HC Deb 25 March 1980 vol 981 cc1155-9
7. Mr. Rooker

asked the Secretary of State for Social Services what is his latest estimate of the extent of social security abuse.

9. Mr. Christopher Price

asked the Secretary of State for Social Services if he will set out in the Official Report how his Department arrived at the figure of £200 million per annum for social security abuse.

10. Mr. Stoddart

asked the Secretary of State for Social Services what methods he used to calculate his recent estimate of the cost of social security abuse.

17. Mr. Austin Mitchell

asked the Secretary of State for Social Services whether he has now made a more exact assessment of the anticipated saving of employing extra Civil Service staff in detecting social security fraud.

19. Mr. William Hamilton

asked the Secretary of State for Social Services what progress he has made in the prevention of abuse of social security payments; and what is the latest estimate of the cost of such fraudulent practices.

Mr. Prentice

The nature of most social security fraud and abuse is such that we can know only about cases which are detected. However, new records have been introduced which should, over the next few months, provide fuller and more accurate estimates of the amount of benefit saved through the work of our fraud and abuse specialists. I shall make a further statement to the House when a sufficient number of these returns have been received and analysed to enable me to draw worthwhile conclusions.

Several Hon. Members

rose—

Mr. Deputy Speaker

Order. I propose to call first the hon. Members whose questions are grouped with this question.

Mr. Rooker

How does the Minister square his recent statement that he expects to gain £50 million out of the alleged £200 million which is lost in the social security abuse to which he referred? How did he arrive at that figure? Will he confirm the leaked report from his Department that his officials rang around the large department stores and asked for their estimate of theft? Was that how he conjured up the figure of £200 million?

Mr. Prentice

There is no need to ring around department stores to know that they, and other large commercial organisations, assume a loss through fraud of 1 or 2 per cent. in their operations. Applying that to the DHSS, with its expenditure of £20 billion a year, leads to an estimated figure of £200 million. Through this operation we are attempting to save this year at least £50 million. If Opposition Members think that that cannot be achieved, they had better stand up and state their case because their constituents will not believe them.

Mr. Stoddart

Is it not a fact that the figures bandied around lately are sheer bogus figures? Is it not disgraceful that figures produced by a great Department of State should owe more to the experience of "Marks and Sparks" with shoplifters than to decent inquiry undertaken by the Department? Is it not true that far more money is involved in justified claims not taken up than there is in social security fraud?

Mr. Prentice

If the hon. Gentleman will go into the DHSS office in his constituency—I extend the same advice to all Opposition Members—and talk to the officers working on fraud and abuse cases, he will find that they are very busy and that they are saving a great deal of public money. However, they are working at nowhere near the point of diminishing returns. There is a great deal more to be saved. The experience of the next 12 months will prove that.

Mr. Austin Mitchell

Will the Minister call on his right hon. and learned Friend the Chancellor of the Exchequer to assess the relative cost-effectiveness of employing extra staff to deal with tax fraud and evasion rather than employing them in an increasingly counter-productive effort to hound social security beneficiaries for a return which must be far smaller than that which would result from strict inquiries into tax fraud and evasion?

Mr. Prentice

I, and every Member of the Government, would be against fraud and abuse in any sector of our public life. I would have expected Opposition Members to take the same attitude. The attitude that they are taking at present, and have been taking in recent weeks, suggests that they are on the side of the scrounger and against the honest taxpayer.

Mr. Hamilton

Is the Minister aware that I was approached last weekend by an employee of the DHSS who indicated that pressure was being brought to bear on DHSS employees to produce the answers that the right hon. Gentleman wants on this matter? Will he say whether he approves of the suggestion made by one of his hon. Friends recently that neighbours should snoop on their neighbours to find out whether there is abuse? Is not that absolutely disgraceful?

Mr. Prentice

On the first point, the overwhelming majority of the staff of the DHSS share the same opinion as the majority of the general public, namely, they want to see those who are trying to cheat the system identified and prevented from doing so.

As for snooping on neighbours, I have made it clear on many occasions in recent weeks that I am not appealing for that. Some information has always reached the DHSS from members of the public. Some of it is genuine, and some of it is malicious gossip. That information is, and always has been, followed up. I am not in any sense asking for snooping. I have announced that the Department would do a more effective job on its own account by carrying out its duty to root out fraud and abuse.

Mr. McCrindle

While warmly welcoming the appointment of additional inspectors to detect fraud in the social security system—which is at least as much supported by genuine social security claimants as by anybody else—will my right hon. Friend take this opportunity to repeat that he has given instructions to the additional inspectors to move gently and slowly with those who are likely to be genuine social security claimants before attempting to detect the perpetrators of fraud?

Mr. Prentice

The guidance that has been sent to officers carrying out this work is that we want an efficient and effective campaign against fraud and abuse, without in any sense acting in a manner which would be offensive to the vast majority of claimants who are honest, and who are making claims to which they are entitled.

Mr. John Townend

Does my right hon. Friend agree that many of those guilty of social security fraud are also working in the black economy, evading tax at the same time as they are defrauding the social security system?

Mr. Prentice

One of the common examples of fraud concerns those who are drawing benefit and working at the same time without declaring it. Almost inevitably, that means tax avoidance at the same time.

Mr. Orme

Is the Minister aware that it is absolutely ludicrous to compare the DHSS with firms such as Marks and Spencer? Will he confirm that after his original statement, he sent out circular 26/ 80, telling staff to take it easy and not to offend people? When will he give the first evidence to the House of the savings that he has indicated he will make?

Mr. Prentice

I can only repeat the answer that I gave a few minutes ago on the question of the circular sent to staff. That text was approved before I made my public announcement about the extra officers. There has been no change of policy.

The comparison with Marks and Spencer was made by the hon. Member for Swindon (Mr. Stoddart), not by me. Any large organisation finds that there is a loss of that order. If Opposition Members are saying that the loss in terms of the DHSS is less than 1 per cent. it would be an extraordinary argument, and I would like to hear the reasons for saying so.

Sir Brandon Rhys Williams

Does my right hon. Friend agree that every honest person must wish him success in his drive to root out abuse? Does he agree also that the hest way to tackle social security abuse is to reduce the very large number of people who find themselves in circumstances where they have to apply for supplementary benefit?

As it is generally the cost of housing which forces people to apply for supplementary benefit, will he make a study of ways in which we can rationalise the subsidy system for housing so that that element at least is taken out of the qualification for supplementary benefit?

Mr. Prentice

I think that goes a little wide of the original question, but we all want to see improvements in the Welfare State as and when the country earns the resources with which to carry them out. I am grateful to my hon. Friend for the welcome which he gave originally, because I am sure that he spoke for the great majority of his constituents, and the great majority of Labour Member's constituents, who will support what we are doing because they know that it is their money which is being lost as a result of fraud and abuse.