the words simply refer to the fact that there is an unresolved crime that is under investigation. Perhaps the hon. Gentleman would check out section 20C of the Taxes Management Act 1970, which states that there must be reasonable grounds for suspecting that an offence involving serious fraud is being, has been or is about to be committed". The same considerations apply. Obviously, the offence is the one that is under investigation. With those assurances, I hope that the hon. Gentleman will withdraw the amendment.

The hon. Member for Beckenham (Mrs. Lait) mentioned two issues when speaking to amendments Nos. 13 and 14. I hope that I can reassure her about those. First, I suspect that there has been some misunderstanding—she mentioned this—on the part of the local authorities about whether they would be allowed access to the data matching work that may be done for housing benefit purposes. I repeat my assurance that the way in which that works is that we do the matching and pass the information on to them, free of charge.

Amendment No.13 would bring about a less efficient method. We would not pass the information to local authorities—they would have to make their own arrangements to do their own data matching for housing benefit, which would be costly and less efficient. We have records of all those claiming social security benefits and that includes housing benefits. We will do the bulk utility data matching against housing benefit records as well as our social security records and we will pass details of inconsistencies to officers in the Benefits Agency and to authorised officers in local authorities for further investigation.

That means that local authorities do not need a power to obtain the bulk data themselves because we shall do it on their behalf. It explains the drafting of the provision, which limits those powers to officers from Departments. However, I reassure the hon. Lady that we shall not keep to ourselves the results of such data matching in respect of housing benefit. We shall pass it to the appropriate local authorities and—I am happy to confirm—it will be free of charge. I hope that disposes of the need for further action on amendment No. 13.

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We had some discussion in Committee about how we might use the powers under amendment No. 14 for data matching on addresses. As I said then, the first step will be to conduct a pilot exercise. We have not yet held detailed discussions about the pilot, but I suspect that it will not involve all 27 million dwellings in the UK—I think we should want to begin with something smaller.

Our experience of data matching within Departments is that it throws up inconsistencies. That does not necessarily mean that fraud is going on, but such inconsistencies have to be further investigated. For example, in utility bulk data matching, we may find an address at which there is minimal use of electricity, water or gas, yet our records show that housing benefit is being claimed and that six people are supposed to live at the address, so there is an inconsistency. There could be a perfectly innocent explanation for that inconsistency, but it could be sought out only by further investigation. That is what we need to do—to throw up a series of inconsistencies and pass them to investigating officers so that they can check why they might have occurred.

I confirm to the hon. Member for Beckenham that we shall treat sensitively any matches that are revealed by the pilots. If little electricity had been consumed, that might have been because someone had been in hospital for a long time, so we should not send fraud squad people crashing in to break down the door. We would check our records to find out whether there were innocent explanations and, if there were not, we would investigate further to discover whether fraud was being committed.

We have five or six years' experience of general matching across our system in the DSS, which has successfully saved £314 million of benefit expenditure. We have seen how that works and we want to try out a pilot scheme. The phraseology in the Bill allows us the maximum leeway in conducting a pilot to try to establish abnormally high or low utility use. That is why I hope that the hon. Lady will be reassured and will not press her amendment.

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

I may take the Under-Secretary of State for Social Security by surprise when I say that I found her response generally helpful. My understanding of "has committed" in this context is that it refers to people who have, for example, been convicted of an offence. Clearly, I have no intention of preventing the Department from pursuing a past fraud even though it is no longer current.

When the Under-Secretary responded to my intervention in Committee, she said that it was not enough that people had committed fraud and that they must also be suspected of committing it—there was an "and". However, it turns out that there is no "and"; people merely need to "have committed" the offence, so that further confused me.

None the less, the hon. Lady's comments this afternoon are convincing so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.