Clause 19

– in a Public Bill Committee on 26th February 2009.

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Loss of Benefit Provisions

This amendment ensures that the loss of benefit provisions in new section 6B of the Social Security Fraud Act 2001 apply where a person in Scotland is cautioned for a benefit offence. As currently drafted, they apply to cautions in England and Wales or Northern Ireland, but not in Scotland.

I do not need to detain the Committee on this particular amendment. I apologise for there being Government amendments at all at Committee stage. There are others, but we have tried to keep them to a minimum.

As currently drafted, clause 19 applies to cautions only in England, Wales and Northern Ireland. The amendment will mean that provision to remove or reduce benefit entitlement for a period of four weeks for all first offences of benefit fraud will apply to Scotland, so the provision will become UK-wide.

Amendment 94 agreed to.

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I beg to move amendment 63, in clause 19, page 25, line 41, at end insert—

‘(14) Sanctionable benefits shall be returned to the claimant with compensation where the benefit offence is attributable to a mistake made by the Secretary of State or anyone acting under his authority as provided in paragraphs (1) to (11) above’.

It is a pleasure to serve under your chairmanship, Mr. Amess. Amendment 63 attempts to ensure that if a mistake is made, it is rectified not only with the restoration of the benefit, but with the payment of compensation to the people who have suffered the loss. We have concerns about this clause because it is a change from the current two-strikes rule to cover the loss of benefit after one sort of incident. We are worried that such an incident may include an administrative error as well as fraud. The clause strengthens any action that may be taken against a benefit claimant, so if it is proved that a sanction was taken as a result of an administrative error, the claimant should receive not only what they lost, but a form of compensation. I hope that the Government will appreciate that the amendment is fair and reasonable. Such a practice applies to many other cases in which someone has suffered a mistake. For example, it applies with tax credits, so it should also apply in this particular case.

Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

It is a great pleasure to serve under your chairmanship, Mr. Amess. I listened carefully to the detailed description of the amendment given by the hon. Member for Rochdale. Notwithstanding what he said, I have one or two concerns that the Committee should consider.

The hon. Gentleman might not have fully reflected on the effects that his amendment might have. He referred to the extension of the benefit sanction to include the case of one offence. In his opening remarks, he referred to that as one sort of an incident, but it is not; it is a benefit offence that would include all cases where somebody had been convicted of one or more benefit offences in any proceedings, had accepted an administrative penalty as an alternative to prosecution, or had agreed to be given a caution.

The amendment includes the word “offence”. Under the amendment, somebody who had committed an offence, including somebody convicted of an offence before a court, not only would be allowed to keep the money that he had wrongfully received, but would be given compensation as well when that was “attributable to a mistake”. However, the hon. Gentleman’s amendment mentions a “benefit offence”, so to talk about “a mistake” misses the point about there being an offence. It would follow that, if there were some element of mistake in the background to someone being convicted of a benefit offence—this particularly concerns me—such a person would then be entitled, under the terms of the amendment, not only to be allowed to keep the benefit that they had received, but to receive compensation as well. I look to the Minister’s response, but because the amendment uses the word “offence”, the courts could interpret it as covering cases in which somebody had been convicted of a criminal offence.

Paul Rowenrose—

Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

If the hon. Gentleman wants to say that the word “offence” means something other than an offence, I shall look forward to his explanation.

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I would only ask the hon. Gentleman to look at the clause. The terms that I have used are exactly the same as the ones in the clause.

Is the hon. Gentleman suggesting that if a mistake is made—not an offence—the clause should allow a claimant to be sanctioned either through the courts or though administrative means? We are saying clearly what should happen if an administrative sanction proves to be a mistake. I know of scores of cases in which that has happened. Does he not accept that an innocent party should be entitled to compensation, because that is what happens under tax credits?

Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

The hon. Gentleman is even more confused than I thought he was in the first place. He talks about an innocent mistake, but his amendment does not refer to an innocent mistake. May I read his amendment to him, because he might not have reflected carefully on it during its drafting? It says:

“Sanctionable benefits shall be returned to the claimant with compensation where the benefit offence is attributable to a mistake made by the Secretary of State or anyone acting under his authority as provided in paragraphs (1) to (11) above”.

The hon. Gentleman refers to the Bill. When I made my first remarks on his amendment, I carefully set out the circumstances that were covered by the Bill: when somebody is dealt with by an administrative penalty or a caution or they are convicted before a court. The hon. Gentleman’s amendment would cover all those circumstances, including the third one—a conviction—but the first two deal with where an offence has been admitted and are alternatives to a matter being brought before a court and the person being subject to a conviction, if found guilty, because an administrative penalty and a caution both involve an admission of guilt.

The hon. Gentleman now says to the Committee that his amendment would deal with somebody who is innocent and where there has been a mistake. If there has been a mistake, there has not been an offence, because such a person would be able to plead not guilty to the charge and would be found not guilty if the courts accepted their version of events. If there were a wrongful conviction, they could appeal against it. However, the hon. Gentleman’s amendment mentions an offence.

When somebody is subject to an administrative penalty or is given a caution—in both cases they will have admitted their guilt—or is brought before a court and convicted and sentenced, if there has been an element of mistake in the background, as there often is on the part of the authorities in benefit fraud cases, that does not negate the dishonesty of the person who has committed the benefit offence. Things might begin with a mistake, but there has been an offence if someone has dishonestly received benefits to which they are not entitled.

Let us clearly set out the effect of the hon. Gentleman’s amendment. Under it, someone who, in common parlance, would be called a benefit cheat would be entitled to receive the amount that they had wrongly been given and compensation on top. People who are convicted of these offences are sometimes given discharges, community sentences or suspended sentences. If the hon. Gentleman’s amendment was passed and such people were able to establish that there had been some mistake somewhere in the background on the part of the administrative authorities or the Department for Work and Pensions, they could say, “Oh yes, but I’m entitled to keep what I received and I want compensation as well.”

The hon. Gentleman is sending out a strange message. Many people are honest claimants of benefits, such as those who are in need and have circumstances that entitle them to benefits, or those who happen to have been made unemployed—particularly at this time. Such people honestly claim their benefits and go to great lengths to make sure that all their circumstances are known. What on earth are they supposed to think if somebody who has dishonestly received benefits is allowed to keep the fruits of their dishonesty and get compensation on top? I am not sure that that is something with which many of my constituents would agree. I might be wrong about this, but I am not persuaded by what the hon. Gentleman has said because he has used the word “offence” in his amendment. I believe that I have described the consequence of his amendment.

Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

Certainly, but the hon. Gentleman’s last intervention did not help him.

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I refer to proposed new section 6B(13) of the Social Security Fraud Act 2001, as inserted by clause 19. It states:

“In this section and section 6C...‘benefit offence’ means” and sets out clearly what a benefit offence is. The provisions to which the amendment would add also set out the circumstances in which any sort of benefit that had been withheld would have to be repaid. All we are seeking to do is to add to the provisions, not replace them.

Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

I am not going to read the provisions out now, but I think that the circumstances to which they refer are, in effect, the same as those that I set out. What those circumstances cover are actually in the note supplied by the House of Commons Library. The hon. Gentleman may, with the best of intentions, have drafted a defective amendment, so I invite him to reconsider and withdraw it. If he wants to press the amendment to a Division, I will have no hesitation in advising my hon. Friends to vote against it, because the legal effect of what is proposed is dubious. Let him be in no doubt that his amendment refers to an offence. It would give compensation and benefits that had been wrongly received to somebody who had committed an offence, and we should not go down that road.

Photo of Ann McKechin Ann McKechin The Parliamentary Under-Secretary of State for Scotland

It is a pleasure to serve under your chairmanship, Mr. Amess.

I think that it would be helpful if I were first of all to summarise the provision to which the amendment of the hon. Member for Rochdale relates. A one-strike sanction will apply to cases of benefit fraud that result in a conviction, or when a caution or administrative penalty is offered as an alternative to prosecution. There is a need for legal certainty and we need to make a clear distinction between a conviction, caution or administrative penalty on the one hand, and official error on the other. The sanctions are in respect of fraud, not official error.

Clause 19 allows for all benefit withheld as a penalty for benefit fraud to be repaid to the customer if a conviction is quashed. That also applies when an administrative penalty is no longer appropriate if, following a review or appeal under the internal procedures that already exist, it is decided that there was no overpayment, or that the sum is not recoverable. Those are obviously matters of fact. The Department already has a widespread scheme to provide redress for maladministration, which allows for compensation to be paid to customers in appropriate cases. If customers remain dissatisfied, a complaint can be made to the parliamentary ombudsman.

The hon. Member for Hertsmere raised an interesting point about the phraseology of the amendment and the fact that it may cover items and cases that the hon. Member for Rochdale did not intend to cover, such as if a mistake is actually a fraud perpetrated on the Department. In the light of that, I urge the hon. Gentleman to withdraw the amendment.

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister 9:15 am, 26th February 2009

I listened to what the Minister and the hon. Member for Hertsmere said, but I am afraid that I violently disagree with them. It is a sorry state when  someone who has been subject to a sanction that has been wrongly administered is not entitled to receive compensation.

Question put, That the amendment be made.

The Committee divided: Ayes 1, Noes 14.

Division number 4 Nimrod Review — Statement — Clause 19

Aye: 1 MP

No: 14 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of Ann McKechin Ann McKechin The Parliamentary Under-Secretary of State for Scotland

I beg to move amendment 95, in clause 19, page 26, line 46, after ‘sentenced)’ insert

‘or in the case mentioned in paragraph (b)(ii) the date of the order for absolute discharge’.

This amendment is consequential upon amendment 96.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss Government amendments 96 to 98.

Photo of Ann McKechin Ann McKechin The Parliamentary Under-Secretary of State for Scotland

The amendments are intended to ensure that we can apply the new provision to all those who are found guilty of benefit fraud, including cases which result in an absolute discharge. The underlying principle of the new sanction is that all those who commit benefit fraud should be subject to the sanction. Absolute discharge means that the court is satisfied that the offender is guilty, but decides not to impose any type of sentence. We see no reason why such guilty offenders should escape the sanction.

Although relatively few cases receive an absolute discharge, we believe that it would be wrong to exclude them from the sanction, especially as those who receive a caution or administrative penalty for low-level benefit fraud as an alternative to prosecution will be sanctioned.

We also want absolute discharges to count for our existing two-strikes sanction in section 7 of the Social Security Fraud Act 2001. It would be inconsistent to apply the sanction to someone who receives an absolute discharge for a first offence, but not to apply it to those who are absolutely discharged for a second offence.

Amendment 98 corrects an error in paragraph 6(3)(b) of schedule 4 to the Bill. That paragraph amends section 11 of the 2001 Act in consequence of the new provisions introduced by clause 19, which provides for loss of benefit if a person commits a benefit offence.

Section 11 of the 2001 Act sets out when the affirmative procedure applies to regulations under the Act. The amendment ensures that the affirmative procedure applies to regulations made under proposed new section 6B(6) inserted by clause 19. The proposed new section allows,  where the sanctionable benefit is income support, for regulations to prescribe the manner in which the offender’s entitlement to income support may be reduced. The Government consider it appropriate for the affirmative procedure to apply to regulations made under the power. This will bring the position in line with regulations under subsections (7) to (10) of proposed new section 6B, which deals with reduction in other types of benefits.

Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

I seek reassurance from the Minister on one point. I do not think that this will take terribly long. My concern is that the provisions should operate independently from the criminal justice system. I anticipate that that will be the case, because it is already the case when someone is convicted of two offences and is made subject to this particular form of sanction. That provision operates independently of the criminal justice system, and I understand that the same will apply in these circumstances.

Let me explain further, so that the Minister fully understands my concern. All benefit fraud offences are serious, but the degree of seriousness varies, and the public accept that. It is important that the courts consider the circumstances and seriousness of individual cases, and that they judge and pass sentence accordingly. The public are especially concerned by cases in which people have received large sums of money over a long period to subsidise a high lifestyle, and who might already have been receiving other income so that the benefits that they have wrongly received have been a top-up. In some such cases—we know that they exist—the people concerned have lived a high, if not luxurious, lifestyle. I expect that those are the cases that the public want to be judged most seriously, and for which they would want people to receive combined punishments. That is our concern, but we recognise that the seriousness of cases varies and that they have to be judged accordingly.

We are particularly concerned about the people at the higher end of the scale. I am amazed that, notwithstanding the warnings that the Liberal Democrats have been given about the effect of their amendment, they would entitle such a person, in theory, to have their lawyers go back over the circumstances of the case, notwithstanding that they have been convicted of an offence or made subject to an administrative penalty or caution, to see if there had been any administrative mistake, and then to come back before the courts to get back the money that they had wrongly received—however many thousands of pounds it was—with compensation on top. I do not want to put this too strongly, but some would call that a cheat’s charter coming from the Liberal Democrats. The hon. Member for Rochdale has been fully warned about this problem, and I am sure that his constituents will take a view on this issue. Many of them will feel, as we do, that people in particularly serious cases, who have got away with large sums of money, should receive combined punishments. I look to the Minister for confirmation that the provisions are quite independent of the criminal justice system.

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

If anyone is living in “Alice in Wonderland”, it is the hon. Member for Hertsmere. I have not said that anyone who is convicted of a benefit offence should not receive sanctions. I have made clear our view that compensation should be payable if the provisions have been administered incorrectly. The hon. Gentleman should concentrate on what the amendment says, and what is proposed, rather than imagining cases that do not exist.

Photo of Ann McKechin Ann McKechin The Parliamentary Under-Secretary of State for Scotland

I am pleased to confirm to the hon. Member for Hertsmere that the system is completely separate from the criminal justice system. He is absolutely right that we must all take benefit fraud seriously. The level of fraud across all benefits is down by more than two thirds from that in 2001. At 0.6 per cent. of expenditure, it is at the lowest level ever recorded, but we certainly are not being complacent. There is absolutely no excuse for fraud, and I do not consider that the hon. Member for Rochdale has grasped that fraud is not excusable in any circumstances. The taxpayer certainly should not, in any circumstances, end up paying back compensation to someone who has attempted to defraud the Department for Work and Pensions. I therefore ask hon. Members to support the amendments.

Amendment 95 agreed to.

Amendment made: 96, in clause 19, page 26, line 47, leave out from second ‘to’ to end of line 49 and insert—

‘(i) a conviction in relation to which the court makes an order for absolute or conditional discharge or a court in Scotland makes a probation order,

(ii) an order for absolute discharge made by a court of summary jurisdiction in Scotland under section 246(3) of the Criminal Procedure (Scotland) Act 1995 without proceeding to a conviction, and

(iii) ’.—(Ann McKechin.)

This amendment ensures that new section 6B of the 2001 Act applies where a person is convicted of a benefit offence, but the court makes an order for absolute discharge. See also amendment 97.

Clause 19, as amended, ordered to stand part of the Bill.