HC Deb 04 August 1976 vol 916 cc2012-23

7.22 a.m.

Mr. William Hamilton (Fife, Central)

In recent weeks certain hon. Members, particularly Conservatives, have sought cheap and nasty publicity for alleged abuses in the social services. In the course of that publicity they have used some highly emotive and extravagant language, aided and abetted by some, but not all, of the popular Press—not least by theDaily Mail, the night soil of Fleet Street. Often the newspapers and hon. Members have shown little regard for the truth. They have taken little trouble to ascertain the facts before they have produced what they presumed would be nice, juicy headlines attacking the Welfare State and engaging in cheap jibes about layabouts scroungers and so forth.

I exempt from my strictures on the Press theEvening Standard which carried a reasonable editorial on 3rd August. That spoke about the emotive use of the words "scrounger" and "layabout" and went on: There is a grain of truth within this equation, with the Department of Health and Social Security reporting 7,250 prosecutions for misuse of its benefits system in the first five months of this year. But the sensational nature of the cases picked out, with their large embezzlements and cunning ways of fraud, has put everything out of proportion. A good way to put it back is to look at the other side of the social security world, the amount of money (almost all of it from means-tested allowances like supplementary benefit) left unclaimed by people entitled to take it up. Set beside the sum believed lost through fraud (an estimated £2,000,000 by 45,000 claimants last year) the saving to the Government is vast. Mr. Frank Field director of the Child Poverty Action Group, reckons the annual unclaimed total at £330 million. The article went on in that vein—a highly responsible, and highly exceptional, leading article.

The recent attacks by Conservative Members would be taken more seriously if they directed some of their venom at the sharks in the sea of corruption, fraud and scrounging in the higher echelons of our society. I wish the hon. Member for Aberdeen, South (Mr. Sproat) would read the report of the Lonrho inquiry rather than the annual report of the DHSS. The former Conservative Prime Minister described Lonrho as the unacceptable face of capitalism—and no wonder! It is appropriate that the next debate should be on that report. Because we are to debate it next I shall not go into it in detail, but I want to refer to Part 7, entitled The Financial Arrangements Made With Mr. Duncan Sandys", which talks of his receiving a consultancy fee of £11,000 a year, how that was increased to £51,000 a few months later, and how he accepted a change of role to chairman of the company in return for £130,000 compensation—

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. The hon. Gentleman is straying into a matter which is not strictly relevant to the subject of part of the Votes which he desires to discuss. The question he has raised concerns alleged abuses on the payment of social security benefits. I shall be grateful if the hon. Gentleman will continue with that discussion and not stray into a different matter.

Mr. Hamilton

I am not straying, Mr. Deputy Speaker, but merely making an interesting comparison of fraud, swindling and scrounging. This document reveals much more blatant scrounging and fraud than anything suggested by the hon. Member for Aberdeen, South. When the money was to be paid into an account in Jersey and subsequently in the Cayman Islands, both to avoid taxation, that was condoned by the right hon. Member for Taunton (Mr. du Cann), Chairman of the Tory Party's 1922 Committee, who said, as quoted in the report, that the then Mr. Sandys had acted as a just and honourable man. I leave it at that.

I come to the lesser fry. Under the headline Confessions Of A Taxman", theSun on 28th July reported Sir Norman Price, who had been the £18,675-a-year Chairman of the Board of Inland Revenue, as saying, speaking of his experiences of fraud in the tax system: The taxman's biggest headache is the estimated 2,200,000-strong army of self-employed people. They have the best chance to fiddle. I need go no further.

Next I quote the Child Poverty Action Group, referring to the specific charge about social security benefits. In a letter to the DHSS, Mr. Frank Field said that if there was to be an inquiry there should also be one into tax evasion.

If there is one message which I want to convey to my hon. Friend it is this: investigations are being made into social security benefits but I hope that he and his colleagues will make the strongest representations to the Treasury to the effect that there should be equally firm and comprehensive inquiries into tax evasion. That is where the sharks are. The minnows are here but the sharks are elsewhere.

Mr. Frank Field estimated in his letter that £9 million a year was being lost by people going abroad, maybe to Spain, without paying their tax bills. He estimated that £1,300 million was being lost as a result of loopholes in estate duty and that up to £500 million was being lost—according to the estimates of the Inland Revenue Staff Federation—through under-statement of income by self-employed people.

I come to the hon. Member for Aberdeen, South. He has been making the headlines for some weeks now. I wonder whether he has made representations to my right hon. Friend to say that he would attend this debate. It has been known for some time that this debate was to take place. The hon. Gentleman knows me well enough to know that I would not miss it. I would not have missed it for worlds. Why is the hon. Gentleman not present to give his evidence?

The Minister of State, Department of Health and Social Security (Mr. Stanley Orme)

I have had no indication from the hon. Member for Aberdeen, South (Mr. Sproat) that he was to attend this debate. Notice of the debate was given 36 hours ago. My hon. Friend and I have been here all night waiting for the debate. I am afraid that the hon. Gentleman, like the evidence he promised to the Government, has not seen the light of day.

Mr. Hamilton

I wonder whether theDaily Mail will make inquiries and find out whether the hon. Gentleman has already gone off scrounging to Spain on holiday. Shall we see the headline in theDaily Mail M.P. for Aberdeen, South on scrounging holiday in Spain when he is being paid his parliamentary salary for duties performed here?

I remind hon. Gentlemen of the kind of thing the hon. Gentleman has beeen saying, as reported inThe Times on 26th July. He said that fraud and abuse was costing £500 million a year, that a man can get £100 a week tax-free with no bother, that £250 million was being paid out in social security to people who are working and that 500,000 people on the dole were on the fiddle because they were not in fact unemployed.

The hon. Gentleman went on to say that frustrated civil servants in the Department had told him that four-fifths of suspicious claims submitted to higher authority were returned marked "No further action". I would be grateful if my right hon. Friend would comment on that allegation and on the allegation that 500,000 people claiming unemployment benefit are not unemployed. In early July the hon. Gentleman asserted that 20 per cent. of all unemployment claims were fraudulent. There was an article in theSun or theMirror a week or two ago dealing with the nonsense of that kind of claim. To suggest that 20 per cent. of the people who go to the employment exchange and go through the degrading exercise involved in claiming benefit are fraudulent is an obscenity.

The hon. Gentleman was asked, in a letter from the Secretary of State, on 14th July, to substantiate the charges he was making. Nothing has been heard from the hon. Gentleman, I think I am right in saying. Over three weeks have now passed. Last week there was a full hour of Questions to the Department of Health and Social Security. Not a single Question was asked on this matter. The hon. Member for Aberdeen, South was here all the time—I noted this myself—and not once did he attempt to get up, even on a supplementary question.

TheGuardian some weeks ago offered the hon. Gentleman facilities, in its open letter column, to produce his evidence, and that offer has not been taken up.

The biggest frauds and cheats are to be found among supporters of the Tory Party and in the higher income groups. Fraud must be rooted out at all levels. I hope the Department agree with that.

In the social security field, 18 million benefits are paid out weekly, 8 million of them to old age pensioners, 7 million to children, 500,000 to widows, and 500,000 to the sick. Supplementary allowances are drawn by 750,000 people and 300,000 people get disablement benefits. Old folk over 65 occupy two out of every five beds in the National Health Service. Old folk take 40 per cent. of supplementary benefit payments and 65 per cent. of all national insurance expenditure. These are the people who are under attack by Conservative Members.

Undoubtedly there are some scroungers in all walks of life, and not least in this place, among Members of Parliament. Some persons at the very top are getting £35,000 a year, by leave of this House. But the cases that get into the Press and into the mouths of Tory Members of Parliament are those of people on supplementary benefits and national insurance benefits.

As I have said, undoubtedly there must be some abuse, and where evidence is provided I presume that it is acted on within the Department. I know that already a big inquiry is under way into the steps taken by the Department to stop abuses. I gather that there are 30 new projects already launched, and already this year, as I have said, more than 7,000 have been caught and prosecuted.

In yesterday's exchanges in this House, the hon. Member for Aberdeen, South, in his snarling, snivelling intervention, mentioned the Deevy case. A full inquiry is now taking place into that case. Deevy received £36,000 over seven years by using 41 aliases. His fraud was discovered by the police and he got six years in prison.

The need for action against fraud need not be the subject of party political controversy at all, unless hon. Members choose to make it so. If Conservative Members choose to make it so, we shall answer in kind. Successive Governments have tried to tackle this abuse. In fact, most of Deevy's swindles took place under a Tory Government. He probably was a Tory. He probably learned a few tricks from the folk in Lonrho—Duncan Sandys and the Lonrho mob.

It was a Tory Government that set up the Fisher Committee in March 1971 and had to deal with that Committee's recommendations in March 1973. They acted on some of the recommendations but rejected others. For instance, they properly rejected the recommendation that there should be random sampling. In my view and, I hope, that of this Government, that would have been an unacceptable intrusion into the affairs of honest claimants—and the large bulk of claimants are honest.

The process of taking tougher measures began with the Conservative Government and it is now being continued by the Labour Government. There are now twice as many prosecutions of social security swindlers as there were five years ago—over 15,000 now compared with just over 7,700 in 1970. Those prosecutions are not undertaken by dragging people into court without prior and thorough investigation. That is proved by the fact that 98 per cent. of those prosecuted were convicted.

The number of special investigators has increased under this Government from 290 in 1973 to 370 now. The Government are accused by the Opposition of increasing the number of civil servants. There are 500 specialist fraud staff in local offices and specialists sections in each regional office. For various reasons—not least to protect the credibility and civilised and humane character of the Welfare State—this Government have gone further than their predecessors in responding to the recommendations of the Fisher Report.

A specialist headquarters unit was established and is now, I gather, fully operational and has been for more than 12 months. A detailed action plan has already been drawn up concerning every aspect of fraud detection and investigation, including ways of preventing fraud. If the Tory Party wants more to be done, it must present the case for more staff, more inspectors, more snoopers and more intrusion into personal privacy. The right balance must be struck between the interests of the vast majority of genuine, honest claimants and the need to find and punish severely the swindlers and the scroungers.

In my view, the biggest fish in the latter category are to be found in the City, in Fleet Street and in Mayfair rather than in Central Fife, Keighley or Salford.

I hope that my right hon. Friend will assure the House that the action being taken by the Government in this area will be as firm as the action being taken by the Inland Revenue in other areas to get after those who are our political and social enemies.

7.44 a.m.

The Minister of State, Department of Health and Social Security (Mr. Stanley Orme)

I am sure that the House is indebted to my hon. Friend the Member for Fife, Central (Mr. Hamilton) for raising this issue. A mood of near hysteria is being whipped up by certain sections of the media. I include in that stricture some radio and television programmes and certain newspapers. It is being done in a manner that can only bring the whole Welfare State into question and, more important, make life more difficult for those who are genuinely entitled to benefits—the unemployed, the sick, those who need supplementary benefit, the disabled and many others.

It is interesting that on the one hand we are accused of paying out too many benefits to too many people and on the other hand we are pressed—often by the same people—to extend benefits. My hon. Friend has played no small part in seeing that help is given to disabled and other people in need.

My hon. Friend has laid the facts before the House and the Government are at one with him in seeking to eradicate any form of fraud or abuse from the system. Those who abuse or defraud the system do a disservice to the millions of people who are justly entitled to benefit. The more successful we are in prosecuting people who abuse the system, the more publicity we get. In the recent case, Mr. Deevy received a sentence of six years imprisonment for his crimes against the social security system. The more people we prosecute, the more successful we shall be in getting people convicted.

In the inquiry that I am conducting I am trying to develop means of preventing frauds on the system. There is no doubt that those who defraud the system should be prosecuted and convicted, but I want to try to tighten up the system so that it cannot be abused. We hope to close the loopholes such as the one that enabled Deevy to adopt a number of aliases without detection, but we must do it in a way that will not make things more difficult for the genuine claimant. That is one of the problems. Every time we tighten up the system we have to be careful that we do not hurt the people who genuinely want aid and are entitled to it. It ought to be made clear that people are entitled to supplementary benefits as of right.

My hon. Friend touched on the wider issue of the Lonrho case. That is the subject of the next debate and I am sure that the Chair would not appreciate my referring to that. My hon. Friend referred to tax evasion and other problems in our society. All I can say is that some people seem to adopt double standards. Why was it that the Government were harried night and day on the Finance Bill when they wanted to increase the number of people to prevent tax evasion? The Government were harried by the Opposition because the Government wanted to prevent that abuse, yet apparently in the Opposition's eye, there are not enough inspectors and social service staff to look for people who are abusing the system for providing benefits. That is what I mean by double standards. My hon. Friend was quite right to draw attention to this.

He asked about the evidence submitted to Ministers and to the inquiry which I am conducting. Many hon. Members have been exceedingly helpful in this matter. Suggestions coming forward are being analysed, and a full report will be made to me very shortly. Every case submitted to the Department will be investigated. At the moment there is one partcular hon. Member who has not yet given the Government any assistance—that is the hon. Member for Aberdeen, South (Mr. Sproat). No information has been forthcoming from him, and my right hon. Friend wrote to him as long ago as 14th July.

It is now absolutely imperative that the hon. Member for Aberdeen South, having said that 50 per cent. of the unemployed were not properly unemployed at all, and that there was a 20 per cent. rate of fraud on the supplementary benefit scheme, should provide the Government with evidence. We want that evidence. I want to analyse and examine it. The hon. Member claimed that he receives 1,000 letters a week and the sooner we get this evidence—

Mr. William Hamilton

I was on Anglia Television with the hon. Member for Aberdeen, South (Mr. Sproat) last Thursday, and he said then that he was receiving 1,000 letters a week. But when asked, he was unable to quote any of them. He had not brought a single letter with him.

Mr. Orme

I fully accept that. It is time that the evidence for his statements—if they are correct—was put on the table. The hon. Member for Aberdeen, South is blackening the characters of millions of people who are justifiably claiming unemployment benefits and who are entitled to supplementary benefits, and he casts aspersions across the whole spectrum of social security claimants.

My hon. Friend the Member for Fife, Central said that in the social services field those aged 65 and over accounted for 40 per cent. of NHS beds, 41 per cent. of supplementary benefit and 65 per cent. of all national insurance expenditure as well as most of the cost of the personal social services. If the birth rate continues to fall we shall have a smaller work force supporting more elderly people, and it would be foolish to deny that several social tensions will result. He quoted those facts from a Conservtive document issued recently, and entitled "Politics Today. Social Welfare: Striking a Balance". There is a lot more information in this document which I would like to see hon. Members opposite use.

That brings me to the famous Spanish case about which we heard so much yesterday. The same document says of overseas retirement: UK citizens who retire overseas are often surprised and distressed to find that their NI pensions are 'frozen' and that they are not eligible for pension increases. Instead, they find their pensionable income continually falling in value. Excluding countries with which there are reciprocal arrangements, Australia (where there is provision for residence-based pensions) and Canada (where reciprocal arrangements are being discussed) the cost of providing pension increases to the remaining U.K. citizens involves the comparatively small sum of £12 million a year and would be a welcome and overdue reform. The document welcomes reciprocal agreements with other countries, the very sort of agreement that we settled with Spain so that our people could go there when they retire, yet still draw their pensions. The Conservatives did not quote that to us yesterday. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) did not mention that to us. That is an indication of the hysteria that was whipped up in this place yesterday by the media. My right hon. Friend the Secretary of State destroyed the allegations by showing that there was no evidence to support them. One of the evening newspapers last night said that the Government had closed the loophole on unemployment benefit in Spain. But it was never open. The case upon which the whole story was based had been turned down by a national insurance commissioner.

I have before me the first editorial in theGuardian this morning. One paragraph is worth quoting. It says, Over half the unemployed do not need supplementary benefits but are paid unemployment benefits by the National Insurance scheme to which they have contributed. (None of the present campaigners, incidentally, ever seem to mention the bank managers, who at 60 can—and do—claim both a pension and unemployment benefit.) Three years ago Sir Keith Joseph was quite convinced on the attitude the Government should take towards claimants: 'This conference would howl if we had pictures on TV of children going hungry because their fathers did not get benefit.' That was an address to the 1973 Conservative Party Conference. The main thing that has changed since then is that a Labour Government has perforce pushed up unemployment in the hope of holding down inflation. Perhaps Mr. Brotherton should re-read Sir Keith's admirably sensible speech. That is an indication of the attitude which exists. But one of the regrettable things is that people who should know better are jumping on to this band wagon and are creating in our society a feeling of uncertainty when it appears profitable to attack minorities. Those minorities could he coloured, they could be on supplementary benefit, or they could come from the Republic of Ireland. I urge my hon. Friends—I am sure they need no urging—to keep this boat steady. I say also to the many Conservatives who are concerned about this matter that they, too, should keep the boat steady and should keep in check such people as the hon. Member for Aberdeen, South, who is in pursuit of cheap publicity.

There is a great danger that certain hon. Members on both sides of the House will be devoured by their own publicity. I have seen it happen. There was a notable case of one hon. Member who used to sit on the Front Bench below the Gangway. I saw that person disintegrate before my eyes and I regretted that very much because, although I did not approve of what he said politically, he was an intelligent and courageous man in his dealings with issues in this House. I am sure that hon. Members know of whom I am speaking.

My hon. Friend has asked what we are doing. I am chairing the inquiry to which I have referred. It is important that we have enough fraud specialists, that we deploy them where the risks are greatest and employ selective drives in high risk areas. There will be no reduction in this category of staff as a result of the Civil Service cuts. In fact, there has been, and will be, an increase. We must train specialists in the best techniques of fraud investigation and provide facilities for them to do a good job. We must ensure that their results are as effective as legal and humanitarian constraints allow. We must develop new measures against fraud and, wherever they prove successful, get them generally applied throughout the Department.

We have to bring home to line management at all levels in the Department the importance we attach to tackling fraud and the need to give their full support to the specialists and we must use the knowledge gained in discovering fraud to find better ways of preventing it. If we need new legislation, the Government will not hesitate to introduce it.

We are responsible for 96,000 staff on the social security and pensions side of the Department. They administer 18 million benefits a week—a considerable job—and their morale is badly affected by this campaign. They feel the pressure of the wild accusations that they are not doing their jobs propertly.

I fully support the staff. If mistakes have been made, it is only human in an organisation of this size. The staff have been extremely hard working and loyal in dealing with many of the distressed cases in our society. It is not an easy job.

Many of the people who come to hon. Members' surgeries are victims of the pressures within society and they need a lot of time and attention. We may sec them for two hours a week and do what we can, but the staff in my Department are sometimes dealing with them five days a week.

I had a case brought to my attention recently in which it was put to me that a person was exploiting the system and laughing at people who were at work. When the case was examined, it was found that the person was not mentally stable. That is the sort of fact which can come to light when the issues are examined.

I am grateful to my hon. Friend for raising this issue. I urge the country to keep on an even keel, because if we are not careful we could turn in on ourselves to no advantage to the community. If we believe, as most hon. Members do, in a compassionate society which looks after its sick, its young and its old and which believes that these people—and not least the pensioners and disabled people—should be given priority and assistance, we should remember that those who attack the system are attacking these people. Therefore, while we shall not countenance fraud and abuse—that is against the system and it destroys all that has gone before—the Government will not allow a dismantling of the Welfare State. That is what we believe in, and that is what I mean by a compassionate society.

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