Fraud (Hansard, 19 April 1999)

§ 5. Mr. Simon Burns (West Chelmsford)
If he will make a statement on the level of fraud within the social security system. [79732]

§ 12. Siobhain McDonagh (Mitcham and Morden)
What targets he has set for reducing fraud in the benefits system. [79739]

§ 17. Sir Sydney Chapman (Chipping Barnet)
If he will report progress in tackling fraud in the social security system. [79745]

§ The Secretary of State for Social Security (Mr. Alistair Darling)
The Government published their strategy for combating fraud and reducing error on 23 March. Copies of the document, "Safeguarding Social Security", are available in the Vote Office. Our object is to get claims right from the start and to keep them right thereafter. The National Audit Office has welcomed this new approach.

§ Mr. Burns
I am grateful to the right hon. Gentleman. What action is he is taking following the Audit Commission report that showed evidence of housing benefit fraud by officers and locally elected councillors in 25 per cent. of local authorities that it visited?

§ Mr. Darling
The Government are taking several steps, both with regard to specific incidents reported to us and generally. The hon. Gentleman may know that we have announced additional funding to ensure that claims are properly verified and that proper checks are put in place in offices to prevent fraud or error. We have also arranged for all local authorities that want it to have remote access to local Benefits Agency offices to cross-check material held there. I firmly believe that if we get the systems right, and take a little more time to ensure that the information is correctly processed and the correct procedures 557 followed, that will cut fraud and error and provide a disincentive to those who might be tempted to try to defraud the system.

§ Siobhain McDonagh
Does the Secretary of State agree that it is important to ensure that benefits are correctly applied in the first place and to look for fraud afterwards? As someone who has worked in a Department of Social Security office and in housing benefits, I am well aware of how the system can make fraud possible. Is he sure that we have changed procedures enough to ensure that the level of fraud and poorly processed claims is reduced from that under the previous Government?

§ Mr. Darling
I agree with my hon. Friend. The previous Government's practice was to instruct Benefits Agency staff to process claims as quickly as possible. The result was that when we came into office, we found that two out of five decisions were wrong. That meant that we had to spend much time chasing round and picking up the pieces. We have cut that rate, with the result that in this Parliament alone, we shall save £1 billion by ensuring that we get claims right in the first place. It is such savings that have allowed us to channel money away from fraud and error into doing far more for pensioners and families, as my right hon. Friend the Chancellor announced in his Budget.

§ Sir Sydney Chapman
Can the right hon. Gentleman confirm that the number of arrests made by the Benefits Agency fraud investigation service fell dramatically in February after a month where it was half the average of preceding months? If so, how does he square that with assurances that he and one of his Ministers gave as recently as 11 January? The Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), said: Far from watering down the campaign to combat that fraud, we are gearing it up".—[Official Report, 11 January 1999; Vol. 323, c. 16.] Is not the opposite the truth?

§ Mr. Darling
The hon. Gentleman is talking nonsense. The Government's record on prosecuting people is very good. He referred to a particular month in which, for various operational reasons, there was a slight downturn in activity, but that followed a month in which there were a record number of arrests. That shows that the Government take the detection of fraud and the prosecution of those who commit it very seriously. What is new is that for the first time, the Government are determined to ensure that all members of our staff not only prevent fraud and error in the first place but, if it is discovered that things are wrong, take the necessary action through the benefit fraud inspectorate or our special investigation services to ensure that people are detected and brought to justice. The nonsense that the hon. Gentleman talks can only encourage those who attempt to commit fraud.

§ Ms Gisela Stuart (Birmingham, Edgbaston)
I am sure that my right hon. Friend welcomes the initiatives taken by local authorities such as Birmingham, whereby remote access terminals, allowing housing benefit entitlement to be checked by the local authorities, are used. Does he not think that there should also be a system that would alert 558 local authorities when people have come off certain benefits and no longer have housing benefit entitlement? At present, the system seems too proactive; we could cut down on benefit fraud by alerting local authorities when certain entitlements have ceased.

§ Mr. Darling
My hon. Friend is right. Far more needs to be done to ensure that staff in local authorities—through the housing benefit offices—and Benefit Agency officers can speak to each other, so that they know what they are doing and share information. We are piloting certain gateways to improve the system; I also believe that the new IT equipment with which the Department will be provided during the next two to three years will make a big difference. Frankly, one of the problems is that we inherited a system in which there had been almost no investment in IT, modern technology and techniques. We are determined to tackle that; if the DSS and the Benefits Agency have up-to-date technology and proper working procedures, much more money can be saved—money that would, for example, be better spent on supporting families and pensioners.

§ Mr. Eric Pickles (Brentwood and Ongar)
The House will not be surprised that the Secretary of State seems to blame everyone but himself for the failure in dealing with fraud. Under his leadership, the Department's record has been less than impressive, with a considerable deterioration from the position left by the Conservatives. Does he agree that the one thing that he could do would be to encourage greater transparency? With reference to the question put by my hon. Friend the Member for West Chelmsford (Mr. Burns), the report does not name the councils in which fraud was taking place. Will the Secretary of State now name and shame those councils? Will he have the Audit Commission's terms of reference changed so that future reports give us a complete perspective on what is happening?

§ Mr. Darling
The hon. Gentleman refers to a report prepared by the National Audit Office, not one provided by the Government. It is for its officials to decide what is in the report; they are perfectly capable of making specific criticisms in it. I firmly believe that local authorities that fall below an acceptable standard should be exposed, and the Government will ensure that local authorities are given every possible encouragement to drive up their standards. That is the whole purpose of the best value reforms that we are introducing.
As for the Government's record on fraud, I repeat the point that I made earlier in response to my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh); when we came into office, two out of five claims were wrong and, as a result of the action that we have taken, £1 billion has now been saved. That £1 billion is being spent on pensioners and families; it would not have been available under the previous Government.